In my work as Secretary of State and then later as Minister of State for International Trade, I traveled to a number of countries with a high degree of corruption both in the political class and the business class. What was noteworthy, however, was that in many cases, Canadian companies were able to do business successfully without having to sacrifice corporate ethics or corporate social responsibility. These successful companies in a variety of countries can provide models for other Canadian companies who want to do well in countries where the business climate is particularly challenging because of high level of corruption.
Before entering into a venture, some basic research such as made available through an organization called Transparency International (website: www.transparency.org) provides excellent information on how countries compare with each other in terms of level of corruption. The organization provides specific country reports as part of a philosophy that the best way to combat corruption is through knowledge. More specific advice includes choosing your partner well: While there may be a general culture of corruption in a given country, there are many people and businesses schooled in the way that companies do business from non corrupt environments. Business people living abroad have often times been educated in the West and have a full understanding that paying bribes and other corrupt practices is not tolerated by companies with a strong sense of corporate ethics and corporate social responsibility.
Furthermore, when dealing in countries with a high level of corruption, a Canadian company should have what in colloquial terms could be called an "ace up its sleeve". In other words, maintaining control over a key piece of intellectual property or some production process component that allows you to maintain power in the relationship and prevents you from being squeezed out is useful advice.
Also important to note is that the Canadian government through the Department of Foreign Affairs can provide excellent information and often times bring pressure to bare to settle disputes when issues of corruption arise. This is not true in all cases, however, and the government cannot save harmless people or companies that have been ripped off in every case.
On a final note, before entering into any venture, it makes sense to have good lawyers on side.
The level of corruption in a country certainly raises the business risk for any given venture. It is up to each individual business entrepreneur whether the opportunities which are many in these countries as they make the transformation into countries that are operating more and more by rule of law, respecting the sanctity of contract, generally operating on principles that we take for granted. Business should be aware that there is Canadian law that prevents them from paying bribes while abroad, specifically the Corruption of Foreign Public Officials Act. A guide is available from the Department of Justice of the Government of Canada which provides useful information when considering if and how to do business abroad in many of the emerging economies.
This article is reprinted with permission from The Bay Street Times.
The Honourable Gar Knutson, P.C., is an associate at Borden Ladner Gervais LLP’s Ottawa office. Mt. Knutson practices exclusively in the area of Government Relations both in Ottawa and internationally.
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