The Differences Between Bribery And Lobbying

By Manish Sahajwani | September 05, 2012 AAA
The Differences Between Bribery And Lobbying



Critics of lobbying suggest that it's bribery in a suit. A bribe giver usually gives an offer of money "under the table" in order to subvert standard processes. This could be paying a tax officer to clear reports with under-reported revenue or sending goods without an invoice. Walmart has been accused of bribing government officials in Mexico to obtain new permits faster in order to open stores sooner.

The SEC charged Johnson & Johnson under the Foreign Corrupt Practices Act (FCPA). Johnson & Johnson and its subsidiaries paid bribes to government doctors in Greece who selected J&J surgical implants. It bribed public doctors and hospital administrators in Poland in return for contracts. Romanian public doctors were bribed to prescribe J&J pharmaceutical products. J&J subsidiaries also paid kickbacks to Iraq to obtain 19 contracts under the United Nations Oil for Food program.

What Is a Lobbyist?
A lobbyist tries to influence political opinion to his or her benefit. Lobbyists traditionally were considered "information givers," usually in support of their cause to swing legislation and government agencies in their favor. Lobbyists are either individuals or organizations paid well by sections of industry to influence the movers and shakers at Capitol Hill. Fueled by the money of various industries, lobbyists have become their men and women at Washington. The total spending on lobbying has ranged from $1.44 billion in 1998 to $3.3 billion in 2011.

The top three spenders in 2012 include the U.S. Chamber of Commerce, National Association of Realtors and General Electric. The U.S. Chamber of Commerce has spent as much as $55,320,000 in 2012 to date. Increasingly, lobbyists are ensuring contributions are made from the grass roots up to influence decision makers at all stages. Lobbyists systematically build up support for their causes. They often have previous government officials joining their ranks, leveraging their understanding of how the government machine works.

For example, cigar lobbyists have campaigned for cigars not to be grouped with cigarettes. They lobbied for years to avoid government scrutiny and to propagate an image that cigars were not harmful, when in fact cigars are as harmful as cigarettes.

Let us look at the instance of the financial sector, which is the largest contributor currently contributing more to Democrats than Republicans. Investment and securities, insurance companies, real estate, and commercial banks all constitute the financial sector. Some top contributors in this sector include Goldman Sachs, The National Association of Realtors and Clarium Capital Management. During the banking crisis of 2007-08, this sector contributed over $468 million. Most of this money was spent to ensure that the government did not regulate the hedge fund industry. Banks have spent their money lobbying to prevent the government from undertaking a detailed scrutiny of their balance sheets.

The impact of lobbying is massive. It affects policy by influencing policy makers and therefore citizens, rather than just individuals.

Bribery
On the other hand, a bribe occurs on an individual level. The bribe may be in the form of a donation or favor in kind. A company's purchase manager may award an order to a supplier in return for undue favor in the form of money, against his company's policy of awarding orders based on criteria of quality and price. Public officers are offered bribes to enable evasion of taxes and the corresponding liabilities at an individual or company level.

Bribery is the first step of subversion of the system. Slowly but steadily, a parallel system is formed. This results in an unfair advantage for the bribe giver. Over time, the system erodes the economic foundation of the country, hurting the most vulnerable members of the society and filling the middle class with a sense of hopelessness and cynicism. Corruption is seen as endemic and at the heart of the systemic failure in some countries.

Bribery is considered illegal, while lobbying is not. Bribery is considered a sale of power. However, lobbying is considered an influence of political power by offering contributions that affect political outcomes.

Bribes may seem like small amounts compared to lobbying contributions, but therein lies the problem. Bribes cannot be accounted for and therefore a parallel economy blossoms. It creates inefficiencies in systems and obstacles. In the World Bank report, "Does Grease Money Speed Up The Wheels of Commerce?," the relationship between bribe payments and a variety of measures of official harassment (management time wasted with bureaucracy, regulatory burden and cost of capital) was studied. The evidence suggests that there is no support for the "efficient grease" hypothesis. In fact, a consistent pattern is that bribery and measures of official harassment are positively correlated across firms. It also increases the cost of doing business.

Recent Lobbying
Since lobbying is legal, lobbyists are required to register with the Secretary of the Senate and the Clerk of the House. Furthermore, lobbyists must file disclosures of their lobbying activity according to the Lobbying Disclosure Act of 1995. No such formalities are required of bribe givers or takers.


Lobbying is also used by civil rights and environmental support groups. In that sense, lobbying becomes a critical and important tool in influencing public policy. The gay and lesbian rights lobby is a civil rights campaign that aims at gender identity equality and removing sexual orientation-based workplace inequities. The Human Rights Campaign (HRC) spent $1 million on lobbying efforts in 2009. Its principal focus was on the passage of the Employee Non-Discrimination Act. It also lobbied for the Domestic Partnership Benefits & Obligations Act. The Act would give same-sex partners of federal workers health and pension benefits equal to opposite-sex partners.

The Bottom Line
Calling to further scrutiny is also the role of the politicians who seek contributions to vote for a policy or the average bribe taker. Senators also aggressively seek contributions for their campaigns and often request lobbyists to arrange for fundraisers. It is a symbiotic relationship. This is true of the bribe taker and bribe giver relationship as well.

The issue of lobbying vs. bribery can be discussed on finer points. While it is true that lobbying can be used to influence political opinion for human rights, it seems to be used more often than not by powerful organizations to suit their organizational interests at any costs. Bribery seems to have no morally redeeming features at all. It is a direct sale of power for individual gain.

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