Word: bribes
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Dates: during 1970-1979
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Remarkable Record. In recent months headlines have been filled with charges of payoffs overseas-and some damaging admissions. United Brands has admitted paying a $1.25 million bribe in Honduras to get a banana export tax reduced, and Gulf Oil conceded making illegal contributions of $4 million to South Korea's ruling political party. Last week the Senate Subcommittee on Multinational Corporations took up the most eye-opening case of all, that of Northrop Corp., the Los Angeles-based aerospace giant, which has a remarkable record of selling warplanes to foreign governments. Its tiny, efficient F-5 Freedom Fighter...
...some countries-even those with strict laws against bribery-questionable practices have become institutionalized. Saudi Arabian law has stern penalties for bribe takers, yet some American executives say that any company seeking a Saudi contract must count on adding 10% for graft to the stated price. One U.S. executive tells of paying $3 million in bribes to win a $7 million contract in Iran. In Indonesia, the President's wife, Ibu Tien Suharto, is widely known as "Ibu Ten Percent" for the rake-offs she has reportedly demanded from businesses operating there. The South Korean government lately has openly...
Inquisitiveness Needed. What can be done to stop these practices? Congress could pass a law forbidding U.S. corporations to bribe foreign officials. (Surprisingly, that is not a violation of U.S. statutes now, although concealing the payments on a corporation's books violates SEC reporting requirements.) A new law seems unlikely to do much good; those corporations paying bribes do so in the hope that their payments will never be discovered. The Internal Revenue Service, however, could become more inquisitive about the fees paid by U.S. companies to foreign agents. If the IRS accepts them as legitimate business expenses, then...
...gets out that a U.S. company is a soft touch for payoffs, it becomes a target for all kinds of ripoffs. Moreover, when a company pays off a corrupt government, it makes itself a target for nationalization if an opposition party comes to power. In less developed nations, further, bribe-giving corporations contribute to an atmosphere of corruption that adds to the appeal of puritanical leftist movements...
...Honduras, a six-member committee investigating the bribe concluded that the recipient had been former Economy Minister Abraham Benna-ton Ramos. He and Honduran Chief of State Oswaldo Lopez Arellano were both ousted from office last month in the wake of the scandal...