Professional Documents
Culture Documents
Oumm3203 Professional Ethics
Oumm3203 Professional Ethics
MAY / 2013
PROFESSIONAL ETHICS
OUMM3203
MATRICULATION NO
: 781130125368001
: 781130-12-5368
TELEPHONE NO.
: 0198533933
NAME
: ppy_poon@hotmail.com
E TUTORS NAME
: PN HAMIDAH RAMLAN
LEARNING CENTRE
: OUM Sandakan
Contents
Introduction ..................................................................................................................................... 1
The causes of the act of Bribery ..................................................................................................... 3
Economic Analysis on the Act of Bribery ...................................................................................... 5
Legal Analysis on the act of bribery ............................................................................................. 11
Ethical analysis on the act of bribery ............................................................................................ 12
Bribery from Religious Point of View .......................................................................................... 16
Curbing Bribery ............................................................................................................................ 18
Conclusion .................................................................................................................................... 19
References ..................................................................................................................................... 21
OUMM3303
781130125368001
POON PICK YUN
Introduction
What is bribery? Bribe as in a verb means to dishonestly persuade someone to act in ones
favour by a gift of money or other inducement. Bribe as in noun is a sum of money or other
inducement offered or given to someone.
In other words bribe is the gift bestowed to influence the recipient's conduct. It may be in the
form money, goods, right in action, property, preferment, privilege, emolument, objects of value,
advantage, or merely a promise or undertaking to induce or influence the action, vote or
influence of a person in an official or public capacity. In economics, bribe has been described as
rent. Bribery in bureaucracy has been viewed as a reason for the higher cost of production of
goods and services. It is an act of giving money or gift giving that alters the behavior of the
recipient. Bribery constitutes a crime and is defined by Black's Law Dictionary as the offering,
giving, receiving or soliciting of any item of value to influence the actions of an official or other
person in charge of a public or legal duty.
Bribery had been practiced for centuries. In ancient China, for instance bribing was as common
as preparing food on the table. The spread of bribery in traditional China is normally connected
to the Confucian concept of renzhi , all relations were based solely on mutual trust and
propriety and this kind of moral uprightness could be developed only among a minority. The
attempt of reducing bribery by trying to institutionalize the monetary of the state,was met with
sharp criticism by the Confucian elite so bribery continued to be widespread both in the court
and among the local elites, which was one of the targets for criticism in the novel Jin Ping Mei.
Another kind of bribery came about in Tang China, developed in connection with the imperial
examination system which was everyones dream to pass.
Bribery is a crime or offense law where a person's liberty, contract or privileges or favours from
the authorities or companies after giving money, gifts or entertainment for the party. According
to the World Bank the causes of bribes are complex. The World Bank recognizes that bribery is a
symptom of other deeper-seated factors, such as poorly designed economic policies, low levels
of education, under-developed civil society, and the weak accountability of public institutions
(World Bank, 1997a, b, p.). This is suggestive of conditions in the developing countries, and thus
they have serious implications of bribery. The results of bribery
1
OUMM3303
781130125368001
POON PICK YUN
individual profits, undermined by ulterior motives decisions may threaten the well-being of the
whole community as acts of corruption affect the well-being of society as a whole and not just
the individual(s) committing the acts. An example is the Ghanaian water supply crisis in 1979.
As the government neglected to monitor the service, and funds were misused, public utility
corporations did not have the necessary equipment to provide water, and the country was close to
national epidemic (Alatas, 1990, p. 126). A more recent example is Pakistan. The cost of
corruption in the period 1993-1996 reached US$15 billion, equal to 25 percent of the countrys
GDP. Systematic leakage of tax revenues cost another 3-4 percent of the GDP. A total of US$50
billion were siphoned out of the country illegally, resulting annually in an acute balance of
payments gap of US$7 billion on an annual basis (Sethi, 2000). These examples show the
seriousness of the problem and the need to tackle it.
There are four major bribery offense stated in the, Malaysian Anti-Corruption Law namely:
1. Asking or Accepting Bribery
2. Offer or Give bribes
3. Making False Claims
4. Misuse of Position or Power
OUMM3303
781130125368001
POON PICK YUN
There are many causes that made men and women commit bribery such as:
a) Personal weakness as lack of faith and piousness.
Everyone knows that bribery is prohibited by religion as well as the law, but would still do so
with a thousand and one personal reasons. It is included in the theory "of Neutralization
Technique" by Grisham Sykes and David Matza, stating that, "Do a bribe in secret as long as no
one knows". For those with weak personality, wanting to live lavishly beyond ones means, to
show- off, being greedy, to get rich quick, the driving force for accepting a bribe will intensify,
justifying their actions even when they know that it is wrong.
b) Weakness of leadership and management in an organization.
Poor leadership in an institution usually resulted in less supervision, no monitoring, tacky in
work performance opening doors to abuse in work performance. Hence, bribery is committed.
c) Social and cultural.
Plural society such as Malaysia has a long tradition of gift giving in the form of money and
possessions, in conjunction with the days of greatness, festivals, birthday parties, weddings and
the list goes on. These auspicious days create opportunities to open and accepted bribery and
bribed recipients are asked to do the same bribed or lured unnoticed.
d) Modernisation.
When economic and social developments are not balanced with spiritual development it will lead
to bribery. Development projects sprouting like mushrooms will also increase the flow of money
thus groups involved also take the opportunity to make a buck or two.
In this modern era, we saw racing contractors tendering, trying and competing to win the hearts
of management officials or decision makers. Bribery is given as shortcuts to get tenders, to
expedite payment, release or action of punishment for failure or delay in completion of the
projects.
OUMM3303
781130125368001
POON PICK YUN
e) Political.
Some politicians used the opportunity to give back to the community by accepting and giving
bribes to get power, won the elections for political office, accumulating wealth, and
addiction of popularity.
the
OUMM3303
781130125368001
POON PICK YUN
OUMM3303
781130125368001
POON PICK YUN
example is the Ghanaian water supply crisis in 1979. As the government neglected to monitor the
service, and funds were misused, public utility corporations did not have the necessary
equipment to provide water, and the country was close to national epidemic as in Alatas, 1990
and a more recent example is Pakistan. The cost of corruption in the period 1993-1996 reached
US$15 billion (RM46.4 billion), equal to 25 percent of the countrys GDP. Systematic leakage of
tax revenues cost another 3-4 percent of the GDP. A total of US$50 billion(RM158 billion) were
siphoned out of the country illegally, resulting annually in an acute balance of payments gap of
US$7 billion (RM21.7 billion) on an annual basis. These examples show the seriousness of the
problem and the need to tackle it for bribery is affecting the financial markets.
Recently, there has been a call for greater control of corruption and associated economic crime
within many international organizations, such as the UN, the World Bank, the International
Monetary Fund; and also regional ones such as the Organization for Economic Cooperation and
Development (OECD), the Council of Europe, the European Community, and the Center for
International Private Enterprise. TI is a non-governmental organization created to combat
corruption in governments and business and the policies of four such organizations: the UN, the
World Bank, EU, and the OECD are analyzed. Some estimates calculate that as much as $30
billion in aid for Africa has ended up in foreign bank accounts. This amount is twice the annual
gross domestic product (GDP) of Ghana, Kenya, and Uganda combined. Over the last 20 years,
Philippines is estimated to have lost $48 billion (RM148.8 billion) due to corruption, surpassing
its entire foreign debt of $40.6 billion (RM 125.86 billion). There is no denying that corruption
is affecting financial markets. Recently, there are several studies that examine how one countrys
level of corruption might affect asset prices in other countries and how corruption may affect the
bond and stock markets.
The role of the government is much debated in economics; however, two important functions
have emerged clearly. Perhaps due to its ``comparative advantage in violence'', the primary
function of the government is to provide the underlying rules of the game (North, 1981). This
involves the implementation of well-defined property rights that foster competition and
collaboration in the pursuit of economic rent. Effective judicial, defense and regulatory systems
must be maintained by the government for the enforcement of these rights since it has economies
of scale in providing these services. This lowers transaction costs and will therefore encourage
6
OUMM3303
781130125368001
POON PICK YUN
economic growth through the evolvement of institutions that exploit the resulting opportunities
by engaging in economic exchange and transformation of resources. By failing to perform this
function efficiently, the government will increase the costs of transaction and lower economic
growth. The second crucial function of the government is to provide certain basic public goods
and services that may be underprovided by the private sector.
According to Hall, there are two problems associated with bribery for the public authorities and
the public to deal with. Firstly, bribery makes the service more costly. Secondly, it perverts
democratic processes and rational decision-making. A serious issue in terms of bribery is the
corruption from multinational corporations in host developing countries. For example, German
companies were paying more than US$3 billion (RM9.3billion) per year in bribes to win
contracts abroad. Independent audits of the World Bank found forty contracts in which US$40
million (RM124 million) had been misprocured. This caused much criticism and discontent from
NGOs involved. The NGO Christian Aid put it bluntly the Western countries should focus on
cleaning their own houses before making the problems in poor country. Ensuring that Western
companies are not involved in bribery, money laundering or tax evasion through offshore
accounts is ranked as first target. P. Vogl from TI once said that There is no question that
reforms in many countries will be strengthened if there were more visible evidence that leading
international organizations and Western governments were even-handed in their anti-corruption
campaign, attacking the bribe givers with just as much as force and fury as they now use to
attack the bribe takers
OUMM3303
781130125368001
POON PICK YUN
OUMM3303
781130125368001
POON PICK YUN
Borrowing costs
In a survey by Ciocchini in 2003 showed that bribery increased borrowing costs for government
and firms in emerging markets determining the price of emerging market bonds sold on the
global bond
market. Ciocchini used the launch spreads of these bonds, which refer to the
difference between the initial yield of these bonds and the rate commanded by a risk-free bond of
the same maturity. The spread of these bonds reflects the higher default probability associated
with emerging market debt. They are in effect studying the relationship between bribery and
the perceived likelihood that a firm or government will default on its debt and the average
corporate and sovereign bond spreads in these countries for average bond spreads increase with
bribery in that country. This preliminary result shows that bribery increases when a countrys
borrowing cost increases. To investigate this relationship further, Ciocchini et al. (2003) did two
things. First, they control other variables that affect bond spreads in a multivariate setup. Second,
they take into the account the fact that the decision to launch a bond is endogenous. Countries
and firms that choose to issue debt will differ systematically from those that do not. Therefore,
they control for the likelihood of new issues by different classes of borrowers. The empirical
strategy consists of estimating the impact of bribery on spreads, first by ordinary least squares
(OLS) and then by means of the Heckman procedure, which controls for the possible sample
selection problem.
OUMM3303
781130125368001
POON PICK YUN
Stock prices
Bribery can affect equity value drivers like a firms long-term growth. Fisman (1991) examines
the value of political connection in Indonesia by examining the stock prices of companies that
have different degrees of political connections. He relates the news on the health of the former
Indonesian President Suharto to the stock returns of these companies. He shows that bad news on
Suhartos health lead to reliably lower stock returns of the companies with extensive political
connections than the independent companies. In addition to the evidence in Indonesia, there is
also evidence that corruption affects stock prices in other countries proving firms from more
corrupt countries trade at significantly lower market multiples, after controlling for other factors
significantly decreases equity values after controlling for many other firm- and country-level
control factors.
One possible reason why bribery may affect stock valuation has to do with corporate supremacy.
As bribery increases, regulatory oversight is weakened and corporate supremacy may become
worse. This leads to higher default risk for bonds and lower valuation for stocks. To investigate
this hypothesis, Ng and Qian (2004) examine the impact of bribery on corporate supremacy.
They build a model demonstrating that an insider has more incentives to expropriate an outsider
if bribery reduces the probability that the insider will get caught. As a result, corporate
governance will be worse in more corrupted countries. They use firm-level corporate supremacy
from two different surveys (i.e. those of Credit Lyonnais Securities Asia and Standard and Poor)
and examine how country-level corruption data would affect corporate governance in different
firms. The empirical analysis suggests that bribery has a significant impact on both corporate
governance and a firms valuation. The quality of corporate governance in more corrupt
countries tends to be worse, and firms are accordingly traded at lower valuation multiples.
10
OUMM3303
781130125368001
POON PICK YUN
According to the Malaysian Anti-Corruption Act 1997 law giving bribes or receiving bribes is
considered to be a really serious offence. If a person were to be found guilty under this act he or
she will be imprisoned up to a maximum of 20 years and fine of five times the value of the
gratification that they received. As that being said, still they are a lot of Malaysians who still
practices bribing. For example when a traffic police tries to enforce a law, we who commit the
offence will always try to offer duit kopi to the officer for him to let us off with just a warning.
One might think giving the police money might only cost him or her RM30 but if paying the fine
it will cost him RM300. On the other hand, when the officer is offered to take the bribe he or she
can always turn down the bribe. As the old saying says it takes two to tango. Giving bribes is an
offence and a law without enforcers is like a book without a reader.
11
OUMM3303
781130125368001
POON PICK YUN
12
OUMM3303
781130125368001
POON PICK YUN
Ethics varies form one person to another due to personal implications and backgrounds such as
family influence, peer influence, life experience, personal values and morals as well as
situational factors.
There are four codes of ethics which are often connected to professionalism such as:
1. Utilitarianism
A Greek word meaning the outcome or result, in other words the outcome of our actions taking
into considerations The greatest good for the greatest number. For instance if a company is in
the brink of bankruptcy as a CEO of a company we need to think of the employees the company
has, how would they cope if they are jobless. These factors will lead the CEO to commit the act
of bribery in order to save his staff and his company.
Utilitarianism says that no matter in what condition, the correct action or policy is which give
more benefits or less cost (if all alternatives only expense on cost, nothing benefit).
Utilitarianism supports the action or policy choosing which give maximize benefits or keep cost
down.
In utilitarianism perspective, bribery is a right thing because with do this way, we can obtain
more benefit for us than do the normal way. But the problem here is other perception. What we
think is good for us, not always good or fine for others. In utilitarianism, all things can be
measured. It means that all thing can be in the trade. In utilitarianism, bribery is right in moral
but in fact, it is not fair and collide others rights. Not all in this world can be purchased by
money. We know that bribery is not a good habit. We have to adjust ourselves to get the right
thing with the right way.
13
OUMM3303
781130125368001
POON PICK YUN
2. Universalism
Universalism is also another Greek term that refers to duties or obligations which is based on the
intentions of the person making the decision or performing the act. Unlike the Utilitarianism,
Universalism is different for example if we as parents, want our children to be good in their
studies, sometimes we might say if you can get 7A in your SPM, I will buy you a smart phone.
Even though, it is morally wrong but good intentions will usually produce beneficial outcomes.
On the one hand, there will always be exceptions to any universal rules. People from particulars
cultures feel that their actions are morally right and ethically justifiable while the universalist
actions would be considered morally wrong. People from universalist cultures would find
particulars behavior as corrupt. There are many reasons for corrupt behavior, especially in
developing countries, such as poverty, bureaucracy and low salaries. However, it is also true that
no nation is free of corruption. It just happens to be less visible in the more developed world.
Human nature is human nature and it is wrong for people to feel that one culture is morally
superior to another. However, the fact remains that big sums of money are paid in bribes each
year. This is bad news for the countries in question because as the same article points out, this
reduced corruption leads to increased income and in the long term increased hope.
3. Distributive justice
Distributive justice is based on two elements that are collaboration and conflicts. In the economic
system we use today it adapts equality, needs, effort, contribution and competence as its
principles. A person in an organization will be judged accordingly and benefits would be shared
equally especially to the most disadvantage members in that organization. The perception that
each party exchanges resources and receives rewards as promised represents distributive justice.
Local officials will reciprocate a bribe payment with the expected services have a positive
relationship with bribery behaviors. It addresses bribery from a motivational perspective. Firms
engage in bribery activities through their agents because they have a strong motivation to do so.
This is to bring a new perspective to the bribery literature.
14
OUMM3303
781130125368001
POON PICK YUN
4. Personal liberty
Personal liberty is based upon a single principle that is liberty. In this theory gifts, contributions,
and services can be allowed just as long as they are voluntary, and it would not change any
outcomes that will be biased to a certain organization. In a free society or free market, the briber
is acting legitimately. It is the bribe who is defrauding someone and therefore deserves
prosecution. Here a distinction must be made between aggressive and defensive bribery. The
first should be considered aggressive and improper, whereas the latter should be considered
legitimate and proper. Consider a typical aggressive bribe. Example is a Mafia leader bribes
police official to exclude other, competing operators of gambling casinos from a certain
territorial area. Mafioso acts in collaboration with the government to coerce competing gambling
proprietors, in this case, an initiator, and accessory, to governmental aggression against his
competitors. A defensive bribe has a radically different kinds of moral status. In such a case,
for example, Robinson is seeing that gambling casinos are outlawed in a certain area, bribes
policemen to allow his casino to operate a perfectly legitimate response to an unfortunate
situation. Defensive bribery performs an important social function throughout the world. In many
countries, business could not be transacted at all without the lubricant of bribery. In this way
crippling and destructive regulations and exactions can be avoided. A corrupt government,
then, is not necessarily a bad thing compared to an incorruptible government whose officials
enforce the laws with great severity. Bribery can at least allow a partial flowering of voluntary
transactions and actions in a society.
15
OUMM3303
781130125368001
POON PICK YUN
OUMM3303
781130125368001
POON PICK YUN
to a superior. The idea of bribe or gift in this sense does not appear in the New Testament. In an
examination of Old Testament passages which mention gift, present, or bribe emerge. The Bible
always condemns taking a bribe. Those in authority who are deciding people's futures are to be
the embodiment of impartial justice. This is a difficult concept for Westerners to understand.
They also can be a culturally based incentive for officials to do their prescribed jobs. Many
would call it a tip. We must bear in mind that the Bible is for all cultures, for all times, and for all
social classes. Scripture is clear that God's people, who are in positions of power and leadership,
must uphold blind, impartial justice but not all of God's people have godly rulers.
However, the biggest impact of bribery is disarraying the administration of a country. As a result,
it creates more problems such as economic decline and the interests of society will be neglected.
The Culture of corruption can destroy the administration and governance of a country as
recorded history of the fall of President Marcos of the Philippines when the helm of the
government was corrupted which became unbearable.
17
OUMM3303
781130125368001
POON PICK YUN
Curbing Bribery
Bribery if not curb will lead to many social problems as the laws made are not fully complied
with. These activities of crime and injustice will flourish and as times go by will get more and
more difficult to counter till one day it will be completely out of control.
Among the Anti-Corruption Measures are as follows:
1. Strengthen Faith and Identity
Faith and personal lives are the most powerful fortress to combat bribery. Faith, strength and
resilience can ward off bribery reward even though the chance is in front of the eyes.
2. Education
Bribery should be taught schools days. Children should be taught that bribery is wrong even
from a young age so that they will grow to be a more responsible, trustworthy and honest
individual.
3. Improve Law Enforcement and Penalties
Law enforcement should be stepped- up so that people will realize the seriousness of the problem
of bribery. If the penalty for bribery is heavy, people will think twice before attempting to
commit bribery.
4. Facilitate Business Using ICT
Processing procedure is long, difficult and slow which usually leads to bribery so it should be
simplified by using ICT. Forms should be filled and sent online so as not to burden the traders,
contractors and investors. A simple and transparent process can avoid bribery simply to speed
up the process.
18
OUMM3303
781130125368001
POON PICK YUN
Conclusion
Bribery is a serious problem for economies in transition. It causes retardation in the development
of institutions conducive to economic growth. It is a serious obstacle in the development process
of developing countries. High levels of bribery endanger the well-being of whole nations.
According to the data, the level of bribery in developing countries and those in transition is
higher than in developed ones. Despite certain ideas that bribery can contribute to development
and the old-fashioned argument that developing countries cannot oppose bribery per se, as being
underdeveloped and lacking mature levels of democracy, it seems reasonable to agree that
bribery breeds underdevelopment rather than the other way round. It is important to remember
that bribery is a transnational crime, an example of involvements of public servants, businesses
and politicians to use other countries to hold or launder their slush funds or pay-off. Thus, it is
only natural to approach it at the international level. However, initially positive ideas of
enhancing control and prosecution of economic crime seem not to be working, just as in the
saying If the path to hell is paved with good intentions. The criminal law-enforcement
approach chosen by the main international organizations UN, World Bank, EU is not effective.
Until this approach changes and priority is given to the principle of prevention rather than
punishment, the costs of controlling economic crimes in the developing countries are
unnecessarily high and not worthwhile.
Transparent and credible administration is very important to bring a country out of this
despicable act of bribery as there is no end in the economic crisis around the world. Therefore,
everyone regardless of different political or religious ideas should look forward and join hands
with the government in achieving this Mission. Indeed, the effort is the beginning of a new era in
the history of the fight against bribery, abuse of power and various forms of abuse. Hopefully
one day, the country is known and recognized as the cleanest country in the world.
To conclude, it is evident that it is almost impossible to eliminate bribery. Unless the interests of
developing countries are taken into account, most international measures to fight corruption
remain costly and ineffective.
19
OUMM3303
781130125368001
POON PICK YUN
In a way, bribery is like cancer. This is quite a popular association used in the literature (Alatas,
1990; Klitgaard, 1988). It has a clustering characteristic, one crime leads to another clustering
around it. Another feature is that law enforcement corruption, like a malignant tumor, does not
disappear but even increases. It seems to be a pessimistic conclusion that nothing can be done
about corruption, however, this should not lead to idleness: Like illness, bribery will always be
with us. But as this sad fact does not keep us from attempting to reduce disease, neither should it
paralyze efforts to reduce bribery. However, it is a question of balancing the interests of the
actors in the international arena, a question of global politics, and promoting equality between
nations. Hinterseer, in relation to the politics of money laundering, that could be applied
generally to bribery as well, stated that: Unless the interests of developing countries are taken
into account, most international measures to fight corruption remain costly and ineffective.
20
OUMM3303
781130125368001
POON PICK YUN
References
Bribery, http://en.wikipedia.org/wiki/bribery, (retrieved on 20thJune 2013).
Corruption
Is
More
Than
Bribery,
http://www.apnacafrica.org/index.php?option=com_content&view=article&id=61%3acorruption
-is-more-than-bribery&catid=40%3astrategic-briefs&lang=en(retrieved on 20thJune 2013).
Costs And Consequences Of Bribery And Corruption, http://www.ethicsmonitor.co.za/costs-andconsequences-of-bribery-and-corruption.aspx, (retrieved on 20thJune 2013).
The Impact Of Bribery On Firm Performance: Evidence From Central And Eastern European
Countries,
http://www.coll.mpg.de/sites/www.coll.mpg.de/files/workshop/kochanova.pdf,
th
(retrieved on 20 June 2013).
The Moral Critique Coruption In Developing Countries, http://www.princeton.edu/jpia/pastissues-1/2000/8.pdf, (retrieved on 20thJune 2013).
To Bribe Or Not To Bribe: What Are The Effects Of Bribery In The Success Of International
Business
Transactions?
,
http://www.dundee.ac.uk/cepmlp/gateway/files.php?file=cepmlp_car13_40_862138685.pdf,
(retrieved on 20thJune 2013).
21