03C China Corruption [download]
This is the third in a series of lessons from this article about corruption in China:
Corruption in China and Elsewhere Demands Board Oversight
Published in NACD Directorship July 23, 2013 by Eric V. Zwisler and Dean A. Yoost
http://www.directorship.com/corruption-in-china-and-elsewhere-demands-board-oversight/
July 30, 2013: Short excerpt from above article with my comments in blue italics:
The reality remains that business practices in China are widely noncompliant. Practices that are commonly regarded as corrupt by global standards, or serious if not blatant conflicts of interest, may be the norm. Anticipating and addressing corrupt activities requires management awareness, a clear commitment, a company culture that values compliance, and a robust management system to monitor and assure compliance.
To protect against charges of corruption, companies need to keep books, records, and accounts that accurately reflect transactions and the disposition of assets. Internal accounting and management controls must be maintained and aimed at preventing and detecting FCPA violations, establishing policies and procedures that explain how business is to be conducted, perform due diligence on and monitor third parties, and conduct training for employees and business partners.
Don’s Observations: I worked with a China manufacturer of high technology displays. One of our customers was a well known Fortune 500 technology firm in San Jose, with a satellite operation in China. Our primary contacts were with the HQ operation in San Jose. Occasionally we interfaced with their satellite operation in China. Early in our relation, their China managers asked for a kickback to allow us to maintain the business. We refused, and reported their request to the HQ operation in San Jose. We were advised that this was “standard operating business” for China, and that the HQ refused to take any action. It is important to realize that many Western companies will “look the other way” if the corruption involves their own satellite operations.
