About corruption

I delayed a bit the post of my essay about corruption due to two major events I didn't want to overshadow: the elections and the Coldplay/Babasha concert. Both events, I believe, showed once again that we Romanians are cursed - the Mioritza curse struck again!

The poorly organized elections started with the local and EU elections aggregation, brought in front of the people five ballots, and concluded with a questionable counting and storing process. Additionally, it was a very hot day and night for which, as usual, nobody was prepared. Cursed! Our voting system is not far from the one used in Tanzania & Zanzibar (these are part of the same country, with different governments and elections). I was there once during the elections, and I had so much fun - similar to here in my home country.

The Coldplay show was the definition of inadequacy, both in terms of guest selection and public reaction. Coldplay invited Zucchero in Milan and Roger Federer in Zurich to sing together. If they really wanted to make a statement, they should have invited Gheorghe Zamfir, Damian Draghici, or many others, great symbols of the Rroma community. However, leaving aside the questionable choice, the public's reaction showed where Romanians stand with the European multicultural diversity - at the bottom!

With all these being said, let us move to our main topic: corruption. Probably the most ingenious and lucrative example of corruption I have encountered was in an American Latin country. I had the opportunity to work in 1999-2000 on a SAP rollout project in Mexico City. We were staying in the posh district of Polanco, in a superb Nikko (currently Hyatt Regency) hotel of 30 floors or so. Every morning two armored SUVs would pick us up at 7:15 sharp. A driver and an armed male escort for each of the cars. Not far from the hotel, we noticed almost every morning a policeman waiting on the sidewalk.

One morning we asked the driver what the policeman was doing there so early in the morning. He started laughing: "Have you noticed the 'No stopping' zone sign? It is right in front of a successful grocery and fast food business. Every morning, a truck with fresh food and other goods stops there to supply the business and the cop is there to collect the toll. The toll is split, of course, up the chain of command." We asked which came first, the business or the sign. And the driver replied giggling, "The business, of course - this is Mexico! When the business became very successful, they put the sign. The very thoughtful and smart model applies only to successful businesses!" True or just an urban legend, not sure!

Another story I want to share with you comes from the US. I was invited by a sponsor of the Democrat Party to his house for a late lunch. The invitation came as, my brother-in-law was at that time chief of staff for a Maryland Democrat congressman, and well acquainted with this gentleman of Armenian origins who was worth about half a billion at the time, back in 2002. Not to mention, on his Maryland property, he had a 9-hole golf course, two tennis courts, a mini-football field, and more. I was shy at first, but after I saw that he let his staff go home - it was a rainy Sunday afternoon - and he cooked surf and turf for us, I felt more comfortable.

So, I decided to ask him about politics and corruption in the US, especially compared to Romania. I also asked him how come he is in such a good relationship with the democrats, like my brother-in-law's boss, and not with the traditional Republican Party people, like most wealthy individuals.

He began his explanation by saying that American society developed quickly and effectively in close relationship with business. During their relatively short history, American businessmen - many of whom became politicians - realized that corruption cannot be eradicated but could be controlled through smart legislation. and taxation. Practically, the fundraising events we all hear about are a way to "bribe" your favorite politician and supporter openly. Sometimes there are limitations on how much you can donate, but people found a solution for that as well. They book a full table at the event and bring other people on their payroll to donate as much as they do. This way you can easily multiply the donation by 8 or 10, which is the size of a normal round table at such an event. All this cash is taxed by Uncle Sam, everybody wins, and there is not much corruption left. It is the way a person supports a certain party or a certain candidate they favor and need help from. The major difference is that every dollar collected is controlled and can be used only for approved activities, individual politicians, or parties.

The second interesting thing he told me is that he doesn't donate only to the Democrats, he equally donates to the Republicans, depending on where his interest lies, maybe a particular city, region, industry, etc. He gave me a simple example: opening a mall. He needs infrastructure, roads, water, energy, and a bunch of approvals. So, he needs the support of the politician who was elected and runs that constituency. He sends a petition and within 30 days, the politician's cabinet must respond. But not before having lunch or dinner together to discuss the donations the businessman should make to the politician for the upcoming campaign, which, for local elections, happens every two years. The bottom line is that in the US, business cannot run without politicians’ direct involvement, and politics cannot be conducted without a lot of money, most of it coming from businesses. Both politicians and businessmen win.

Looking now from a Romanian perspective, just think for a second of the big fuss our media makes if a businessman is seen having lunch or dinner with a well-positioned politician. Corruption is written all over the place. This is probably true in 90% of the cases, but what about the other 10%?

My host said bluntly that in the world we come from (Romania, Armenia, CEE, and even Europe), such a model is impossible to implement at scale and would require a dramatic shift in culture and local mentality. We were simply not raised to accept it.

I picked two extreme examples of how two countries treat corruption. Which one would you prefer?

I lived abroad in the US and the Netherlands between 1997 and 2005. From what I was told, I was away during the darkest period of corruption in Romania. When I came back, I dealt with the local market for a few years before moving to a delivery European management role. Those days, things were still bad but showed a positive development. Some politicians were already under scrutiny and even sentenced.

I was hired by a company where bribery is almost impossible to engage in. In general, American corporations are very careful in world regions known for a predisposition to corruption, such as the Far and Middle East, Eastern Europe, and South America. The set of control boards and approvals make it almost impossible to hide money in the offer and then give it away during the delivery. That is why very few large American corporations were involved in Romanian corruption scandals, even though their products were implicated, like the Microsoft licenses case. The traditional way to do business at that time was to have a prime contractor that was willing to "cooperate", while the corporations selling the products didn't want to hear or know what was happening behind closed doors.

The IT ecosystem in Romania was rocked by several major corruption scandals, leading to some of the industry's icons, mostly Romanian entrepreneurs, either ending up in jail or relocating outside Romania to countries where extradition is unlikely to happen if one has sufficient financial resources.

Others were caught in various corruption schemes, but in the most traditional Romanian model of switching sides, opted to become whistle-blowers for their market fellows, partners, competitors, and clients. For a few, this has been a lucrative method that helped them to escape prison until today.

I do not have an in-depth knowledge of the local IT market today, but from my perspective, it appears to be more mature and less corrupt. By the way, in September, I was part of a delegation that met the Prime Minister to discuss the IT Romanian Government agenda. On that day, Apple, IBM, and Amazon were invited for discussions at the Victoria Palace.

I remember two decades ago when another Prime Minister praised a prominent local IT house. A few years later, the president of that company went to jail for corruption and implicated several important players in the Romanian IT market. O, tempora! O, mores!