A corporate executive plans to bribe a government official to create a monopoly for his products by finding an excuse for banning his competitors. Ask yourself: Can a whole community benefit when access is granted to only a few?
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In the video, a corporate executive plans to bribe a government official to create a monopoly for his products by finding an excuse for banning his competitors. Along with unfairly targeting the executive’s business rivals, the government’s involvement in corporate fraud ultimately hurts everyone involved, including consumers, said Jessica Tillipman, the assistant dean for field placement and a professorial lecturer in law at the George Washington University Law School in Washington.
Citizens have a basic assumption that their tax money and other public resources will be used to provide the best products and services available. That system completely breaks down when the government selects a contractor or service provider who is not the most qualified.
“You’re going to be dealing with a higher cost for both consumers and potentially the government,” Tillipman said. “Oftentimes corruption leads to higher prices for goods and services than would be necessary if there was no corruption because usually the company is building the corrupt payments into their prices.” The customer, meanwhile, is usually getting poorer quality services or faulty products.
In addition to losing public trust and paying more, the government is “potentially shutting out competitors that could have more innovative products or services.”
The company also stands to lose if its collusion with the government ever becomes public.
“Companies that are engaging in corruption do get prosecuted and do get potentially blacklisted or disbarred,” Tillipman said. “That puts a company out of business, and even just the reputational damage could significantly harm a company to the point that they could go out of business. Those sorts of things could lead to the destruction of jobs for hundreds or thousands of people.”
Government transparency mechanisms, such as offices that audit and publish contracts, procurements and spending, are essential to preventing this type of corruption. But they need to be independent and have adequate staff and resources to be effective, she said.
“We really depend on transparency, because that can at least flag for people how the government is making decisions and how the government is spending money so that they can then see whether or not something has happened.” Free media and protections for whistleblowers are also “powerful tools to unearth corruption.”
In the end, Tillipman said, everyone wants to have safe and functioning goods and services and to get the best value for the tax money the government collects.
Ask yourself: Can a whole community benefit when access is granted to only a few?
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