Was it an Offer or an Ask?
You know, I’m the last person I would expect to be defending brown paper bag transactions, but I find myself questioning a certain righteousness flavouring the reporting of certain recent events.
Let’s go to Rio… Stern Hu, a senior executive of Rio Tinto is being held in China on charges of stealing state secrets.
It could be that this is true. Or it could simply be Chinese retaliation for a perceived loss of face from the state-owned Chinalco’s failed negotiations for the purchase of Rio. He could be accused of these things because of a certain naivety of the Chinese in commercial negotiations with the West. Or it could be because (as has been reported in some media) that Rio allegedly bribed Chinese steel mills to set a favourable price on its iron ore.
If it is the latter reason, is this really the sin it appears to be? Don’t faint just yet. Here’s why I ask:
Years ago I used to travel reasonably regularly to South East Asia and on those long flights (every flight from Australia is long) pre-in-seat video screens, there was pretty much nothing else to do but chat to fellow passengers. There was the Australian shoe importer, whom I coincidentally met on two separate trips, and who always regaled me with stories of his adventures with Indonesian customs officials. There was on another trip, a furniture manufacturer with sobering tales of trying to do business throughout South East Asia, and the Australian tourism operator in Bali who could have done a stand-up routine on the comedy that was Indonesian bureaucratic administration at the time.
All three paid what we call bribes, regularly.
But those payments were not considered with the same derision that the subject of bribes draws today. Yes, society’s expectations have changed somewhat in the past 20 years, but as the tourism operator put it, these are people on low incomes – very low incomes compared to ours. The only way they could get ahead was to make a little more. The scary stories of the furniture manufacturer surrounded events resulting from his refusal to pay “commissions” the first time.
Now, these guys didn’t go into these foreign countries offering money to do business. They were there trying to do business and were getting stalled, blocked, robbed, penalised and pressured – until they paid. The fact is, you couldn’t do business in certain countries without such payments. It was simply a cost of doing business.
Did those same businesspeople try to bribe Australian officials at the time? No. Those three guys were not crooks. Their conduct of business in Australia at the time was legitimate; they were law-abiding citizens. They followed the rules in Australia. And they followed the rules in Indonesia. This doesn’t make it right by our laws, in our country, today.
But does it make it wrong? Does it make them bad people? Having been to those countries and witnessed what I have, I would say no. Does it make the people asking for the bribes in those countries bad people? Having been to those countries and witnessed what I have (and if no one was hurt in the process) I’m inclined to think not.
But let’s for argument’s sake, say you do.
Would these Aussies still be able to do business in Indonesia if they didn’t pay bribes? No. And if they didn’t pay, we all know someone else would have. What if there was nothing written into Indonesian law at the time prohibiting individuals from profiting from commercial contracts or government transactions? What if (as it was the case in many situations) without those additional cash payments, the local bureaucrat couldn’t feed his family? Would you prefer he sold his daughters to the sex shops as they did (and still do) in Thailand? Is it still wrong to pay another 1 or 5 or 10% over the contract price?
What would make it right?
Did Rio pay bribes? I don’t know. But I’d be interested to know if it is written into Chinese law that such payments cannot be made, and very interested to know (if Rio did) for how long and to whom. But most of all – I want to know was it an offer, or an ask? This to me is the critical factor in assigning guilt, if you will.
Was Rio put in such a position that it would not be able to do any business in China if it didn’t pay certain officials? Was that the message given to executives working in China? Was that the environment in which they had operated for a decade or more of doing business with China?
Or, did Rio kick down the door with its saddle-bags overflowing with gold, offering to spread some largesse around? Have you ever done business with Rio? Is this what they do elsewhere? If the pressure was applied to Rio to pay commissions simply to be able to sell its ore to China, is it Rio who should be flayed? Or is it the officials with their hands out who are at fault?
But if Rio did throw the gold around to ease the negotiations and achieve a better price for itself than its competitors, that I would think is an entirely different matter. (That it has continued to do business with China while the Chinese government holds several employees imprisioned bothers me. That it points to its stated “code of conduct” too, is a cop out. There is a lot more to this than we are seeing anywhere, but that’s a whole other story that I’m going to have to come back to.)
But getting back to allegations of bribery in the press… leads me to The Honourable Gordon Nuttall, Harold Shand and the especially magnanimous Ken Talbot.
Now, I don’t know any more than I’ve read elsewhere, but it annoys me to read or hear it said that Mr Nuttall accepted money from Mr Shand and Mr Talbot. To say he accepted, suggests it was offered.
“Hey Gordon, I’ve got a little extra cash floating around, would you like a bit? C’mon, let me help you out there, they clearly aren’t paying you enough to work at the piggery. Please Gordon, you know you want to, c’mon, one for the boys, take it, go on go on go on, pleeeeeaaase take it! “
By all accounts, that is hardly the way it happened. In Nuttall’s own words, he approached and hit them up for cash (them and others) to fund (again, his words) his children’s future.
Nuttall was a grasping little man; a politician caught squarely with his snout in the trough, putting the hard word on wealthy people “just because they had money” (his words).
No, he couldn’t really promise any favours outside of his portfolio, but he sure could make life difficult for people – as he had effectively started to do for Talbot – by attacking him with the privilege of parliament. If he had kept the verbal abuse up, Talbot may never have been able to do business again. A situation not of Talbot’s making.
Let’s say for a minute you are Talbot. Think about it – Nuttall is throwing mud around the parliament, abusing parliamentary privilege to insult and embarrass you, and with the ensuing media coverage, putting the government itself under pressure for engaging in legitimate business with you. And after weeks or even months of this, Nuttall quietly suggests that he will shut up and leave you alone, if he could just find a way to buy the kiddies a property. Or three.
You’ve got buckets of cash to spare, but little patience, and you are jousting defence in the media, on all business fronts, and for your children against schoolyard taunts and tut-tutting neighbours. You have much bigger issues at stake that are now at risk because of a politician’s petty assaults. What do you do?
I now believe had I been in the same position as Talbot, facing the above-imagined circumstances; I would have paid any amount to get that bottom feeding grub out of my life.
Is that bribery? Or is it extortion?
Whether this is what happened or not, I don’t know. But to report that Nuttall accepted money, when it was money that he demanded – regardless of the reason or circumstance – puts a spin on this in Nutall’s favour that I seriously don’t believe he deserves.
The important underlying question whose answer reveals all, is: Was it an offer, or an ask?
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Category: CSR & Sustainability, Reputation Management
Sorry i disagree with your article. You cannot privilege Talbot in the eyes of the law by classifying him as “wealthy ppl” with “cash to spare”. Your implication that Talbot was simply trying to get Gordon off his back is at best, simplistic. At worst, it is biased and posits “wealthy businessmen” on a higher moral ground to government officials. Your argument is based on this faulty assumption that thankfully is not admissable into a court of law.
Certainly, the businessman had motivations. It is for the court of law to look into Talbot’s business progress between 1998 – 2002 and of course 2002 – 2005. Any irregularities exposed are permissible evidence and will rightfully be held against him.
As an individual case, Talbot is both admirable and suspect given his rise on the social ladder from ‘humble miner’ to ‘coal king’. The outcome of this case and court findings will then set precedent for morality inspite of success. The thing that makes this case so interesting is that it is reflection on class boundaries. You cannot hold claim to being one of Queensland’s richest men in such a short span of time with blotches on your record. Afterall, the end does not justify the means.
As you rightfully observe, different countries have different moralities depending on the extent to which they can fight corruption within their system. If Australia has inherited a relatively un-corrupt system, it is the court’s responsibility to preserve that institution.
Finally, it does not matter whether that money was asked for or accepted. What matters is that there was an exchange of money between government and business that compromised the integrity of Australian institutions and one of the perpetrators has been charged with this exact crime.