Bulletin Autumn‧Winter 1999

Since World War II, the US has been a majo r force i n the wo r ld economy. The issue of cross-border bribery by American companies was first brought to public attention by the Foreign Corrup t Practices Ac t (FCPA) in 1977. It was recognized that many American companies were involved in questionable foreign payments in order to gain an edge over their competitors. It remains unclear, however, whether the Act has had any detrimental effect on the competitiveness of American companies in international business. In the context of US-China business, again little is known about the impact of the Act. Cross-border corruption exist s also i n business activities between mainland China an d Hong Kong. According to a press release issued by the Independent Commission Against Corruption (ICAC) i n July 1993, i n some 50 Ho n g Kong companies w i t h a p r oduc t i on base on th e mainland, payments intended to bribe accounted for three to five per cent of their operating costs. While the Prevention of Bribery Ordinance in Hong Kong gave th e ICAC the power to combat corruption in Hong Kong, there has been no legislatio n similar to the FCPA that deals w i t h cross-border corruption. Mainland Chinese authoritie s too show much concern about the issue. The Premier's Office has issued Corruption Prevention Directives to tackle the problem. I n theory such directives should, together w i t h the measures taken i n the US and Hong Kong, be able to wipe out cross- border corruption among these three places. However this is far from the reality. Cor rup t i on Perception I ndex Indicates Wo r sen i ng Si tuat ion Transparency International, a non - gove r nment organization headquartered i n Berlin, compiles regularly Corruption Perception Indices (CPI) for different economies in the world. Literally a poll of polls, the CPI combines the subjective evaluatio n of businessmen, political analysts, and ordinar y citizens. Wi t h 10 being the highest score, and meaning the least corrupt, corruption in Hong Kong, China mainland, and the US has been on the rise over the last 15 years (see Table 1). It wo u l d be worthwhile to study the factors behind this phenomenon. CPI score 1980-85 1988-92 1996 1997 U S 8.41 7.76 7.66 7.61 H o n g K o n g 7.35 6.87 7.01 7.28 C h i n a 5.13 4.73 2,43 2.88 Source: Transparency International Table 1 H ow Ethical No rms Ope r a te The influence of ethical norms on cross-border business transactions can be examined from three different perspectives: cultural relativism, e t h i c a l i mp e r i a l i s m ( u n i v e r s a l i sm ), and the d e v e l o pme n t of contextualized hypernorms . Research News 45