Dr. John Hollins, past chair of CACOR considers “The terms of doing business — overseas”
This is a commentary on the place of Canadian business in the big wide world, not only in the “developing” world, but also in some “developed” countries.
The SNC-Lavalin brouhaha has much broader dimensions than being the blame game du mois. It may suit some partisan interests at the moment, but
the fundamental issue will haunt any Canadian government for the foreseeable future: does Canada wish to do business in the other 168 countries of the
world? If it does, it will have to play by their rules, not by ours.
I have visited more than 40 countries, some of them developing countries. For this note, however, I am drawing mainly on the experience of colleagues, one of whom, a member of CACOR, has 20 years of experience of doing business in the developing world as a contractor in sustainable tourism and a late
colleague with 40 years of experience in civil engineering in 60 countries.
“Canada is an extreme outlier when it comes to perception of what is corrupt; Canada is the equivalent of a Boy Scout at a Hells Angels convention.”
Dr. Edward (Ted) Manning, one of the five Canadian members of the Club of Rome
A study by the OECD in 2014 Link to article… revealed a great deal of bribery by corporations in very many countries, both rich and poor. The OECD analyzed 427 foreign bribery cases that were closed between 1999 and 2014. What the researchers found is a steady stream of illicit money exchanges between multinational businesses and public officials in both poor and rich countries. 19% of the cases involved mining companies and 15% were construction companies.
Here’s a commentary by Dr. Manning, who has submitted proposals and done contracts in Africa, South America, China, and other places.
If you don’t pay (even if your government bans all payments) the following occurs:
1. You are not invited to bid at all;
2. If you do bid, your company is not shortlisted for the project;
3. Even if you get on the shortlist, you do not win the project;
o Ted recounted for me a project in Zambia where this happened to him. French contractors with a patently inferior bid won the contract.
o He is also aware as a consultant of having being dropped off shortlists where his consortium was the lowest bidder and had the best proposal as evaluated by the UN largely because they did not grease the local wheels.
4. If you do get the job, your supplies and equipment never leave the dock;
5. Your support for the project from the country doesn’t happen;
6. New taxes are assessed which must be paid;
7. If additional (unofficial) work doesn’t happen, your licence will expire and not be renewed.
8. And so on…
In many African and south Asian countries, you may not even get through the airport without a trail of US $50 bills so that they are able to:
o find your ticket,
o your reservation,
o an available cab,
o verify that the visa in your passport is “real”,
o validate your reason for entry, etc.
Many countries have a “local” affairs office” which is able to manage “liaison” under contract.
o No, they are not paid by the government giving aid,
o but by an NGO who hires an offshore NGO,
o to hire a local consultant to pay facilitation fees
o to whomever provides “access”.
Some countries hide the “facilitation fees” in military budgets that are not subject to public audit.
Ted has captured in this account what I learned from the late Art Birchenough, the first Chair of the Energy Council of Canada for whom I worked as Executive Director. Art was involved in construction projects in 60 countries, including the Three Gorges dam in China, the largest dam in the world (22.5 GW; compare Robert-Bourassa = 5.5 GW; Lepreau = 0.7 GW). Art, a wonderful human being, was President and CEO of Monenco, a large engineering company originally from Montreal that moved to Mississauga and became Agra Monenco.
Here’s a short story from Dr. Art Hunter of CACOR, who, amongst other things, contributed to the design and construction of the Canadarm.
“Exactly. I ran into this in 1984 with a company working on a big sale into Brazil. There were four import fees to pay and the customer accepted that the price of the contract would go up by the extra amounts. So the fees were paid and the EDC (then called the CCC) were happy. The contract proceeded without any further bother.
o It is the price of doing business.
Canada has just 0.5% of the population of the world and accounts for between 2.0 and 2.5% of world GDP. Canada is a small fish with hubris in a big pond. The markets in Asia, Africa, South America and other places, including Europe, do not and will not apply Canadian values in the foreseeable future. Canada cannot expect to impose its moral values. If Canada cannot stomach the way those markets work, it has only one option: stop selling in them. That should be addressed directly as a matter of policy.
In the year of Canada’s confederation, the Prussian statesman Otto von Bismarck made the following observation in an interview with Friedrich Von
Waldeck of the St. Petersburgische Zeitung (1867 August 11):
Die Politik ist die Lehre vom Möglichen
(Politics is the art of the possible)
This quotation should be hung over the doorway of every politician’s office.