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Corruption is dishonest behaviour by those in power, typically involving abuse of power for personal gain. Typical categories of corrupt behaviours include bribery and embezzlement. The term is most often used to refer to such behaviours on the part of public officials. This is particularly relevant for business ethics because it is often corporations, or those acting on their behalf, that are accused of having exerted a corrupting influence on public officials, as for example through offering a bribe.

Bribery is one common and important form of corruption. Bribery involves the offering of some benefit (typically money or gifts) in return for some preferential treatment. A typical example might involve a company offering a secret cash payment to a government official in order to secure a profitable government contract.

Activities falling under the heading of corruption are typically both unethical and illegal. From an ethics point of view, for example, those who engage in bribery may justifiably be accused of seeking unfair advantage, distorting markets, hindering economic development, and encouraging public officials to violate their oaths of office. Most forms of corruption are also illegal. Bribery, for instance, while relatively common in some places, is illegal in every country on earth. Of particular note is the US Foreign Corrupt Practices Act (FCPA), which allows the US government to prosecute bribery by any American company (or company traded on a US stock exchange) regardless of where on earth the bribery took place. Penalties under the FCPA include very heavy fines, and the possibility of jail time for individuals.

Many companies today have sophisticated systems in place to attempt to reduce the likelihood that one of their employees or agents will participate in corruption. Such systems might include special provisions within the company’s code of ethics, specific training on the legal rules related to corruption, and mechanisms for evaluating the risk of corruption in particular jurisdictions, particular industries, or for particular kinds of business deals.

See also in CEBE:

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The Concise Encyclopedia of Business Ethics Copyright © 2023 by Chris MacDonald and Alexei Marcoux is licensed under a Creative Commons Attribution 4.0 International License, except where otherwise noted.

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