Page 80 - DMGT547_INTERNATIONAL_MARKETING

Unit 4: International Legal Environment

This act of theirs has been most unscrupulous, unethical and illegal. This, though, does not fall Notes
in the strict precincts of bribery; however, it is akin to bribery.
There are a number of instances of firms paying bribes. In 1995, the US government learnt about
90 cases of firms paying bribes to undercut American firms’ efforts to win international contracts
worth $45 billion. Germany’s Siemens, France’s Alcatel Alsthom and Airbus Industries are
among the major practitioners. Germany found 1500 cases of public officials on the take between
1987 and 1995 in Frankfurt, adding 20 to 30% to the cost of a building contract. Lockheed
Corporation admitted paying $38 million in bribes, kickbacks and other questionable payments
to foreign officials to facilitate aircraft sales from 1970 to 1975. Sweden offered kickbacks to arms
agents for the sale of their Bofor guns to the Indian Army. This has created quite a political
upheaval in the country and the enquiry is still in progress example understated.

Example: Bofors Kickbacks
India was looking for a gun which could clear the high lofty mountains, as the 130 mm Russian
gun was not found suitable for such a purpose. A few months after the Bofors deal between India
and Sweden was signed, the same assassin who wounded Mr Olaf Palme, the Swedish Prime
Minister, while leaving a cinema hall in Stockholm was assassinated by his wife, who was
walking ahead of him. Mr Palme had promised India that there would be no pay off in Bofors
deal and insisted that there would be no middlemen.
In 1987, Mr VP Singh, who had been finance minister and then defence minister, was fed up with
the corruption which had permeated all walks of life particularly the top echelons. He wished to
revitalise his campaign around this issue but said that his great difficulty was that he had no
material with which to proceed further.
The Bofors purchase led to the fall, in 1989, of the government formed by the one party which
had commanded the respect of most Indians over decades of independence. After 1989, India’s
experiment with democracy had reached an all-time low. Our plethora of shaky governments
which led to ambitious, self-seeking, and unscrupulous coalitions had forgotten India.
The Ministry of Defence decided to purchase the Bofors gun even against the recommendation
of the Army headquarters because it is alleged that some of the politicians and bureaucrats had
taken kickbacks worth ` 63 crores from this deal. Though the Bofors gun was good, yet it is not
the best. It is believed that the selection of the Bofors gun had a direct impact on the poverty of
good governance in the last decade, i.e. 1989-99. The nexus of negativity has destroyed the soul
of India, which needs to be restored, and a more positive future ensured for the subcontinent.
The enquiry is still going on by the CBI under the supervision of Central Vigilance Commission
but no substantial proof can come out till the original papers are received from the Swedish
government. The legalities of this case are being worked out and the real culprits will be taken
to task.
There are a number of reasons as to why a bribe is solicited, offered and accepted. Low income
of public officials is one reason and simple greed is another. Loyalties and commitments of
public servants have to be with their political parties, families and friends whom they can ask
for favours. That will benefit those groups. The proliferation of bureaucratic regulations seems
to be another cause. Among reasons why some businesspersons are willing and eager to offer a
bribe are

To speed up the required work or processing.
To secure a contract.
To avoid the cancellation of the contract.
To prevent competitors from getting the contract.

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