Bribery is inevitably something that sits under the surface, yet the scale of the problem is nonetheless enormous, with statistics suggesting over $1 trillion is paid in bribes each year around the world.

A recent study from the University of Cambridge explores some of the thinking companies go through when deciding whether to make a bribe or not.  The researchers found that, unfortunately, bribery appears to pay off, with a $1 investment generating a return of up to $9 in company value.  This only declines if citizens of the country where officials are bribed are well-informed.

A significant problem

The authors highlight that around a third of legal professionals representing multinational corporations surveyed by the OECD said that colleagues had participated in some form of international corruption.

Despite this apparent commonality, relatively little is known about how companies determine the benefits of bribery.  The researchers examined 195 bribery cases from 60 countries between 1975 and 2015 to try and find out.  In each of these cases, companies paid officials in exchange for being given a particular contract.

The researchers conducted statistical analysis on the exchange to try and determine whether any links exist between the size of the bribe and the subsequent value of the company.  The source of the bribes themselves were widespread, including companies in construction, oil and gas, aerospace, and electronics from the UK, France, Japan, Germany, and the US.  Officials were equally dispersed but typically included government ministers, governors, military officers, and judges.

Size matters

The analysis found that the size of the bribe was crucial to the returns generated, with each $1 increase in the size of the bribe resulting in a $6-9 increase in the value of the company as a result of securing the contract.

There was also a key role to be played by the public, however, as when they had greater knowledge of such affairs, the returns on bribery for companies was much less.  The greatest benefits emerged in autocratic countries where politicians were not accountable to the public.

There was also a strong correlation between such regimes and levels of corruption, as well as a link between efficient law enforcement and the size of the returns from bribery.  Worryingly, however, the study suggests that even being caught and convicted did little to diminish the size of the benefits for companies.

It underlines the difficulties inherent in tackling the trillion-dollar problem and ensuring that the public can have faith in markets and in governments to be fair and transparent.