How to think about corruption when talking about Asian businesses, and Asian tycoons. Part 4 of the Asian Conglomerate series.
This is a companion discussion topic for the original entry at https://commoncog.com/lets-talk-corruption
This is a companion discussion topic for the original entry at https://commoncog.com/lets-talk-corruption
It means that one skill, present with all of these tycoons, is in reading the nature of power well, and in building alliances with the right group.
Just interesting to note, as someone outside the US, that even in a country with reasonably strong institutions, savvy businessman (cue: Zuck) turns their company’s policies around to align themselves with the current powers.
A logical question that I’ve been pondering: how does the US get stronger institutions over time? I imagine it doesn’t happen drastically.
What makes a country less corrupt over time?
And how is South Korea’s corruption story going?
I still remember the loud support for at-the-time presidential candidate Park Geun-hye in Seoul when I visited 10 years ago. Fast forward to today,
Former South Korean president Park Geun-hye was found guilty in 16 charges, including abuse of power and bribery, and was then imprisoned for 25 years.[4] Another former president Lee Myung-bak was also charged with corruption scandals involving major companies in 2018 and was sentenced to 17 years in jail.[5]
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I’m not a US citizen, so I’ll leave the commentary on what’s going on right now with Trump and Elon and the other CEOs to those who are more qualified to comment.
But I will say that I’ve read many business biographies of US history, and the development of strong institutions throughout the late 1800s to the 1950s was really quite something to see. It always happens in the background, and I’m not 100% sure how it happened. But it’s there. By the time you hit Katharine Graham’s biography, which is deeply intertwined with Washington machinery (her circles with filled with bright young men — it was mostly men — who wanted to serve in the government and make the country better), the US was already very good against corruption.
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The Age of Reform by Richard Hofstadter (1955) is good background reading on the development of U.S. institutions to pair with U.S. business biographies that overlap with ~1890-1940
It’s a retrospective look at the succession of U.S. political movements over that 50 year period (Populism, Progressivism, The New Deal) which, in part, reacted to and then targeted tycoons and business corruption
The book is 70 years old (good critiques of it are available) and it is political history (so not the best fit for Commoncog discussion) but it is fairly short and readable - a reasonable starting place for the curious
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Oh, thank you thank you thank you!
I was hoping someone would be able to give a book recommendation for this very topic.
Definitely not in scope for Commoncog, but I will want to read this.
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For a more general overview of how institutions develop and become stronger (or decay), I believe the best beginner’s guide is Fukuyama’s The Origins of Political Order and Political Order and Political Decay. It’s kind of long but I basically developed 80% of my mental framework based on this. (maybe 15% on Mann’s stuff and 5% other)
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Seconded. They are HUGE books but well worth the time.
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https://www.npr.org/2025/06/20/1254460243/foreign-corrupt-practices-act-bribery-glencore-sudan-oil
This is a Planet Money podcast episode about how Trump is changing the US’s anti-bribery laws. The description reads:
The U.S. has been policing bribery all over the world for nearly half a century using a law called the Foreign Corrupt Practices Act. But now, President Trump has said that this anti-corruption law is crippling American businesses. Since taking office, his administration has reduced the number of investigators, killed some cases, and changed the rules.
The transcript is available here.
There’s an interesting history embedded in this podcast about how we’ve come to believe that corruption and bribery is a bad, illegal, no-good thing. Before the FCPA, bribery was seen as ‘no big deal’ … even by American companies.
The timeline of events goes something like this (condensed by Claude from the transcript, but heavily edited by me):
1970s - Origins During Watergate
- Early 1970s: Stanley Sporkin, an SEC investigator, watches the Watergate hearings and becomes concerned about corporate financial practices
- During Watergate hearings: It’s revealed that major U.S. companies (Gulf Oil, Goodyear, American Airlines, Ashland Oil) were making illegal campaign contributions to Nixon’s re-election campaign.
- Senator Frank Church’s investigation: Discovers these same companies were also paying bribes to foreign officials
- “What the senator learned in his hearings was that many companies saw bribing, particularly in developing countries, as grease in the wheels (emphasis mine) — you know, a way to get important and lucrative business deals done. (…) I think that there was fewer qualms about it then. There was this idea that bribery made things go better, you know? That it was kind of that governments were bad, and to the extent that you could get government out of it with a bribe, then actually that could help market efficiency.”
- Lockheed scandal: The aircraft manufacturer was found to be paying millions in bribes to the prime minister of Japan, a Dutch prince, and the president of Italy in exchange for jet contracts. When this broke, the Japanese Prime Minister was forced to step down, and Italy’s Democratic president was ousted by the Communist Party.
1977 - FCPA Enacted
- Congress passes the Foreign Corrupt Practices Act
- U.S. becomes the first country to prohibit its companies from bribing foreign officials
- Initial corporate reaction: The U.S. Chamber of Commerce complained this would hurt American companies’ ability to compete globally, because only American companies were barred from bribes.
- “The US Chamber of Commerce was just like, this is going to hurt our ability to export. It’s going to undermine our ability to kind of engage in the global economy. This is going to really hurt us.”
1977-1987 - Minimal Enforcement
- As a result, only 8 cases were prosecuted in the first decade.
- U.S. companies struggled to compete as they were the only ones prohibited from bribing
1990s - International Expansion
- U.S. pushes for international cooperation through the OECD (Organization for Economic Co-operation and Development)
- 1997: All 29 OECD countries sign an anti-bribery treaty (Convention on Combating Bribery of Foreign Public Officials in International Business Transactions)
- This covered most major developed economies where multinational corporations were headquartered
- This was a really good 80/20 solution: you didn’t have to convince all the countries to sign, just the ones where most of the major MNCs were domiciled. As a result, global norms against corruption took hold, and other countries gradually set up their own anti-bribery offices.
2000s-2020s - Increased Enforcement
- More international cooperation leads to increased prosecutions
- Major cases against Goldman Sachs, Siemens, Halliburton, 3M, Herbalife, and Glencore
- Economic consensus develops: Bribery is bad for competition, enriches corrupt officials, and actually increases business costs
China’s Role as Non-Participant
The transcript notes that China is not a member of the OECD, the international group that oversees anti-corruption rules around the world. And the Chinese government does not seem to be all that worried about Chinese companies paying bribes to foreign officials. Examples include Chinese companies paying bribes in Congo for cobalt and in Namibia for lithium. This gives them an advantage.
2025 - Trump Administration Changes
- Trump calls FCPA “a horrible law” that should be changed
- Executive order links U.S. national security to companies’ ability to compete for critical minerals and infrastructure
- DOJ closes about half of FCPA investigations
- New guidance suggests prosecutors should consider whether U.S. businesses or national security suffered harm when deciding whether to prosecute
- Glencore’s compliance monitoring ended more than a year early
So, who wants to bet that the number of American companies engaging in bribery will go up in the coming decade?
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