Playing by Your Home Country's Rules

One of the quiet reasons that many North American companies look for overseas joint venture partners in places such as China, India and Latin America is that they can't afford the risk of directly muddying themselves in bribes or other scandals which are par for the course in most parts of the developing worlds. And that's because the Foreign Corrupt Practices Act says the same standards apply for a US company doing business on American soil as they do for the same organization doing business around the globe. But as we all know, bribes and corruption in the developing economy deserve a similar line item from an accounting perspective just as they do in the restaurant trade in New York city. After all, "protection money" is protection money regardless of whether its in lower Manhattan or Columbia (while at university, I was a bartender, so trust me on this one).

According to a recent BBC news dispatch (hat-tip Tony Poshek), Chiquita, a food grower and importer, was fined $25 million "for having given protection money to Colombian paramilitary groups." The story notes that "in March, Chiquita pleaded guilty to paying $1.7m (£850,000) to the United Self Defence Forces of Colombia (AUC) ... The firm said its only motive was the safety of its Colombian workers. Prosecutors said Chiquita also made payments to Colombia's main left-wing rebel group, the Revolutionary Armed Forces of Colombia (Farc). The company's former Colombian subsidiary operated in areas where there was a strong presence of both armed groups." What's the moral here? If you must operate in an area where protection money is required -- such as in the restaurant trade in major Northeastern cities in the US or developing world export economies -- then do so at a serious distance from the cash exchange. Or don't do business there in the first place, if you're so inclined.

Jason Busch

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