In 2014, the “Clean Company Act 2014” was enacted. According to the Act, companies are responsible for the corrupt practices of their employees and can be held liable without a finding of fault. Bid rigging and fraud are prohibited in public procurement, as well as bribery of Brazilian public officials. If found guilty of corruption the companies can be suspended, dissolved or fined.
Economic consequences
In 2013 it was estimated, by using statistics provided by the Federation of Industries of Sao Paulo State, that between $32 – 53 billions could be accounted as corruption money. This means about 2% of the country’s total GDP
• Total costs of corruption in Brasil -> Money could have been used to…
o Multiply amount spent on education and public health o Lift 10 million Brazilians out
…show more content…
• As they were a large state firm there was low risk of bankruptcy and they could invest heavily in technological innovation and development
• Had monopoly on oil search- and production in Brazil from 1954-1997
• Oil central to Brazil growth strategy – Petrobras leading role o At one point the 6th -largest company in world by market capitalization and accounted for 10% of Brazils total GDP, with a value of more than $200 billion (2008)
• In 2010 Petrobras raised $70 billion in the world's largest-ever share sale. Today, Petrobras is worth $56 billion.
Economy ($ billions)
• Non-Reccuring Items skyrocketed and played a big role in the huge yearly loss of $7.5 billion.
Examples of unusual or infrequent items:
• Gains (or losses) as a result of the disposition of a company's business segment including: o Plant shutdown costs o Lease-breaking fees o Employee-separation
When dealing with corruption, first question to ask or to clarify is what corruption is. NSW Research (2002) describes corruption anything from gaining materialistically by virtue of position (for eg. getting a special discount at stores) to engaging in ‘direct criminal activities’ (eg. selling drugs). Newburn (1999) believes that there is a thin line between the definition of ‘corrupt’ and ‘non-corrupt’ activities as at the end, it is an ethical problem. For common people, however, bribery generalises corruption.
Due to its high population rate (large labour pool), its vast natural resources and its geographical position in the centre of South America, it bears enormous growth potential in the near future. Aligned with increasing currency stability, international companies have heavily invested in Brazil over the past decade. According to CIA World Factbook, Brazil had the 11th largest PPP in 2004 worldwide and today has a well established middle income economy with wide variations in levels of development. Thus, today Brazil is South America's leading economic power and a regional leader. 2.
The development of a country depends generally on the work and values of its society. The image of a country can be severely damaged by certain actions and behavior of their citizens, like bribery. When a country is known as a corrupt nation, not only will the facade of the country be affected, but also the economy. Establishing measures to eradicate corruption are urgently necessary. Corruption has been around since the begging of time, but currently is more common in business, more specifically, international business. Although some organizations have been formed, and conventions have been signed in order to end it, corruption is still one of the mayor problems around the world. An ethical view might bring more insight to why bribery and corruption is not a moral act and why more severe measures should be taken into consideration.
Chetwynd, Eric, Frances Chetwynd, and Bertram Spector. "Corruption and Poverty: A Review of Recent Literature." Management Systems International (2003): n. pag. Print.
First, paying bribes and siphoning off millions of dollars from the corporation would eventually lead to the company losing money because building mega projects in politically unstable countries would prove problematic. A sudden regime change would render the contracts useless, as
There was a sudden turn of events; causing Brazil's economy to fail, not only in the society but financially. High unemployment and inflation is starting to become in intense problem for Brazilians. Brazilians are not ready for dishonest behavior, and acts of bribery in the government. Investigators found that before the reelection of Rousseff in 2014 there was a bribery scandal with the state run
In the current economic times the development and growth of any economy has come to a near stop or at least to a drastic slow down. The face of the global economic environment has changed and many new countries are starting to change the way their country and the rest of the world does business. One such nation is Brazil, who has turned around their own economic troubles and is becoming one of the fastest growing economies in the world (World Factbook). Brazil has started developing its economy and using the opportunity to achieve a level of respect in the world.
The runaway corruption in the country harms the business environment and causes collapse of various established institutions and industries.
Bribery is wrong, and it would be almost instinctive to point at the benefits of impartially functioning public servants and incorrupt corporations to our democratic society as justification. However, in this imperfect world where bribery is rife in varying degrees, is it possible to express this notion convincingly? Certainly 'because the UK Bribery Act says so' is far less persuasive to a council planning office in Shanghai than in London, and indeed in compliance with section 7 of the Bribery Act 2010 which relates to commercial offences, it is essential that this question is engaged with on a corporate scale and without assertion through dogma. Accordingly, this essay will argue that elements wrong with bribery are inclusive of both moral and economic considerations. Moreover, in conjunction with international mandates, advent of aggressive legislation such as that of the UK Bribery Act 2010 is representative of global efforts to eliminate bribery. Hence, it follows that bribery can never be considered a normal part of business because it is economically unsustainable in the long term.
Over the last few years, the issue of corruption--the abuse of public office for private gain--has attracted renewed interest, both among academics and policymakers. There are a number of reasons why this topic has come under recent inspection. Corruption scandals have toppled governments in both major industrial countries and developing countries. In the transition countries, the shift from command economies to free market economies has created massive opportunities for the appropriation of rents, excessive profits, and has often been accompanied by a change from a well-organized system of corruption to a more chaotic and deleterious one. With the end of the cold war, donor countries have placed less emphasis on political considerations in allocating foreign aid among developing countries and have paid more attention to cases in which aid funds have been misused and have not reached the poor. And slow economic growth has persisted in many countries with malfunctioning institutions. This renewed interest has led to a new flurry of empirical research on the causes and consequences of corruption.
Kearney, A.T. (2001). Corruption and the Globalization Index. Last access on 27 March 2005 at URL: http://www.globalcorruptionreport.org/download/gcr2001/data_and_research.pdf NAIM, Mois´s (1995). Corruption Eruption. Last accessed on 2 April 2005 at URL: http://www.carnegieendowment.org/publications/index.cfm?fa=view&id=648 MORAN, Robert T. and RIESENBERGER, John R. (1994)
Ranked among the FORTUNE Global 500® largest corporations in the world, Petroliam Nasional Berhad, most commonly known as PETRONAS, is a Malaysian state-owned oil and gas company which ventures into a wide range of petroleum activities. Established in the year 1974, PETRONAS was incorporated alongside the enforcement of the Petroleum Development Act 1974 (Malaysian Explorer, 2012). Today, being owned entirely by the Malaysian government under the Ministry of Finance, PETRONAS is entrusted with the responsibility to manage the entire nation’s hydrocarbon resources (Rig Zone, 2013) and to ensure the sustainability and orderliness of the country’s oil and gas industry is prolonged.
The existence of bribery and unethical behavior is rampant in the world market and may not change overnight. The question of bribery has been distilled in business literature as a question of ethics. In this situation at the airport with the customs officer, it is important to distinguish between business ethics and personal ethics. In a business ethics situation, the Foreign Corruption Practices Act would prohibit offering any bribe to the custom office – for example to free a shipment of goods that was lost in red tape (Pitman & Sanford, 2006). Most companies also have policies against bribery as well. In this situation, however the main issue at hand is that of personal ethics. When in a situation where your company is unknown and there is no business being conducted, normal business ethics and laws (including FCPA) do not apply only personal ethical standards.
The degree of corruption in any society is directly related to how much of the State’s resources and funds are lost to these criminal practices.... ... middle of paper ... ... Retrieved May 4, 2014 from http://www.corruptionwatch.org.za/content/why-corruption-getting-worse-south-africa SANDU, A., & NIU, M. (2013). CORRUPTION AND ORGANIZED CRIME.
In our industry the majority of professionals consider corruption activities such as bribery to obtain planning permission or contracts; billing for unperformed work; production of fraudulent invoices; concealment of bribes; false or exaggerated claims; collusion and cartel activity; inclusion of extra cost to contract claim; cover pricing; employment of illegal workers; cover pricing; and leaking of information to a preferential bidder. Nevertheless are practices that exist in construction, and this is because the people start with small things, and in the end, people will tolerate this behaviour gradually, without realising that his moral scale has been