Business Essay

952 words - 4 pages

For awhile the use of facilitation payments to obtain favour (s) has been controversial and this is due to people considering it as being a form of bribery. While Bribery is the corrupt payment or receipt of anything of value in return for official action, facilitation payments involve paying a small sum of money to a public official to ensure they carry out their duties promptly or at all. The purpose of this paper is to review and compare two articles on facilitation payments and corruption in multinational corporations from different perspectives such as their main points, arguments, implications to society, and others. This review will analyse the article “Facilitation payments: culturally acceptable or unacceptably corrupt”, as written by Robert Bailes, and “Corruption and companies: the use of facilitation payments”, written by Antonio Argandona.
Bailes sees facilitation payments in multinational corporations (MNC’S) as a form of corruption. He argues that although there are some claims that there is a distinction between facilitation payments and bribes, this should not be so because facilitation payments can have damaging consequences to the economy. On the other hand, Argandona views facilitation payments more from the point of view of the MNC’S that the payments. He views facilitation payments as a form of “petty” transgressions because what the payer wants to be done is not illegal, but something that exceeds their authority.
Corruption still continues to thrive especially in multinational corporations under the guise of facilitation payments (Bailes 2006: 297). Despite the adverse effects it has on MNC’S, such as reducing accountability, diverting valuable resources away from economic and social development, and bolstering poverty amidst other various issues and problems, Bailes attests that in certain countries they are of the notion that facilitation payments are culturally appropriate and a routine way of doing business. Argadona also agrees with Bailes on this issue, he observes that in certain environments, facilitation payments are seen to be harmless or unavoidable despite the fact that it is a very widespread form of corruption. The argument here is that facilitation payments are generally a subtle way of bribery. A company that allows providing or accepting gifts to influence business in the form of facilitation payments, eventually loses its effectiveness (Harned 2007).
As Bailes (2006: 294) argues, the poorest performers on the Corruption Performance Index (CPI) are from the world’s least developed and political unstable nations and this in turn has led to insufficient capital formation, less efficient public spending structure and reduction in accountability/transparency, to name a few. Argandona (2005: 251) also views corruption via facilitation payments as being very widespread in developing countries. Following Bailes and Argandona’s argument, Schleifer and Vishny (1993) also agree that in some less developed...

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