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Bribery And Corruption’s Costs And Effects

Corruption leads to a reduction in service performance and an increase in costs.

Bribery and corruption continue to be prevalent in our culture and in the media. This includes anything from so-called minor bribes to traffic authorities to large sums paid as “commissions” to get tenders. The sum may differ – whether it is R100 or R1 million – but the principle of the action remains the same. Everything boils down to bribery and corruption.

It may be a naive question to inquire as to why this is taking place. It’s not because those involved don’t know what’s right and wrong or, in the majority of cases, because they’re poor.

Rather, it can be viewed as an avoidance strategy at the level of a bribe to a traffic authority. This could just be to avoid paying a fine or, worse, getting imprisoned for intoxicated driving. There does not seems to be any other reason for tenders but money.

As a result, someone avoids a fine while another becomes wealthy. Is it really that bad? That question is best answered by looking at the costs and repercussions of bribery and corruption. Bribery and corruption allegations can have a severe influence on a company’s stock price, as MTN found out in March when Turkcell filed a $4.2 billion lawsuit against them for allegedly bribing officials to secure an Iranian license.

However, because the stock price immediately recovered, it may be claimed that this isn’t a big deal. However, this reasoning falls apart when the incident also has an impact on public opinion of the organization. Reputational harm can endure far longer than the few days it takes for the stock price to recover, and it may be extremely damaging to individuals and businesses.

Individuals convicted of corruption have lost not only their jobs, but also their freedom as a result of their prison sentences. Jackie Selebi, who was convicted of corruption and sentenced to 15 years in prison in December 2011, is currently the former National Police Commissioner… He’s hardly a good example, though, considering he was released after just serving 229 days of his sentence!

Bribery and corruption have a considerable impact on the cost of running business

Only a fraction of the contract amount is used to deliver the product or service, rather than the entire amount. This can have a variety of repercussions, such as compromising quality when poorer building materials are employed, for example.

Another expense is that of leadership. When high-profile leaders engage in bribery and corruption, their influence as role models is severely harmed. Not only is the message that unethical and unlawful behavior is acceptable, but it also implies that personal gain takes precedence over customer care. This runs the risk of developing an immoral culture among employees (or citizens) where “lowest common denominator” behavior is the norm.

On a national level, this also runs the risk of tarnishing the country’s image. A bad ethical reputation can lead to a variety of negative consequences, including lower foreign investment, lower tourism, and the loss of top talent to other countries.

All of these costs add up to a legacy cost, which can persist and throw a shadow over an individual or an organization long after the event has occurred. Serious ethical failures, such as corruption, tend to overshadow other accomplishments, and an individual or organization becomes renowned for their ethical failures rather than their accomplishments.

These costs and outcomes reflect some of the most obvious reasons why ethics is important. They also state unequivocally that bribery and corruption are bad and that the cost is extremely high – far more than any country or organization should be willing to pay.