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Medical Equipment Inc.

in Saudi Arabia
By: Amal Omar Al Azem

1. Is bribery or corruption a problem in the Arab World? Give two cases.

According to the Transparency international bribe payers index released in 2011, the
bribery is an international problem that is not common specifically in Arab world, in fact
many Western countries score higher on bribe scale, an interesting example is China and
Russia, although both are increasingly growing on international business scale they score
among the worst with corruption and bribes prohibiting companies operating in them
from fairly competing in the market and negatively affecting society.

BAE Systems (UK) a company that provides defense and security systems among other
related services.

Saudi Arabia: BAE Systems has been accused of offering bribes and improper facilitation
payments to middlemen and agents in relation to arms sales to Saudi Arabia. These
allegations are now the subject of an investigation by the Serious Fraud Office (SFO). It is
alleged that BAE made payments totaling more than GBP 60m to prominent Saudis to
help secure arms contracts in Saudi Arabia from 1989-2002. The Company is also
accused of bribing a former civil servant working for the Ministry of Defences (MoD's)
arms sales unit. Similar allegations were made in 2003 when it was alleged that the
Company was operating a GBP 17m fund although the latest allegations are that the
money spent was far larger. BAE deny allegations of any wrongdoing.

According to Elizabeth Johnson which is an intern in Transparency Internationals


Research and Knowledge Department reporting on 23 September 2011; Every
Saudi Arabian royal receives a huge monthly stipend, uncovered by WikiLeaks in 2010,
on top of the $10 billion, skimmed from state money and controlled by a few key princes
in an off-budget program. Moreover, spending by the Saudi royals became the subject
of much controversy in 2008 following allegations of corruption connected with the
signing of a $43 billion deal with the British arms manufacturer, BAE systems.

Another example from Saudi Arabia, writer Abdul Mohsen Musalam was jailed in March
2002 after he published a poem in the newspaper Al-Madina on 10 March 2001.
Musalam's poem, 'The Corrupt on Earth', accused several judges of graft. Saudi Interior
Minister Prince Nayef ordered the sacking of Al-Madina's editor-in-chief for allowing the
poem to be published.
2. How would you evaluate the level of corruption and ethics in Saudi Arabia?

Depending on the Transparency International global coalition Saudi Arabia is ranked 22


among a scale of 0 to 10 where 10 indicates no bribe at all and 0 indicating highest
corruption and bribe. The below report is for 2011.

RANK COUNTRY/TERRITORY SCORE NUMBER OF STANDARD 90% CONFIDENCE


OBSERVATIONS DEVIATION INTERVAL
LOWER

BOUN

UPPER

BOUN

1 Netherlands 8.8 273 2.0 8.6 9.0


1 Switzerland 8.8 244 2.2 8.5 9.0
3 Belgium 8.7 221 2.0 8.5 9.0
4 Germany 8.6 576 2.2 8.5 8.8
4 Japan 8.6 319 2.4 8.4 8.9
6 Australia 8.5 168 2.2 8.2 8.8
6 Canada 8.5 209 2.3 8.2 8.8
8 Singapore 8.3 256 2.3 8.1 8.6
8 United Kingdom 8.3 414 2.5 8.1 8.5
10 United States 8.1 651 2.7 7.9 8.3
11 France 8.0 435 2.6 7.8 8.2
11 Spain 8.0 326 2.6 7.7 8.2
13 South Korea 7.9 152 2.8 7.5 8.2
14 Brazil 7.7 163 3.0 7.3 8.1
15 Hong Kong 7.6 208 2.9 7.3 7.9
15 Italy 7.6 397 2.8 7.4 7.8
15 Malaysia 7.6 148 2.9 7.2 8.0
15 South Africa 7.6 191 2.8 7.2 7.9
19 Taiwan 7.5 193 3.0 7.2 7.9
19 India 7.5 168 3.0 7.1 7.9
19 Turkey 7.5 139 2.7 7.2 7.9
22 Saudi Arabia 7.4 138 3.0 7.0 7.8
23 Argentina 7.3 115 3.0 6.8 7.7
23 United Arab 7.3 156 2.9 6.9 7.7
Emirates
25 Indonesia 7.1 153 3.4 6.6 7.5
26 Mexico 7.0 121 3.2 6.6 7.5
27 China 6.5 608 3.5 6.3 6.7
28 Russia 6.1

But the Transparency International has no office in Saudi Arabia as they will not be able
to conduct their work away from the direct government interference.
According to the Ethical Investment Research Services report released September 2005,
Saudi Arabia had two cases of unethical business conducts ( BAE Systems (UK) and
Lucent Technologies (US) ) .

Although Saudi Arabia claims to be the country that conducts the Islamic law in all life
aspects we can still witness corruption, bribes, nonethical behaviors, inequality among
other negative concepts that does not match Islamic standards, a dilemma in that
country.

3. Does Grover understand the local the local culture in Saudi Arabia?

He did note that personal relationships with key opinion leaders are a must, but while
his investigation and analysis helped him gain the acceptance of the physicians and
technicals in the hospital he failed building a rapport with the Saudi decision maker, as
the physicians and technicals are expatriates and professionals while the Saudi decision
maker needs more time to be friend with people, time that was not allowed for Grover
as he could not meet with him as much as needed, so we can say he understood the
culture but didnt have the resources to invest in it.

4. Grover considers the option of sending Al Humaidi to a Medical Equipment showroom in


France or the US. How does that compare to paying Al Humaidi a bribe?

It should not be compared by any means as visiting a showroom is regarded to be


informational and would add huge knowledge to Al Humaidi to aid him in his decision
even though a trip will have some extra touristic activities on the side, still I conceder
this as a good way to build relationship and rapport with Al Humaidi.

5. If a bank offers an MP3 player as an incentive for people to switch their accounts to their
bank, is that a bribe or incentive? What is the difference between bribes and incentives?

A common sense could judge between both bribe and incentive, If a present or money
were offered to overcome a clear obstacle or override some lows or regulations it is
clearly considered as a bribe, on the other hand if a present was offered as a
complement that will not override regulations it is a gift, incentives would help build
better relationships among different people, say if a bank offered small books of
chocolate to account holders on the occasion of mothers day its not a bribe, its a nice
gesture even if the gift was presented to non account holders. Also bribes are meant to
manipulate people into taking what are others wrights while incentives could draw
people together and should not affect major decisions.

An MP3 player to attract new customers for a bank will not harm others as gifts are good
gestures among all humans although presented with conditions to open an account it
might be a way to encourage people to try the banks services especially with the
competing banks doing somewhat the same.
6. What is the difference between facilitating payments and bribes? Are the former
ethical?

According to the Wikipedia A facilitating payment is a certain type of payment to foreign


officials which is not considered to be bribery according to legislations of some states as
well as in the international anti-bribery conventions, yet the value of the payment
should be compared to the service requested if it becomes high it could raise a red flag.

But according to the Business anti corruption portal; Facilitation payments are a form of
bribery made with the purpose of expediting or facilitating the performance by a public
official of a routine governmental action and not to obtain or retain business or any
other undue advantage.
Facilitation payments are typically demanded by low level and low income officials in
exchange for providing services to which one is legally entitled without such payments.
A distinction is generally made between facilitation payments and outright bribery and
corruption. In some countries, it may be considered normal to provide small unofficial
payments under certain circumstances, although this practice is illegal in most countries

Facilitation payments are one of the unsettled questions in the OECD Convention
(Organization for Economic Co-operation and Development), meaning that the
convention does not establish them as an offence.

7. What should Grover do now? And Why?

If he depends on the tip given for him by Dr. Saxman he is about to lose the deal,
nevertheless I think he should invite Al Humaidi to the showroom and ask his preference
regarding France or US even though he might lose this deal its an answer to build good
relationship with Al Humaidi to win his acceptance as a decision maker for future offers.

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