Oliver Bullough
156 foreign affairs
their own governments. The reasons
why are spelled out in perhaps the most
interesting section of Montero’s book,
in which he contrasts the risks and
rewards that come from engaging in
corrupt behavior. He cites the work of
the economist Jonathan Karpoff, whose
research suggests that, on average,
companies have little more than a five
percent chance of getting caught if they
pay a bribe overseas; meanwhile, each $1
they spend on bribes results in an
average of an additional $5 in earnings.
The reward far outweighs the risk. From
this perspective, paying bribes is rational.
Karpoff ’s conclusions emerge from
legal proceedings brought under the
Foreign Corrupt Practices Act of 1977, a
piece of U.S. legislation passed in the
aftermath of Watergate that prohibits
American companies from engaging in
bribery overseas. Fcpa prosecutions and
the congressional investigations that
sometimes accompany them are central
to understanding how corruption works
and remain the best resource available to
anyone working on the problem. Montero
uses them to great effect in his analysis
of corruption in the Greek defense
industry in the late 1990s and early years
of this century, when American, Russian,
and European arms companies paid off
government insiders in order to win
contracts, inflating their prices to cover
the cost of the bribes. The higher prices
naturally added to Greece’s intractable
public debt, which exploded into a crisis
when the country went bust in 2009.
Montero also explains how, before
Chinese authorities took action a few
years ago, Western pharmaceutical compa-
nies exploited the fact that Chinese
doctors’ earnings were tied to the amount
of drugs they prescribed. The paymentavoids the inflated estimates that afflict
more sensationalistic accounts, and points
the way toward some new thinking about
how to combat this global scourge.
“A SLOW-MOTION DISASTER”
Montero selects his evidence with care,
and he correctly focuses not just on the
recipients of bribes but also on the
companies that pay them. These include
some of the biggest names in business:
Chevron, Halliburton, ibm, Pfizer, and
many more. “Bribery, unlike other crimes,
often plays out slowly, with secret pay-
ments flowing between a company and a
government over the course of years,” he
writes. “The result is a slow-motion
disaster, leaving economic, political and
social damage that cannot be detected
unless someone begins to look for it.”
Montero analyzes a succession of
scandals in order to draw out different
lessons. He begins with the oil-for-food
program that the un ran in Iraq be-
tween 1995 and 2003, when the United
States invaded the country. That deeply
flawed initiative allowed more than
2,000 corporations to connive with the
regime of the Iraqi dictator Saddam
Hussein to avoid un-imposed sanctions,
and it serves as an example of the failure
of global anticorruption conventions.
The program was intended to ensure
that the most vulnerable people in Iraq
did not suffer for the actions of their
government. Instead, it allowed insiders
in Baghdad to profit by extracting
kickbacks from companies hungry for
oil, all the while denying ordinary Iraqis
food, clean water, and basic medicines.
The scandal demonstrated how, when
confronted by officials who demand
bribes, corporations often put the interests
of their shareholders ahead of those of