I have an ethical question. I own a business that provides services to corporations, both public and private. Today at lunch I was having a conversation with my business partner. He brought a proposal from a large public company's purchasing manager who had made it known to my business partner (since they were childhood friends) that he would give us this fairly substantial project if we offered him a kickback of 20% of the project cost, discreetly payable to him outside of the USA in cash. This purchasing manager would rubber-stamp approve our bid, even if it is high because we have to cover his kickback. I told my business partner that his friendly purchasing manager was not only doing something illegal, but also that he was unethical. I told him that we should not deal with such persons.
My business partner posed this question to me - "How is this unethical? We routinely visit purchasing managers of other public companies and we take them and their key personnel out to lunch or to dinner to...
Lunch and dinner invitations are, in the United States, a normal part of doing business. By extending such an invitation, you are then not gaining an unfair advantage over your competitors who (insofar as they are interested in doing business with the same company) will -- or at least can -- also extend such invitations. Thus, your payment of the meal is neither unfair to your competitors nor defrauding the shareholders/owners of the purchasing company because it does not disturb the purchasing manager's incentive to make the deal that is best for his company. By contrast, your payment of a 20% kickback will displace this incentive by inducing the purchasing manager to make a deal that is much inferior for his company. The kickback and the purchasing manager's acceptance of it therefore are unfair to your law-abiding competitors and constitute a defrauding of the shareholders/owners of the company represented by the purchasing manager.
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