Current Affairs Study: Czechs world leaders in tolerating use of gifts and entertainment to win contracts

11-06-2014 15:41 | Ian Willoughby

A freshly published international study from consultants Ernst & Young makes for disturbing reading when it comes to unethical practices in Czech business. In fact, the report says Czech executives rank as world leaders when it comes to tolerating the use of special events – and luxury gifts – to win contracts and keep clients sweet. I discussed the study’s findings with one if its authors, Ernst & Young’s Tomáš Kafka.

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Tomáš Kafka, photo: archive of Ernst & YoungTomáš Kafka, photo: archive of Ernst & Young “A large portion of Czech managers – approximately 70 percent – tends to justify unethical sales practices. Among those, the first would be entertainment: sending customers on trips to exotic destinations, or having some exclusive marketing events.

“The second practice would be providing gifts to customers to influence their decisions, such as expensive watches, jewelry, a computer. Or maybe also some barter services, like construction work.”

Isn’t it the case that providing entertainment also goes on in other countries and is not necessarily a corrupt practice?

“Yes, you are right. We were asking specifically about a decision by a customer to award a contract to the company and whether it is justifiable.

“The word corruption is actually from Latin and means influence… so in a way this sales practice is considered to be unethical. And in some countries it’s also illegal.”

As regards gifts, what kind of gifts are Czech executives giving in order to win contracts or maintain contracts?

“It was not really part of the interview, but overall from our practice we see definitely expensive watches. And we had some cases here in the Czech Republic where handbags or Cartier jewelry was provided to one of the public officials…”

Are you talking about Jana Nagyová, the former chief of staff to then prime minister Petr Nečas?

“That’s your conclusion, but obviously it was meant in this way.”

Is giving gifts seen as being different from giving a plain envelope full of cash?

“Yes. About 37 percent of respondents were basically supportive of the idea of giving gifts to win a contract, whereas only 6 percent supported paying bribes.”

Photo: Barbora KmentováPhoto: Barbora Kmentová Where do you think this difference comes from in the minds of Czech managers?

“There is probably… they feel that [cash bribery] is beyond the border, that this is something that is illegal.”

And is it also a hangover from communism where people had to give, I don’t know, a doctor a gift in order to get better service?

“I think the Czech mentality is to find the way around. It is crystal clear that giving an envelope is a bribe, whereas providing gifts or providing special entertainments is something people can easily justify. I would probably see it this way.”

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