Scandals and scheming: The borderline between effective business development and crime

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Where does legitimate (and effective) business development travel, entertainment and gifting stretch over the line to bribery or otherwise illegal and unethical activity? The answers aren't always clear-cut
bribery image
Where does legitimate (and effective) business development travel, entertainment and gifting stretch over the line to bribery or otherwise illegal and unethical activity? The answers aren’t always clear-cut.

When you observe a multi-year procurement scandal unfold, it can be like watching a train wreck in motion. At one moment, everything seems calm, ordinary, routine. Then, “crash” and the existing world falls apart. Suddenly, as post-mortems and litigation commence, the world sees the seamy underside and the questions are raised: “How could things get so far out of hand, for so long?”

When you dig into these stories, you discover there is a slippery slope (and even inconsistencies) between ethical business development and entertainment and criminal collusion and kickbacks. In some cases (this makes it interesting), it is quite legitimate to offer gifts, entertainment, and even travel hospitality — but it is wrong to accept the gifts (at least without disclosing them, unless they are of truly nominal value.) So some major general contractors that won multi-million dollar projects (and entertained their counterpart with somewhat lavish travel) are in the clear and can continue with their work while the purchasers’ representatives face civil litigation or even criminal charges.

I don’t doubt the value of travel, entertainment and gifting key current and potential clients. These business development methods are undoubtedly effective. They represent rather modest marketing costs when you think about the rewards — and they are probably quite common in private sector projects. There is nothing new about these practices as well, and they transcend the architectural, engineering and construction community. (One pharmacist I know, for example, has long-retired and sold his business, but is still burning off the millions of gifted airline points provided him by pharmaceutical manufacturers.)

The rules are different in the public sector because the trade-offs and embarrassment of scandal in the public eye. The result, perhaps, are draconian controls that may add to the problems. Public servants, unable to take advantage of benefits available for their peers in the private sector, may be less inclined to stay on the job — and of course the classic revolving door between public and private sector employment raises other ethical questions.

What can or should we do about these issues? I don’t have a simple answer. I would say that if you are in a position to offer travel, entertainment or other benefits to your clients — and there are no rules against accepting them — then go ahead and be generous. You’ll undoubtedly have a competitive advantage. And I would suggest you can make these offers to public sector employees as well, but it makes sense to ask first if it is okay.

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