Corporate Scandal: Bribery

This document discusses the issue of corporate bribery, its causes, and its impact on the economy. It also explores the challenges faced by organizations and provides recommendations to overcome them.

Corporate scandal: Bribery
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Abstract
Bribery is the act of offering incentives or valuables to a party in expectations of reciprocation in
the form of tangible or intangible favors. Corporate corruption often takes place for personal or
professional gains. It may be a result of several socio-economic factors, but it is evident that
corporate bribery has long-lasting effects on the nation and its economy, along with the two or
more parties involved.

Table of Contents
Chapter 1: Introduction........................................................................................................5
1.1 Background of the study............................................................................................5
1.2 Problem statement.....................................................................................................5
1.3 Research aims and objectives....................................................................................6
1.4 Research questions.....................................................................................................7
1.5 Research rationale......................................................................................................7
1.6 Structure of the study.................................................................................................8
Chapter 2: Literature review................................................................................................9
Chapter 3: Research methodology.....................................................................................19
Research Design and Methodology...............................................................................19
6.1 Research philosophy................................................................................................19
6.2 Research Approach..................................................................................................19
6.3 Research Design......................................................................................................19
6.4 Data collection and analysis process.......................................................................20
7. Research Limitations.................................................................................................20
8. Time Schedule...........................................................................................................20
Chapter 4: Results and analysis.........................................................................................22
4.1 Qualitative analysis..................................................................................................22
4.2 Thematic analysis....................................................................................................24

Chapter 5: Conclusion and recommendations...................................................................28
5.1 Conclusion...............................................................................................................28
5.2 Recommendations....................................................................................................28
References......................................................................................................................30

Chapter 1: Introduction
1.1 Background of the study
The original meaning of "Bribe" lies in the Old French language, meaning rob or extort,
(as a noun) theft or stolen goods. Today Bribery can be defined as the act of offering, promising
or giving someone something of value to persuade him/her to do something favorable in return.
Bribery is often done illegally between two or more government or nongovernment
organizations. Bribery was the most common practice in the judicial system, wherein judges
were persuaded with the help of bribes to make biased decisions in exchange for favorable
rulings. Corporate bribery is one in which potential buyers or agents are influenced in one's favor
using promises to provide something in return.
The happenings of bribery have been around for several decades. However, it is seen
in the last two decades that corporate bribery is emerging as a global pandemic. Research states
that corporate bribery most commonly takes place in four sectors, namely: Construction, IT and
Telecommunications, Transportation, and Extraction. According to the International Monetary
Fund, around $2 trillion are spent on corruption and bribery. This accounts for about 2 percent of
the world's GDP. The Organization of Economic Co-operation and Development (OECD) stated
after studying over 400 cases that almost everyone in two convicted bribery cases involved
officials from countries with high to very high HDI (Human Development Index). This shows
that corporate bribery is independent of a nation's developmental status.
1.2 Problem statement
The primary causes of bribery, specifically corporate bribery, are greed for profits and
other personal gains, poor moral and ethical environment, economic environment, traditions,

values and habits, religion, and lack of quality education. Greed for profits and power is one of
the leading causes of bribery. Many multinational corporations are found in practicing illegal
methods of bribing government and other officials to secure contracts in various fields. It is also
evident that bribing an official to get work done gives the company an edge against its
competitors. This leads to a false sense of power in otherwise undeserving entities. Various
socio-economic and environmental factors can also lead to a feeling that a particular task cannot
be accomplished without the means of bribery. This often happens due to a history of events that
have been wrongly nurtured in the system. Religion and religious practices are also a leading
cause in corporate bribery and corruption, due to which people of seemingly backward religions
need to pave their way into the system through bribery. Lack of education is, however, the most
important cause of corruption in the corporate world. It is evident that a person brought up in an
environment that promotes integrity and openness would not practice in any illegal activities
such as bribing. One should be taught from early childhood to work purely on the grounds of
merit and promote the same in future generations.
1.3 Research aims and objectives
The study aims to understand the factors responsible for corporate scandal: Bribery and
analyse its impact on performance of the company.
The objectives are as followed.
 To understand the factors responsible for corporate scandal: Bribery
 To find out the impact of corporate scandal: Bribery on organisational
performance
 To analyse the challenges faced by organisations for corporate scandal: Bribery

 To recommend solutions for overcoming the challenges
1.4 Research questions
The research questions are as followed
 What are the factors responsible for corporate scandal: Bribery?
 What is the impact of corporate scandal: Bribery on organisational performance?
 What are the challenges faced by organisations for corporate scandal: Bribery?
 How the challenges can be overcome?
1.5 Research rationale
Corporate bribery scandals not only affect the reputation of the involved parties but may
also have an impact on the economy of a country as a whole. Gains obtained illegally have
driven many countries into a state of economic instability. It is found that bribery often leads to
an increase in transaction costs and makes the economically insecure. It can be seen that bribery
leads to money being allocated for unnecessary projects, especially regarding construction and
infrastructure often acquired by undeserving executives and officials. It is because of this
inefficient allocation of resources that funds cannot be allocated to the sectors in real need such
as rural development, education, and awareness. Due to this, the Government is unable to
generate merit-based employment, which in turn decreases the tax revenue of the country. It is
therefore inevitable that the country's tax prices are ever rising, giving birth to a vicious cycle of
an unstable economy.
Corporate bribery is not limited to two or more companies; it also extends itself into the
government. It is the large industries and industrialists that have a large chunk in the campaign
funding of politicians. Political parties often bend the legislation in favor of large multinational

corporations as a token of reciprocation for such bribes. An unfortunate effect of this is the
elected leadership is often unable to govern the country, which takes a toll on the nation's
reputation as well as its economy. Policies in favor of these corrupt industrialists are often made
by these politicians, which may benefit the company in the form of profits, but in the long term
are found to have numerous ill effects.
1.6 Structure of the study
The research covers introduction, literature review, research methodology, results and
findings and conclusion as well as recommendations.

Chapter 2: Literature review
2.1 Overview of the research topic
Bribery is one of the most significant ethical challenges in the corporate world.
According to David-Barrett et al. (2017), one out of four people has participated in paying
bribes. The Transparency International Survey of 2011 indicated that public officials and people
occupying managerial positions in the business world faced greater likelihoods of engaging in
bribery particularly in Africa and Asia. Ideally, Button, Shepherd, and Blackbourn (2018)
explain that the acts of corruption are committed at the interface of private and public sectors
with variations in the degrees of pervasiveness. Considering the position occupied by bribery as
one of the most severe forms of corruption, global institutions such as the International Chamber
of Commerce, the United Nations, and Organization for Economic Corporation and
Development have incorporated various standards and policies aimed at fostering the public's
awareness of corruption. For instance, Wu, Chandramohan, and Bali (2016) explain that the
United States of America goes to record as the first economy to consider bribery as a crime in
1977. Corruption occurs when an entity opts for the avoidance of cost or pain in its pursuits of
obtaining certain benefits and may impose detrimental effects on the legitimacy, efficiency, and
fairness of a corporate institution.
2.1 Theoretical background
The principle-agent theory is one of the most useful frameworks of neo-
institutional economics applied in the study of the effects of unfair conduct in the corporate
world. According to Schipani, Lui, and Xu (2016), the principal-agent theory explains the
potential impact of the bad manners of two corporate players (principal and agent) who involved
in the processes of exchanging resources. The researchers describe that the problem of

opportunism exists between these two parties. Ideally, the two parties strive towards attaining
their self-interests by ensuring that they maximize their wealth. By considering the rationales
mentioned above, it means that the opportunistic traits of the agent encourage the parties to
pursue self-interest while incorporating dishonest deeds such as stealing and lying. Chiu and
Donovan (2017) explain that the dishonest dimension of management refers to an arbitrator’s
intentional cover-up of the unethical and irresponsible performances.
As a consequence, the organization’s board adopts the role of a controlling and
monitoring its processes as a way of managing the agency problem depicted between the
shareholders and the administrative arm of the institution in question. According to Lord, and
Broad (2018), the board of directors controls the opportunistic pursuits of the managers while
ensuring that the managers work to ensure that the wealth of the shareholders attains a positive
growth. However, Schipani, Lui, and Xu (2016) reckon that the agency problem is one of the
issues of concern for institutional governance in instances where members of board adopt
opportunistic behaviors as a way of deteriorating the system of management of a given firm.
According to Chiu, and Donovan (2017) board opportunism develops in instances where selected
members of board play the role of self-interest seekers while taking advantage of the powers and
positions bestowed.
Multiple real-life cases attributed to the issue of board opportunism exist.
According to Sebhatu, and Pei-lin (2016), such activities reveal the opportunist trait of
administrative arms where board members were found to be guilty of using their positions of
influence to accept kickbacks from corporate managers, and other members of the supply chain
such as vendors to favor their wants against the interests of the shareholders. For instance,
Jensen, Hall, and Malesky (2018) present a case where two pharmacy directors at Costco

undertook the professional misconduct of accepting kickbacks from drug manufacturers to get
their products stocked in the company's retail chain.
Consistent with the proposals of Schipani, Lui, and Xu (2016), there are
tendencies that people who undertake opportunistic activities may misuse the resources provided
by their organizations for their benefits while hiding crucial pieces of data from the face of the
observers. According to Chiu, and Donovan (2017), such a scenario drives the agency problem
along with the issues of information asymmetry. The researchers explain that corporate who
engage in opportunistic activities could be exposed to challenges such as reduced levels of
transparency, under-exposure to investment opportunities, and poor quality governance.
2.3 Impact of corporate bribery:
Brazil-based construction company, Odebrecht is an example of this phenomenon.
Oderbrecht is the company responsible for the construction of the large infrastructures of the
2014 FIFA World Cup, the 2016 Rio Olympics, the public metro system in Caracas, along with
several other dams and airport terminals in several countries. It was found that Oderbrecht paid
bribes amounting to approximately $788 million in exchange for construction contracts in around
12 countries. Odebrecht admitted to bribing politicians, law officials, lawyers, bankers,
government enterprises, etc. to secure agreements in Brazil as well as abroad. Due to
Odebrecht's conviction, several investigations against government officials and other associates
went into gear. Due to this, the economy of Brazil and Peru were adversely affected.
Construction projects worth millions of dollars were put to a halt due to the investigations.
Hundreds of companies went bankrupt, leaving the country's construction sector virtually
paralyzed for long periods.

A company's valuation depends largely on trust and credit. A bribery scandal may
very well break the confidence of investors and could potentially ruin the company's judgment in
the market. It can be seen in various chapters of commercial history that companies have
declared bankruptcy after bribery scandals. Close to a decade ago, Siemens, a well-known
electrical engineering company was convicted for what was the biggest corruption scandal in the
world. Before the conviction, Siemens had an impeccable reputation for its advanced technology
products and services in the fields of telecommunications, power, medical equipment, etc. It was
often that Siemens emerged into remote markets, with high-quality products, leaving behind its
competitors. For years, the company had portrayed an image of abiding by high ethical and
moral standards, ensuring utmost transparency with its customers. However, reality painted a
different picture. It was later found that since the early 1990s, Siemens had created a global
network of corruption to acquire a significant market share alongside its competitors.
The company could primarily do this because of the loopholes in the judicial systems of
several countries, including Germany. The company systematically conducted corrupt deals
through pseudo consultants, hidden bank accounts and several intermediaries under the name of
"useful expenditures," internally known as bribes. Bribery was not an anomaly in the functioning
of the organization, but a popular business strategy. This goes to show that without proper
intervention, corporate bribery is accepted as the norm in several business practices. Bribery, if
not corrected appropriately will spread itself like a virus in the system.
At the micro level, it is observed that corporate bribery affects the morale of
employees, along with the parties involved. It is found that bribery is often an aid to nepotism,
and can decrease the confidence of other employees. Bribery leads to the selection of
undeserving candidates, while selection based on merit takes a back seat. Knowing that the

chances of climbing the corporate ladder in the form of promotions and incentives are slim to
none, the performances of employees are found to be adversely affected. An organization that
practices bribery shows that it is in its innate value system to practice business unlawfully and
unethically.
Along with hurting the economy and employee morale, a corporate scandal may also
carve a path for potential disease. An example of this would be The GlaxoSmithKline scandal in
China. GSK was accused of paying bribes to hospitals and doctors to promote excessive use of
their products. Mark Reilly, Head of Operations, China, was found guilty and set to be deported
following a $490 million fine for the pharmaceutical company. David Montero talks about
bribery in China in his book "Kickback: Exposing the Global Corporate Bribery Network." He
states that in a country like China, a large portion of the doctor's salaries come from bribes,
which has led to an over-prescription of antibiotics. It is no surprise then that China is one of the
leading countries with an antibiotic-resistant strain of bacteria. This phenomenon is,
unfortunately, spreading to other parts of the world.
Corporate bribery may also lead to another terrifying problem. Various multinational
corporations often bribe the Government for a variety of reasons. Many times, this money is used
to fund terrorist activities in the country. This has proven to become a global threat. Quantifying
the effects of corporate bribery on an organization is difficult. Bribery leads to acquiring large
quantities of new contracts, which leads to profit making for the company. It may also boost the
requirement for employment. These are the two possible short term advantages of corporate
bribery. However, in the long term, bribery can more often than not prove to be disadvantageous.
Once a corporation gets trapped into a bribery scandal, it is inevitable that it loses its reputation,
and can also lead to insolvency of the company or bankruptcy.

2.4 Bribery as a corporate challenge
Chiu and Donovan (2017) consider corruption as one of the threatening issues to
international economic security and stability. According to Tomasic (2018), bribery is described
in the corporate world as the intentional abuse of power to foster personal gains. The researchers
explain that while there are multinational variations in the perception of bribery, typical
dimensions to this vice include conflicts of interest, engaging in fraudulent activities,
embezzlement, extortion, and nepotism. David-Barrett et al. (2017) explain that while corruption
exists in small, medium and large companies, the difference demystifies by the ability of the firm
under consideration to absorb the costs associated with the malpractice. Ideally, larger
organizations are better placed to absorb the costs associated with bribery compared their small
and medium-sized counterparts.
The fact that the global landscape has experienced a considerable increase in the cases of
bribery acts as a clear indication of the ethical challenges faced by society. Button, Shepherd,
and Blackbourn (2018) emphasize on the importance of strengthening the instruments put in
place to fight bribery at the corporate level based on its detrimental effects in impeding the
growth and development of businesses. For instance, Lord, and Broad (2018) explain that
corruption is highly capable of demeaning direct foreign investments and the operational
effectiveness of multinationals. Barkemeyer, Preuss, and Ohana (2017) attribute such a position
to the fact that bribery is an active contributor to the challenge of crony capitalism where the
operational success of business ventures is reliant on unethical practices to deal with competing
forces by adopting more comfortable options such as cheating, concealing information and
establishing close relationships between government officials and business people.

2.5 Previous researches
Previous literature has systematically demonstrated that bribery has been a prime cause of recent
corporate scandals and financial crisis. Bribery is one of the most significant ethical challenges
in the corporate world. The Transparency International Survey of 2011 indicated that public
officials and people occupying managerial positions in the business world faced greater
likelihoods of engaging in bribery. Bribery occurs when an entity opts for the avoidance of cost
or pain in its pursuits of obtaining certain benefits and may impose detrimental effects on the
legitimacy, efficiency, and fairness of a corporate institution.
In past research, scholars have made significant achievement about bribery, especially in the
definition, related causes and risks of corruption. Bribery remains to be a complex, broad, and
global phenomenon. Bribery has been one of the emerging concerns in most organizations. It is
a salient form of corruption and unethical practice characterized by exchange, secrecy, and
reciprocation. Chiu and Donovan (2017) consider bribery as one of the threatening issues to
international economic security and stability. It has been noted that bribery is one of the highly
publicized allegations in the corporate world (Lord, 2013). Firms have long sought to negate the
impacts of corruption in distorting corporate. Many scholars have conducted more detailed
research from the definition of bribery, causes, risks, and preventive measure. Below are some of
the studies that have been done on the topic of bribery in recent years.
Islam, Haque, Dissanayake, Leung, and Handley (2015) carried out a study to investigate
corporate disclosure about battling bribery. The paper examined two Chinese telecommunication
firms. They note that corruption as a corporate scandal has resulted in a significant number of
convictions, fines, and imprisonment of officers and employees; corporate and personal
reputation damage; and distortion of the market. To solve the issue of corruption, these firms

have formed anti-bribery and corporate responsibility movements to create business awareness
of the obligation and risks posed by bribery. These two telecommunication firms have
formulated and enacted comprehensive policies and programs to reduce or minimize the chances
of bribery. The companies have a code of conducts and well-structured procedures and policies
for managing essential corporate functions such as procurement and hiring of new employees.
In their quantitative research (Rui & Soreide, 2018), outlines some of the global indicators of
bribery and government policies and regulation to curb bribery. While examining the prime
causes and impacts of bribery at the national and corporate level, the paper maps factors of
bribery into three level macro, meso, and micro. Rui and Soreide (2018), focused on the specific
effect of various aspects of the economic cultural and political system and bribery. It notes that
the government has enacted several policies and it is still increasingly looking for effective
measures to prevent incidents of corruption and bribery as a way of improving organizational
resilience. The state and firms have formed anti-bribery and corporate responsibility movements
to create business awareness of the obligation and risks posed by bribery. Paper states that most
firms have a code of conducts and well-structured procedures and policies for managing essential
corporate functions such as procurement and hiring of new employees.
Lord (2013), analyzed the bribery data of over 30 corporates in the United Kingdom and
Germany. Paper concluded that bribery results in low investment and affected economic growth.
Comparing bribery is common incorporates from developing countries compared to develop. In
assessing the risk associated with bribery and corruption to an organization, the paper ranks
bribery among four economic crimes committed in organization globally. The rate of fraud and
bribery is forecasted to increase despite some effort to curb these vices. It is noted that most
businesses don’t have compressive bribery framework that communicates to employees the

importance of the corporate stance against bribery and how the companies can mitigate the risks
they face.
In their paper Lord and Broad (2018), extensively examines some of the organized corporate
bribery scandals. They note that bribery is a salient form of corruption and unethical practice in
most organizations. It highlights that there several forms bribery such as public procurement
bribery, petty bribery, the sale of natural resources bribery, and policy-corruption. The paper
notes that employees and officials engage in bribery acts due to system failure. Often, the
company pays bribes to its business partners and lower level government officials. Ideally, the
two parties strive towards attaining their self-interests by ensuring that they maximize their
wealth. There are tendencies that people who undertake opportunistic activities may misuse the
resources provided by their organizations for their benefits while hiding crucial pieces of data
from the face of the observers. Paper states that corporations who engage in opportunistic
activities could be exposed to challenges such as reduced levels of transparency, under-exposure
to investment opportunities, and poor quality governance. In other cases, firms bribes
government officials, healthcare facilities, medical associations, and individual physicians to
foster the processes of marketing the firm’s products by increasing their distribution channels
while heightening commodity prices.
Lastly, while examining global corporation, bribery, and corruption acts, (Tomasic, 2018)
outlines some of the adverse impact of bribery on a business or an organization. The paper notes
that bribery causes the destruction of the commercial culture, undermines democracy and the rule
of law, social impacts, erodes the quality of life, and unfair competition. Corruption undermines
the government and corporate effort of fostering a fair and transparent market economy. Also,
the paper noted that firms facing scandalous accusations suffer detrimental social consequences

both from the public and investors. Corporates suffer multiple losses in terms of levels of
professional credibility and consumer base. Also, the paper points out that bribery imposes great
harm to the image of the company engaged in the illegal act. It compromises the integrity of
corporate culture
In sum, the existing literature doesn’t provide a comprehensive approach on how to prevent or
reduce bribery incorporate. Businesses and states at large, are advised to formulate compliance
controls, transaction monitoring, and forensically focused audits. Well enacted and monitored
anti-bribery frameworks consist of three features involving the need to prevent, detect and
respond to incidents of bribery. Firms should formulate and pass structures that foster
responsibility, transparency, and integrity among their employees. Implementation of new
preventive approaches will significantly reduce incidents of bribery and its risks to the business.

Chapter 3: Research methodology
Research Design and Methodology
Research methodology can be defined as the procedure of making systematic approach
for problem solving. It is the way of explaining, exploring as well as prediction of specific
research phenomena.
6.1 Research philosophy
There are generally three types of research philosophies such as positivism, realism as
well as interpretivism. In the present study, positivism philosophy will be selected for using
factual knowledge as well as lead to test the hypothesis of the research in scientific as well as
statistical way that is trustworthy. In order to understand the corporate scandal: Bribery,
positivism philosophy will be helpful to give provision to the type of the research.
6.2 Research Approach
Deductive and inductive are two type of approaches used in research. Deductive
approach assists to develop hypothesis as well as testing through developing new research
strategy. On the other hand, inductive approach concerns with finding new patterns in the
existing theories along with creating new theory of obtained knowledge. For the research,
deductive approach is selected for its suitability and appropriateness with positivism philosophy.
The approach enabled to test the hypothesis whether the use of social network can bring
advantages in business or not.
6.3 Research Design

Mackey and Gass (2015) stated that exploratory, explanatory as well as descriptive are
three types of research designs widely used in scientific researches. Explanatory research
concerns with description of the causes of specific phenomena and predicting future occurrences.
In the research, descriptive research is selected in order to clarify topic of the research.
6.4 Data collection and analysis process
In the research, secondary data from different organisations have been conducted in order
to get understand and analyse corporate scandal: Bribery. Simple random probable sampling
technique will be followed for the research. There are two types of data collection process such
as primary and secondary. Secondary data from different articles are presented in the literature
review portion of the study. Qualitative data analysis method is used to analyse the data.
7. Research Limitations
There are some limitations for facing some difficulties while conducting the study. Due to lack
of adequate money as well as time, it is not become possible to use high rated technology for
analysis of the use. On the other, dependencies on some limited articles that are not completely
update may generate issues for the study. Moreover, some biased data may lead to inappropriate
results for the study.
8. Time Schedule
24th
week
22th
week
18th
week
14th
week
12th
week
6th
week
1st
week
Main activities
Selection of the

topic
Reviewing
literature from
different peer
reviewed
journals
Development of
the Research
methodology
 .Collecting
primary data
through online
survey
Analysis and
interpretation of
data
Findings
Conclusion and
Recommendatio
n
Final submission
of the research

Chapter 4: Results and analysis
4.1 Qualitative analysis
Analysis of companies’ corporate scandals
Siemens’ Scandal
German authorities unleashed the colossal bribery acts committed by Siemens in
November 2006. Barkemeyer, Preuss, and Ohana (2017) explain that for about seven years, the
technological firm adopted illegal funds to foresee the payment of bribes worth 1.3 billion Euros
in the form of provisions. The researchers explain that the company paid these bribes to its
business partners, and lower level government officials by about 300 employees.
Further, the people involved in his act were accorded generous payoffs to ensure that all
operations remained private. According to Jensen, Hall, and Malesky (2018), the bribery scandal
committed by Siemens was the greatest in German’s economic history and caused the company
damages worth over 1.6 billion Euros. According to Schipani, Lui, and Xu (2016), Siemens paid
some of its employees to spy on key stakeholders such as trade union representatives. Further,
the scholars demystify that the technology firm bribed members of the AUB huge payoffs for
about two decades in the form of opulent excursions.
GlaxoSmithKline LLC (GSK)
GlaxoSmithKline (henceforth GSK) goes to record as one of the worse hit
multinationals in bribery scandals. In June 2013, GSK got entangled in the corrupt deeds of
bribing Chinese government officials, healthcare facilities, medical associations, and individual
physicians to foster the processes of marketing the firm’s products by increasing their
distribution channels while heightening commodity prices. According to (ref11), Chinese police

agencies claimed that GSK had channeled a sum of 3 billion Yuan to bribe travel agencies and
700 intermediaries. On the other hand, an amount of over $500 million in the form of kickbacks
among the stakeholders who aided in the processes of facilitating the prescription of medications
from the United Kingdom since 2007. The scholars further report that the Chinese Ministry of
Public Security initiated the legal procedures of detaining four high-level managers of GSK
China and over eight other lower-level employees. According to Jensen, Hall, and Malesky
(2018), the GSK appeared among the top ten white collar crimes across the globe in 2013.
Barkemeyer, Preuss, and Ohana (2017) report that the Changsha Intermediate
People’s Court found GSK guilty of engaging in bribery offenses on 19th September 2014.
According to Wu, Chandramohan, and Bali (2016), GSK had been involved in the acts of bribing
nongovernmental officials and imposed a fine of about $500 million; the most significant
corporate fine ever imposed in the Chinese jurisdiction. On the other hand, the scholars explain
that Chinese legal authorities proceeded to sentence Mark Reilly, former Britain's GSK country
manager, and four other managers for a prison sentence of four years. However, the court
suspended the sentence on the ground that the convicts would never engage other offenses in
China. A few hours after the verdict, GSK released a statement indicating that it “fully accepts
the facts and evidence of the investigation, and the verdict of the Chinese judicial authorities . . .
GSK P.L.C. sincerely apologizes to the Chinese patients, doctors, and hospitals, and the Chinese
government and the Chinese people.” (Broad, 2018).
GSK’s internal policies on the issues of corruption and bribery are stern and
specific. However, Lord and Broad (2018) explain that the acts portrayed in China took place by
the use of third-party agencies such as travel agencies. The researchers describe that the travel
agencies were adopted to foresee the processes of inventing corporate meetings that needed

higher levels of traveling among the staff. The budgets attributed to these meetings were
channeled to the unorthodox methods of bribing physicians to ensure the prescription of
positively selected pharmaceuticals among the consumers in China. According to Sebhatu, and
Pei-lin (2016), the physicians involved were issued with credit cards from GSK to enable the
processes of transferring kickbacks a day after they had prescribed the drugs. The researchers
further allege that GSK did not only institutionalize these illegal acts in China but also bribed
physicians in other economies such as Poland, Syria, Jordan, and Lebanon. Schipani, Lui, and
Xu (2016) explain that GSK allegedly paid Polish physicians to promote its asthma drug labeled
Seretide. The scholars further report that the government of Iraq accused the pharmaceutical
manufacturer of unlawfully paying physicians working in public health care facilities to increase
its sales volumes.
4.2 Thematic analysis
Theme 1: Unfair competition Triggered by Bribery as a Corporate Scandal
David-Barrett et al. (2017) explain that while it is difficult to quantify the precise
value of the competitive advantages that result from the corrupt acts of bribing, the culprits of
this vice end to reap enormously. For instance, Jensen, Hall, and Malesky (2018) estimate that
GSK gained more than $150 million from its bribery endeavors in the Chinese market in terms of
sales revenues and escalation of drug prices. GSK is a direct competitor of the local
pharmaceutical firms operating in the Chinese market. However, the profits acquired by the GSK
are a direct translation of the losses sustained by the company's direct competitors in this
economy who lacked the will of deviating from the competitive forces availed by free-market
policies. Similarly, Chiu and Donovan (2017) explain that the acts of bribery committed by GSK

in China undermined the Chinese government's efforts of fostering a market economy whose
efforts adopt the ideologies of fairness and transparency.
Theme 2: Social impacts by Bribery as a Corporate Scandal
Companies facing scandalous accusations suffer detrimental social consequences
both from the public and investors. For instance, Wu, Chandramohan, and Bali (2016) explain
that the acts of bribery committed by Siemens did not only expose it to the anger of its
shareholders and investors but also heightened the violence of the citizens of Germany. The
scholars reveal that apart from the critique imposed by Siemens’ shareholders, most of the
corporation’s employees developed a sense of humiliation because the technology firm's
integrity and levels of trustworthiness were put to scale. Lord and Broad (2018) explain that the
reputation and social standing of the top leadership of Siemens saw great destructions. The
scholars demystify that senior managers at Siemens risked facing criminal and civil prosecutions
whose implementation would have resulted in bankruptcy or imprisonment. Schipani, Lui, and
Xu (2016) reveal that while Siemens received great fiscal benefits for a short period, it suffered
multiple losses in terms of its levels of professional credibility and consumer base. The
researchers explain that the damages incurred by the technological firm resulted from the
ineffectiveness of its management to institutionalize ample frameworks of fostering
responsibility, transparency, and integrity among its employees.
Comparatively, the acts of bribery committed by GSK in China imposed a direct adverse
effect on the consumer. Barkemeyer, Preuss, and Ohana (2017) explain that in a standardized
world of business, fierce competition among business agencies should benefit the targeted
consumer in terms of quality and reduction in the prices charged for given merchandise.
However, the competition fostered by GSK aimed at building the company's competitive

advantage based on corruption as opposed to the general propositions that put a lot of emphasis
on the use of improved products and reduction in prices. Tomasic (2018) explain that in the case
of GSK, consumers faced the double burden associated with the act of bribery- sub-standard
products offered at enormous prices. The researchers describe that by inflating the rates charged
on its medical products, GSK passed the cost burden associated with the hundreds of millions of
the U.S dollars incurred in the form of bribes to the consumers. Ideally, patients are directly
affected by increments in the costs charged for healthcare services. According to Sebhatu, and
Pei-lin (2016), a senior executive at GSK China confessed that the company inflated its
commodity prices to cater for the cost of bribery. For instance, the scholars report that patients
were forced to pay $48.94 for products whose prices were quoted at $4.89.
Theme 3: Destruction of the commercial culture
Bribery imposes great harm to the image of the company engaged in the illegal act. For
instance, the bribery activities undertaken by GSK did not only impose damages on the
pharmaceutical company's model but also played a role in compromising the integrity of its
corporate culture. Wu, Chandramohan, and Bali (2016) explain that the government of China is
highly active in welcoming multinational corporations to engage in business operations in its
jurisdiction. On the other hand, Sebhatu, and Pei-lin (2016) demystify that Chinese consumers
have higher expectations whenever they procure foreign brands. The scholars attribute such a
position to the fact that the local consumer bases in this economy do not only presume that
international brands aid in fostering product diversification, supporting the advancement of
technological platforms and incorporation of new skills in the market but also play an essential
role in the institutionalization of a new commercial culture and ideas. There are tendencies that

the local businesses and consumers in China may have suffered disappointments with the alleged
improper pursuits committed by GSK and other multinationals across the globe.
In conclusion, the current section of the study sought to present a review of the literature on the
nature of bribery as a corporate scandal. Based on the analysis, the acts of corruption occur in
instances where an entity opts for the avoidance of cost or pain in its pursuits of obtaining certain
benefits and may impose detrimental effects on the legitimacy, efficiency, and fairness of a
corporate institution. Siemens and GSK go to record as the multinationals that committed multi-
billion bribery scandals in the last two decades. Bribery does not only impose detrimental social
effects among the parties involved but also leads to the destruction of the conventionally upheld
commercial culture and stirs unfair competition

Chapter 5: Conclusion and recommendations
5.1 Conclusion
To conclude, it is found that bribery has tangled itself with the day to day happenings
of several multinational corporations. It is observed that many companies openly indulge in
unlawful acts of corporate bribery for many gains. Governments are also often responsible for
enabling such activities. The after effects of such unethical actions is evident not only in the
short term but also in the long term. It can be seen that what is seemingly an easy way to
navigate through the loopholes of the system for most corporations, can prove to be the end for
them. It is up to the leaders of the industries to exterminate these unlawful practices by taking
into consideration its long term effects. As stated earlier, corporate bribing, if not corrected
immediately, can spread itself and become an inherent part of the system.
5.2 Recommendations
Embedding and nurturing an anti-corruption mindset is the first step in preventing
corporate bribery. A company should have strict anti-bribery policies which mandate one to
follow an ethical and professional code of conduct. Creating an environment of integrity often
seeds good leaders who act against illegal practices. Anti-bribery policies should include proper
transactions of money and maintain records for the same. A helpline should be provided which
will investigate any suspicious bribery scandals or ongoing cases. It is essential that
organizations have good leadership when it comes to unethical practices. It becomes imperative
that the leaders of the company promote ethical behavior in a sustained manner to encourage
dedicated efforts from other members of the corporation. Open communication in the workplace
is equally essential to prevent bribery. An employee should not hesitate to report potential

bribery to the officials. She/he should be ensured a thorough investigation and no consequences
for reporting the same. Along with that, the Government should also have strict policies against
corruption in the corporate environment. It should strictly prosecute those found guilty in cases
of bribery and set an example for future generations.

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