- Historic Sites
The Businessman And The Government
Corruption, Yesterday and Today
June 1977 | Volume 28, Issue 4
The logical new form of bribery was, of course, the kickback for a government contract award, rather than the direct bribe for a favorable legislative climate. It appears that the vast waste of government funds during the war years resulted more from inefficiency and ineptitude than from bribery. The government had spent $5.8 billion by the end of 1943 in the settlement of cancelled contracts alone. Blair Bolles tells us of one lucky contractor who first valued his inventory at $1.068 million, then sold it to the government for $2.137 million, and shortly thereafter, the government having found the goods unsuitable for its purposes, bought it back for $339,000; yet no bribes had changed hands. The wartime atmosphere, with a few variations, carried over into the postwar years. The mink coats and deep freezers of Harry Truman’s time, and the Oriental rugs of Dwight Elsenhower’s, were penny-ante stuff; particularly in the years of Truman, the coin of influence on government was usually not cash but cronyism. In retrospect, the years 1945-60 appear as a silver, if not a golden, age in business-government ethics. Handing out public money to old pals for the sake of friendship, all moral and legal authorities agree, is less sinful than handing it out in exchange for bribes from strangers. The advantage to the citizenry is, however, less clear.
As we have recently learned, it was in the igoo’s that, with Uncle Sam’s role as angel to business sharply curtailed by other commitments, bribery by business to influence legislation got a new lease on life. Gulf Oil inaugurated its now-famous Bahamas slush fund in 1960; by that July the first $150,000 had been drawn on it and duly delivered to deserving legislators. Within a few years, if we may believe Gulf’s chief Washington lobbyist at the time, illegal payments had been made, either directly or via their staffs, to forty-five members of Congress, including various key men on key committees and a future President of the United States, Lyndon B.Johnson. Many other corporations have confessed that, particularly late in the decade, they indulged in similar activities. Meanwhile, as the overseas operations of large American corporations expanded at an unprecedented rate, bribery of foreign officials and their governments not only made a piker of Charles Schwab but seems to have become the rule rather than the exception. Two forces were behind this sinister second blooming of unethical business conduct at home and abroad : the fact that, beyond question, in many of the foreign countries where American corporations now operated for the first time on a large scale, bribes were the accepted if not the required custom; and on the domestic front, the accession to power in 1969 of an administration of such ruthlessness and political cynicism that even the best-intentioned business enterprises were often made to feel that it was a case of pay tribute or die. It would be cynicism of another sort to suggest that a third force behind the bribery revival was that of time-honored American tradition.
The attitude of leading businessmen toward ethical questions in the middle 1970’s—a time of reformism in Washington and, one might hope, penitence in corporate boardrooms—must give the righteous pause. In a report on a series of meetings held in 1974-75,tne members of the Conference Board, the most respected of national organizations of leading executives, expressed their views forthrightly, if in almost every case anonymously. The executives’ prevailing attitude seemed to hold paranoia and smugness in delicate balance. “The harassment of the businessman by the government bureaucracy stamps out productivity,” said one. The press and television, many participants felt, are another source of harassment: “The media are destructive and misinformed.” “The press is forever at war with the creative minds of free men.” Certainly there was some truth in these strictures; but how easy is it to agree with the view of one participant, echoed by others, that “Deep down in their hearts most people trust us [corporations] more than they do any other institution”? Such a statement, in the present context, seems to suggest either a blindfolded eye or an underdeveloped brain. The bribery scandals per se were tactfully left all but unmentioned in the discussions, but nevertheless were a tacit presence; the implied attitude of the participants toward them was reflected in repeated identification of “poor communications” as the root cause of the public’s current low estimate of business. Corporations, the Conference Board consensus went, are already socially responsible, and need not be prodded to become more so; their shortcoming has been in too modestly mumbling the recital of their virtues. Yet the real communications problem, at least over the years since 1973, seems more likely to have been that the corporations have communicated all too well.