THE COMPANIES ARE AMONG the world's best known: Japan's Marubeni and Tomen, Germany's Siemens, Italy's Pirelli and Britain's BICC. Accusing them of receiving confidential data on tender projects, Singapore recently barred the firms from bidding for new government-related contracts for five years. The companies denied wrongdoing. The statements of trader Marubeni, Asia's fourth-largest corporation, were typical: the firm had "nothing to do with corruption." But Singapore authorities were not moved. No appeals on the prohibition, they ruled. Case closed.
A government official had it much worse than the companies. Mr. Choy Hon Tim, convicted last November of taking payments for supplying confidential information on capital projects the corporations were bidding on, was sentenced to 14 years in prison. He was also ordered to pay $9.8 million, the amount he apparently received. For their part, the five firms were not forced to give up contracts they had won.
It was significant that such alleged hanky-panky occurred in Singapore, which has a near-legendary reputation for toughness against corruption. The incident serves as one more forceful reminder that graft remains a deeply rooted scourge in Asia. Indeed, it is a problem that threatens to get worse as the region's growing wealth magnifies the stakes involved. India and South Korea are currently embroiled in their biggest corruption scandals ever. And in China, the Communist authorities are in the throes of yet another of their periodic campaigns against graft. In Japan, the formidable Ministry of Finance is being denounced for spending $6.5 billion in public money to bail out bankrupt housing loan companies, or jusen, which are widely believed to have ties to gangsters.
Given the endemic nature of corruption in many parts of Asia, it may be tempting simply to throw up the hands and conclude that graft is just another cost of doing business. That would be a mistake. For one thing, business imperatives would be turned on their head if companies had to focus their energies on whom they should pay and how much, rather than on how they can deliver the highest-quality goods at the lowest cost. The public will pay more for inferior products if bids are awarded on the basis of bribery and not merit. Almost inevitably, a company will pass along the cost of graft -- just as it would any other outlay. Consumers end up lining the pockets of dishonest officials.
More insidiously, widespread corruption promotes a culture of cheating. If people are convinced their government is corrupt, they will be less likely to pay taxes honestly or follow any appeal for self-denial in the name of the national good. They may even be less inclined to deal with one another in a straightforward manner.
In societies that have rule of law, corruption undermines respect for that valuable institution. That's why Singapore's recent moves, though harsh, are commendable. The message is clear: You must take the law seriously; if you are corrupt, we will punish you no matter who you are. In places where laws are deficient or only sporadically enforced, fighting corruption becomes problematic. An argument can be made that bribery is then an essential lubricant to business -- like getting a phone line installed or ensuring a steady supply of electricity. The solution, of course, is for such societies to develop a comprehensive set of laws that clearly defines violations and punishments. Then, the governments concerned must move to enforce those regulations firmly and impartially.
The developed countries that are home to most multinationals should do their part too. It is perhaps noteworthy that none of the five companies proscribed by the Singapore government was American. The United States is the only jurisdiction that allows the criminal prosecution of domestic firms for bribery violations abroad. In 1994, after years of pressure from Washington, the Organization for Economic Cooperation and Development passed a non-binding resolution urging members to punish companies engaged in corruption abroad and to change tax codes that allow them to offset their tax bills with amounts paid as bribes. Developed countries would do well to enshrine such principles in law. In fact, the U.S. has proposed bringing up the issue at the World Trade Organization's inaugural ministerial meeting this December in Singapore. A ruling by the global body would be binding on its members -- and a boost to anti-corruption efforts. Certainly, the setting would be right for such a move.