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Do corrupt companies have contract managers?

August 25, 2015

Continuing revelations about corrupt contracting practices at Brazilian oil giant Petrobras continue to hit the headlines. It is interesting that they are one of the few major oil and gas producers which does not have active membership in IACCM. Might there be a connection between these two facts?

The answer, quite clearly, is ‘not necessarily’. Some of the recent scandals in the corporate world make it clear that bribery and corruption can flourish yet be hidden from most of the staff – including those who are negotiating or managing the contracts. ‘Special arrangements’ may be hidden away in secret places or never even documented. Satyam had a robust and well-trained contracts and legal group (arguably one of the main reasons it avoided total collapse), yet that did not prevent high-level fraud. Also, corruption is often confined to specific subsidiaries or country operations, such as Walmart in Mexico or GSK in China, where few have visibility.

In many cases, however, it seems to me that companies which engage in illicit acts tend to be very secretive and inward looking. Their participation in external associations is often limited; they are less keen to be on public platforms or to be at networking events. Management inevitably discourages openness and transparency.

There are occasions when contracts or commercial professionals are caught up in corrupt practices. While typically they may not personally benefit, they are aware of the actions going on within the business. Since it is clear that such actions are against the interests of society and of world trade (not to mention illegal), professional ethics say that those practices should be reported. But is that practical? What advice would you offer to a contract manager in this position?

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