Running head: BUSINESS CORRUPTION

Community problem report: Corrupt Practices in the Business World

Leslie I. Rodriguez
University of Texas at El Paso

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Abstract

This paper will inform about the huge problem that corruption in business practices
represents and it will explain how its eradication is necessary for the country to succeed.
Corruption has always been a problem but it has increased and spread lately, due to several
factors such as globalization and income inequality. There is a wide range of people that engage
in these wrongdoings, from regular employees to important CEOs and business executives, and
the number is increasing which is alarming. Sometimes people participate in corrupt actions
because the benefits seem to be higher than the costs, but when the wrongdoing does public,
costs will often exceed the benefits. There are several solutions that can be used in order to
prevent and stop corruption in the business world, one of them is to raise awareness about the
problem and change the way people see corruption. Another important solution would be to
invest more money and put more effort to fight this issue. The enactment of anti-corruption laws
is also a good immediate solution to this problem and it is the most effective. In conclusion,
corruption should be eliminated to help the world be a better place in all aspects.

Keywords: Corruption, wrongdoings, business, income inequality, anti-corruption laws.

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Introduction

Corruption is a huge and growing issue in our world nowadays; it affects everyone and
unless someone takes action to stop it, it will keep on getting worse. One of the main sectors
affected by this issue is the private sector, especially since it is the one that moves the most
money around. This problem is so relevant because it affects everyone and it prevents the
country from succeeding and progressing. It prevents law enforcement, hinders democracy, and
encourages political and authority intolerance. There are several possible solutions, but one of
the first steps to get rid of corruption is to change peoples minds and raise awareness so
everybody can realize what a little corrupt action can do in the long run. For example, it can
produce a bad economy, increment in crime, loss of trust in corporations, loss of resources, and it
can end up in big frauds and bankruptcy. For the country to succeed and society to change,
people need to be aware of the problem and join together to fight and eradicate it.

Increment in corruption
There has always been corruption in the world but it has lately increased and spread
widely. This increase is due to several different factors, such as globalization, income inequality,
financial institutions, the fact that companies are bigger, and because of the rush of corporate
money to politics. Like it is shown in a survey by the law firm Labaton Sucharow (LaCarpa,
2012); the amount of corruption in Wall Street, as well as the percentage of executives that
engage in such practices, has increased. This study is an example of how corruption in business
practices has been spreading recently and why it has this increasing trend.

Who participates in corrupt practices?

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Everybody can engage in these
wrongdoings, from owners of big companies,
important CEOs and government agents, to
regular employees who are good community
members. The fact that employees and people
with low importance jobs often engage in
corrupt practices can be explained by
rationalization tactics, which are mental

strategies that allow employees to justify their actions and neutralize any regrets; this is
accompanied by socialization tactics through which newcomers accept and practice these
unethical actions (Anand, Ashforth, & Joshi, 2004). Meanwhile business professionals, such as
Wall Street executives as seen in the Labaton Sucharow survey (Cohan, 2012), claim that they
feel they need corruption to succeed. There are also big corporations such as financial
institutions, business and governments, that engage in these illegal practices because it is thought
to be highly beneficial, and because they can give justifications and they know that they wont be
affected in the long run. The fact that so many people can engage in corrupt practices is alarming
since it represents a huge problem. Not only does it represent the increase in corruption in
general, but also because it gives a bad example and enhances more people to become involved
in such practices.

Benefits vs. costs

There are those who think that the benefits of corruption are higher than the costs, or that
there are only benefits. The benefits that come with wrongdoings can be money, power, position,

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and being able to get things the easy way, amongst others. On the other hand the costs can be a
job, jail time, a bad reputation, money (fines), etc. The benefits can sometimes exceed the costs,
but this is only when no one finds out. Because when the wrongdoing goes public, the costs can
be way bigger than the benefits even when they wont last forever. Such is the case of a Barclays
trader who e-mailed to his colleague Dude. I owe you big time!... Im opening a bottle of
Bollinger, for fiddling the LIBOR rate and improving the apparent profit of his derivatives book
(Porter E, 2012). At that time he would have never thought that those benefits would be exceeded
by the costs that included his reputation and his job. So this cycle will always repeat itself over
and over. People or companies will get caught and they will act in a proper way for a while and
then they will go back to how everything was before.

Solution: raise awareness

There are several solutions proposed in order to prevent corruption in business. One of
the most important, and what should be the beginning of a plan to eradicate such practices, is to
raise awareness in order to change peoples minds so that corruption seems the wrong thing to do
instead of a key to success. One of the things that could be done is to address weaknesses in the
global system, this way people can see the flaws that affect our way of living and what could be
done right. Another key element that would help people change their view on corruption is, to
strengthen transparency. This way everybody can be well informed about everything that is done,
weather it is within the government or in the private sector, and thus make better decisions.
Another big step into changing the way corruption looks to the eyes of big companies is to work
from the inside with integrity, educating the staff and leaders about principles and values to
prevent bribery and corrupt practices instead of using their power for wrong purposes (Heineman

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& Heimann, 2006). Companies can also accompany this with the proposal of anti-corruption
policies that will help raise awareness among people inside the company and so they start
viewing things differently instead of joining other coworkers in engaging in corrupt practices.
This is definitively one of the hardest parts in the efforts of making corruption go away, but it is a
necessary step if a change wants to be made.

Solution: Invest money

Another of the important solutions to make corruption go away is to have more money
invested into its prevention. Increasing the governmental budget used to pay government actors
or to pay for the improvement of anti-corruption efforts or programs is one way of doing this.
Also as Petter Cohan suggested, all corporate financial reporting must be conducted by highly
paid government auditors rather than by auditing firms that are paid by the companies they
audit(2012). This means that the governments should take action into auditing and monitoring
firms and institutions, while also giving these government agents the incentive of a highly paid
job. By giving a better salary to the people who have the jobs where corruption is generally
involved, they would get this bonus incentive or motivation to do their job correctly and to not
commit any illegal actions in order to get an extra benefit.

Solution: Enactment of laws

The most efficient and immediate solution to the problem would be the enactment and
enforcement of laws. Anti-corruption laws and programs should be used in order to help stop
corruption and to force people to stop these wrongdoings. An example of this is the act that was
proposed by Represent.US (2012) in their video Introducing: The American anti-corruption act,

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where they propose to eliminate corruption, end the auction, and to stop the bribery. There are
also a few organizations that fight corruption for example, the leading organization Transparency
International USA. This organization participates in different programs and, like stated in its
webpage, works at home and abroad to combat corruption and promote transparency and
integrity in government, business and development (Transparency USA, 2011). Furthermore
like proved by Heineman and Heimann one of the major achievements of the last decade has
been the adoption of several international treaties designed to fill gaps in existing national
anticorruption laws (2006).

Conclusion
As we can see corruption is a major issue everywhere around the world, and especially in
the business sector since it is one of the major ruling powers. This issue is growing and
increasing, and the fact that everybody engages in this practices makes it worse. So in order for it
to stop affecting society everybody should join together to fight it, and with changed ideals and
legal incentives and punishments this should be possible. Because corruption has to be eradicated
if the country and the whole world wants to prosper and succeed

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References

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