Entrepreneurs don’t bribe and don’t take bribes

The war on drugs has proven you must fight demand and supply.

Its no good putting buyers (drug-users) in prison. You need to punish the sellers (drug-dealers) too. Especially if they’re selling a chemically-addictive substance.

Same applies to business. Its easy to preach about corrupt officials, but for someone to be corrupt there must have been a corruptor.

There are some things even more dangerous than chemically-additive drugs. Like owing someone a favour for paying your daughter’s school fees.

Charity is rare. Usually there is a price to pay. Rapunzel is a famous story because its true. Take the short term gain from the witch (turnips) and be prepared to pay the price of having your daughter taken away and held hostage in a tower.

I first encountered this when I was working at iBurst. We were one of the biggest buyers of bandwidth in the country and so we were constantly being courted by sellers of bandwidth.

One day I received an invite to the 2007 RWC from our bandwidth supplier. My wife and I spent five days on a yacht on the Mediterranean and watched to quarterfinals in Marseille. For free nogal.

We had a legend time. To cap it off, South Africa won that World Cup!

What a nice bunch of people to show their appreciation for my business.

Four months later I’m sitting in my boardroom and the penny drops. The CEO of our bandwidth supplier is shouting and threatening me because we refuse to keep our business with them unless they match the lowest price on the market.

That’s when I realised the RWC trip was not to say thanks for past business. It was to say thanks for future business. The unspoken deal is that they take me on a R500,000 trip and when it comes to contract renegotiations I agree to pay R6million more than market-related bandwidth prices.

Luckily we had an honest CIO, so we told our bandwidth supplier to bugger off, changed suppliers and life went on.

But that’s not how many CIO’s behave. By padding their expenditure on things that the CEO doesn’t understand, CIO’s can get their suppliers to pay for golf tournaments, overseas trips and much more.

The same suppliers also overlook the concept of the pie is big enough for everyone, as they even compete with small business suffocating them to bankruptcy. They don’t win by offering the best product. They win by being able to afford the biggest bribe.

That is corruption through and through. And suppliers that engage in these practices are no different from drug dealers. They belong in prison.

The private sector seems immune to being accused of corruption, as they’re not in the public eye — yet evergreen supplier contracts are overlooked and never questioned. The suppliers that have millions in contracts still cry foul when a competitor supplier uses the same tactics. The irony.

If you’re a CEO and you want to block the corrupting influence of suppliers the simplest policy is a ban on receiving gifts with a value greater than R300. Politicians and journalists have strict ethics not allowing others to so much as pay for their coffee in case it creates a conflict of interest, why not employees in the private sector?

Implement the policy and see who squeals the most. Fire that person and do a forensic audit. Don’t be surprised if its your CIO.

CEO’s that don’t want to corrupt clients must simply lead by example. A fish rots from the head. Watch out for companies that are known for flying CIO’s around for fancy shindigs. They’re the drug-dealers.

The good news is that it doesn’t affect the man on the street in the long run. Even the worst CIO’s are inevitably overwhelmed by great product. Blackberry is a great example. When it first arrived on the scene it was blocked by CIO’s until they eventually crumbled to pressure from their CEO’s for a decent phone that can handle work emails.

Then Blackberry got fat and lazy and started relying on CIO’s making the purchasing decisions for themselves rather than employees. The iPhone came out and RIM execs thought they were safe. Surely all the money they had invested in CIO’s would pay dividends now? No CIO would let their company abandon Blackberry and allow BYOD.

It took a few years until the CEO’s stepped in again. “I want to use my iPhone or you’re fired.”

RIM, the company behind Blackberry is now a shadow of its former self.

If you’re a CIO, ask yourself if you can look your children in the eyes and tell them you don’t take bribes. If you’re the CEO of an ICT company ask yourself if you can look your children in the eyes and tell them you don’t give bribes.

Because your kids will one day find out. The Internet is here. No more secrets

Originally published at The Big Almanack.