Elements of ethical assessment
5.1 Basic premise: corruption is immoral
As we have said, corruption occurs in societies the world over. Most people, and not only those in the realm of Occidental culture (29) are in agreement (30) that it is iniquitous and abhorrent. (Unless, that is, they happen to be among those who profit from it. (31)) Corruption is socially destructive. It saps the foundations of probity and leads to disregard of the public interest. In the markets it warps competition to the point of stultifying it, to the detriment of the economy. By thwarting rational ways of deciding things and getting them done it puts a further strain on the network of interaction, cumbersome enough to begin with in many developing countries. From the perspective of development policy it is particularly to be deplored that repercussions emanating from corruption hurt the underdogs of society worst because of its inherent tendency to twist decisions in favor of those who, thanks to their pocketbook or social position, can bring influence to bear.
Small businesses and poor people lack the resources to prod the decision-making mill to work in their interest; they are helplessly at the mercy of capriciousness and corruption. So they must try to make a go of it in the outlaw zone of the shadow economy, living in constant fear of criminal prosecution or forced to “protect” themselves by greasing the palms of the servants of the state. As de Soto has shown, the poor of Lima, like those in other big cities in developing countries, have built up an informal shadow economy because “official channels” leave them no chance of survival, what with too much government and too many conditions, approvals and decrees serving mainly to satisfy the bureaucrats' own interest and opening up opportunities for corruption to them. The deleterious impact of corruption on development is beyond doubt. (32)
The business world as well can only view corruption as an evil. For one thing it undermines every effort to do business with the customer in mind, aiming to achieve the optimal customer satisfaction that translates into market success. A business that can flourish merely by “greasing” has no incentive to strive for quality. In a climate of corruption the quality and competitive price of products and services do not determine market success, but rather how much bribe-money changes hands; not the reliability and integrity of a company, or other gauges of genuine competence, but rather the unscrupulousness of corrupt individuals. This game does not deserve the name of competition: its true name is fraudulent competition. Corruption can tie up sizable financial and organizational assets (33) indefensible in any normal climate of operations. Without the impediment of corruption those resources could be employed elsewhere or used to improve profitability. (34)
Last, it is too much to expect of employees that they should perform corrupt acts and submit to making payments. Especially employees of multinational corporations who do so can run a high personal risk, for it is probable that even though two people may be doing “the same thing” it will not be considered quite the same. A bribe passed to a government employee by a countryman is generally looked at in a different light than the identical act with an expatriate doing the bribing.
In the long term no society can subsist as an orderly whole if corrupt mores dictate the tenor of economic, social and political life. It always comes down to shady practices used to procure an unfair advantage for one side at the expense of someone else. Both the Economic and Social Council and other UN bodies and the OECD have condemned and proscribed corruption. From a corporate ethics point of view there can be only one clear-cut judgment on corruption: whether active or passive it is illegitimate and immoral.