Doing Ethical Business In a Culture Of Corruption

Corrupt Venezuelan officials who ask Rum Santa Teresa Chairman and CEO Alberto Vollmer for bribes get something much different than cash or liquor under the table. The leader of the 200-year-old family distillery offers free enrollment instead to courses on anti-corruption, transparency and human rights.

“At first they laugh,” Vollmer said Nov. 16, 2010, during a Thunder Radio interview with MBA student Rodrigo G. Castillo. “But the second or third time you do it, they might go to the course.”

Vollmer said corporate leaders who fret about doing business in corrupt environments sometimes scoff when they hear his solution to bribery. But his approach has proved effective in a culture of bribery, corruption, government land grabs and violence.

“Lots of these officials have mothers who tell them, ‘This is the right way to live, and this is the wrong way,’” Vollmer said. “At first you might find resistance, but in the long run they listen.”

Vollmer said he is careful not to judge government officials when negotiating alternatives to bribes. “Otherwise they will get on the defensive, and they might want to attack you,” he said. “They will see you as a menace who might tell on them.”

Officials who attend Vollmer’s free courses never ask for bribes again because they understand the values governing Rum Santa Teresa. “This guy becomes your protector,” Vollmer said. “When other officials say they will target your company, he says, ‘No, don’t mess with them because they will make you study.’”

Vollmer offered several guidelines for other business leaders facing ethical dilemmas in emerging markets such as Venezuela.

Look before you leap
The first guideline is to consider the long-term consequences before paying the first bribe. Vollmer said business leaders who go down the path of corruption might never recover their values.

“What people don’t see when they fall into the corruption trap is they become suckers of the whole system,” Vollmer said. “Any move they want to make, they have to continue in the corruption cycle.”

Invest in values
Vollmer said business leaders who maintain their values will suffer at first. But little by little they will gain respect. The key is to be patient, stay strong and take a long-term view.

“At first you will see it as a cost,” Vollmer said. “But it is actually an investment. The return you will have is enormous. In the long run you will be respected by the authorities because they know you are not going to fall into that trap.”

Recognize a negotiation
Another key is to recognize bribery as a negotiation process. “What they are proposing is a negotiation,” Vollmer said. “Try to turn the situation into having them accept something legitimate.”

Vollmer said many people will do the honorable thing when shown a reasonable alternative. “We try to get the person to think about how he can become a better person, and how we can help him become a better person,” Vollmer said. “We try to sit them down and think about other ways we can satisfy their personal needs. Often this involves education.”

[This article has been reproduced with permission from Knowledge Network, the online thought leadership platform for Thunderbird School of Global Management https://thunderbird.asu.edu/knowledge-network/]