Corruption is often a subject when talking to foreign businessmen that want to do business in Brazil. This article will give some insight to the kind of corruption that never gets to the headlines of foreign press.
In 2010 it was estimated that 2% of the Brazilian GDP is disappearing in corruption, and although this is much less than other members in the BRIC club it is still a substantial challenge for the Brazilian government.
Corruption for Everybody
Discussing corruption in Brazil is difficult as a foreigner as corruption is closely tied to the moral understanding of how a society should work.
Foreign press often questions why Brazilians are not protesting more against corruption from politicians.
What the foreign press seems to forget is:
- Brazil is a democratic country.
- Politicians have the same moral to corruption as the people who elected them.
The truth is that most Brazilians are fine with corruption as long as it benefits them.
Obviously most Brazilians do not get to decide important investment on behalf of the government. However spending some time on a bakery during lunch hours will show you how Brazilians approach what an European would consider unethical behavior for personal gain.
Many Brazilian companies are compensating lunch based on receipts, but limited to a maximum amount. A large portion of those that eat lunch for less than the maximum amount will ask the cashier for a receipt that is close to the maximum amount, even though they didn’t pay that much.
The cashier get a bit in tips, the employee gets refunded more money and everybody wins, right?
Increased Service Level
In Europe and North America corruption for increased service level has been institutionalized. It is often called “express delivery” or “rush service”.
This type of corruption is where the moral question about what is right or wrong is difficult to balance. In Europe you will call your broadband operator and pay for 24 hours express delivery, they will then pay one of their employees overtime to install your connection outside his normal working hours.
In Brazil you will order the same broadband service from your broadband operator, but instead of paying for a 24 hours delivery you will have to talk to the employees of the broadband operator directly and pay them to install your connection outside their usual working hours.
The question that often comes to mind is if there is a significant difference on how payment for increased service level is done in Brazil and other places in the world.
Increased Service Level Gone Wrong
The notion of having to pay for increased service level has such deep roots in Brazil that sometimes it has devastating outcomes.
Most prominent is the way wealthy priests are able to convince poor and uneducated Brazilians that paying the better part of their salary to him will ensure them a place in heaven.
Each case of religious brain washing like this is sad, it also gives a good understanding of how deep in the Brazilian culture the notion of paying for increased service level is founded.
Recommendation: Play by the rules
Our recommendation to foreign companies is to play by the rules and use common sense. There are large police forces that have as their primary task to catch corruption and they are more than willing to work upon tips from the public.
If you get into the radar of the police you can get all your business assets frozen for as much as five years and they can effectively put you out of business in Brazil.
Using "friendships" without any financial transactions is common in Brazil and can be used to increase service level with very little risk involved. The police won't care if you pay an employee of a broadband operator to have your Internet connection installed faster, but do not assume you will get away with paying for contracts with the government.
Corruption is a sensitive topic and we would love to hear from foreign and Brazilians about their views on everyday corruption in Brazil. Please use the contact form below.
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