Small 'c' corruption in Castro's Cuba

Small 'c' corruption in Castro's Cuba

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March 06, 2009

'Bribery' and 'corruption' are often used interchangeably, but the distinction is important in Cuba.  We have returned this evening from a week-long independent research trip to Havana and found some surprises there.

We spoke with representatives of the Cuban and American governments, executives from European companies and with ordinary citizens.  This totally centralized and controlling government seems to tolerate little of what we think of as "traditional" commercial bribery.  While people spoke with great candor and at length about the frustrating and restrictive employment practices, extraordinarily slow bureaucratic processes and the thriving and pervasive black market, everyone we spoke to agreed that cash-for-contract bribery is virtually unheard of, especially at the highest levels.  (Things get a bit hazy further down the chain of command and much hazier still with government employees of government joint ventures.)

But if there is less bribery than elsewhere in the region, corruption is rampant.

All working Cubans are employees of the state.  (Consider the FCPA implications of that!) Whether they're waiters at a Cuban hotel or receptionists at a company like DHL, they are typically selected, vetted, assigned and paid by the Cuban government.   Their salary is roughly US$20 per month.  

It isn't possible to live on that in Cuba.   Everyone - everyone - is an entrepreneur.  They may sell their services, working as translators, drivers or tour guides after hours.  We heard about one heart surgeon who decorates cakes on the weekends.  They may grow or prepare food for sale at community markets.  They may legally or illegally rent rooms in their houses or run small 'paladares' - small restaurants - in their homes.  Less benignly, they may participate in the rampant pilferage from factories and elsewhere and sell what they can on the black market.  Bartenders substitute low quality rum for the good stuff, which they sell on the side.  Cigar rollers palm any excess for the same purpose.

Cuba is an extraordinarily challenging place to live and everyone has - of necessity - 'an angle'. But lawyers and businessmen operating there place bribery well down that list of challenges.

The results of our research will be written-up more fully in the next edition of Ethisphere.

 

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Small 'c' corruption in Castro's Cuba

Comments 6

  1. Andrey

    Charles R. Cherry2009/03/02I haven't yet read this book, but I read the interview.My qioutsen is this: in cultures and societies where government officials are not paid a living wage, they require these these so-called gifts just to get by. Aren't these gifts just a form of direct taxation?In our country, we are taxed in order to pay our government workers enough to survive and even thrive, thus there is no need for these workers to collect gifts.Any thoughts?

  2. TRACE

    Andrey, thank you for your comment. While we do recognize that in a very small number of countries, certain government officials receive little or no pay at all from their government and are instead expected to create their own income through corruption, it is difficult to sympathize with any government official who demands you to do something that is ultimately illegal. Every bribe of a government official – regardless of size – breaks the law. There is no country anywhere in the world with a written law permitting bribery of its officials. Permitting the citizens of one country to violate the laws of another on the grounds that it is “how they do business there,” corrodes international legal standards that otherwise benefit multinational corporations. A lack of resources, political will or interest has meant violations are rarely prosecuted, but that is changing. Demands for small bribes are also a form of harassment. Entrepreneurial bribe-takers learn to focus their demands on companies that have paid bribes before. From the perspective of the company, this practice introduces uncertainty, risk and delay into overseas business operations.

  3. Andrey

    Charles R. Cherry2009/03/02I haven't yet read this book, but I read the interview.My qioutsen is this: in cultures and societies where government officials are not paid a living wage, they require these these so-called gifts just to get by. Aren't these gifts just a form of direct taxation?In our country, we are taxed in order to pay our government workers enough to survive and even thrive, thus there is no need for these workers to collect gifts.Any thoughts?

  4. TRACE

    Andrey, thank you for your comment. While we do recognize that in a very small number of countries, certain government officials receive little or no pay at all from their government and are instead expected to create their own income through corruption, it is difficult to sympathize with any government official who demands you to do something that is ultimately illegal. Every bribe of a government official – regardless of size – breaks the law. There is no country anywhere in the world with a written law permitting bribery of its officials. Permitting the citizens of one country to violate the laws of another on the grounds that it is “how they do business there,” corrodes international legal standards that otherwise benefit multinational corporations. A lack of resources, political will or interest has meant violations are rarely prosecuted, but that is changing. Demands for small bribes are also a form of harassment. Entrepreneurial bribe-takers learn to focus their demands on companies that have paid bribes before. From the perspective of the company, this practice introduces uncertainty, risk and delay into overseas business operations.

  5. Andrey

    Charles R. Cherry2009/03/02I haven't yet read this book, but I read the interview.My qioutsen is this: in cultures and societies where government officials are not paid a living wage, they require these these so-called gifts just to get by. Aren't these gifts just a form of direct taxation?In our country, we are taxed in order to pay our government workers enough to survive and even thrive, thus there is no need for these workers to collect gifts.Any thoughts?

  6. TRACE

    Andrey, thank you for your comment. While we do recognize that in a very small number of countries, certain government officials receive little or no pay at all from their government and are instead expected to create their own income through corruption, it is difficult to sympathize with any government official who demands you to do something that is ultimately illegal. Every bribe of a government official – regardless of size – breaks the law. There is no country anywhere in the world with a written law permitting bribery of its officials. Permitting the citizens of one country to violate the laws of another on the grounds that it is “how they do business there,” corrodes international legal standards that otherwise benefit multinational corporations. A lack of resources, political will or interest has meant violations are rarely prosecuted, but that is changing. Demands for small bribes are also a form of harassment. Entrepreneurial bribe-takers learn to focus their demands on companies that have paid bribes before. From the perspective of the company, this practice introduces uncertainty, risk and delay into overseas business operations.

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