Bribe

DEFINITION of 'Bribe'

A bribe is an illegal payment from one party to another, usually in return for a legal or financial favor. Bribes are often made to public officials or heads of other regulatory agencies to escape legal convictions or unfavorable rulings, or as an incentive for the payee to bend or overlook pertinent regulations that would otherwise restrict the payer.

BREAKING DOWN 'Bribe'

Bribes and kickbacks of any kind are, obviously, nondeductible. Bribes that take the form of kickbacks to insurance or securities customers are known as rebating and can result in disciplinary actions by the regulatory authorities.

Types and Scales of Bribes

Bribes can be given at a variety of different scales, ranging from minor transactions between individuals to major deals between corporations and/or governments. A common example of a small scale bribe might occur at an expensive restaurant. In an effort to obtain a table before other customers, a patron might hand the host or hostess a small amount of money to earn favor. A bribe on a larger scale might involve a substantial amount of money or goods. As such, these bribes almost exclusively involve larger institutions capable of undertaking such a significant deal. Companies in controversial fields of business, such as oil companies and gun manufacturers, might bribe certain people of influence to look the other way in regards to their actions. Bribery is a key issue at the intersection of business and politics, as there are always concerns that those in government are being illegally influenced by those in business.

The Difference Between Bribes and Lobbying

Bribes and lobbying are almost the same in concept, though there are key differences between the two, at least in American politics. The most significant is a bribe usually refers to an illegal or immoral exchange, while lobbying involves outside consultants arguing for favors as opposed to buying them. Lobbyists act as a very common way for special interest groups to influence government policy without stooping to the act of bribery. However, there is controversy as to whether lobbying is essentially a legalized form of bribery. Some foreign governments, such as South Korea, even outlaw lobbying entirely due to this blurred distinction. The argument in favor of lobbying is that by banning it, bribery might simply take its place. Lobbying acts as a legal measure to prevent full-scale corruption, while bribery allows those with money and influence to buy whatever favors they require.

RELATED TERMS
  1. Facilitating Payment

    A financial payment that may constitute a bribe and that is made ...
  2. Foreign Corrupt Practices Act

    A United States law passed in 1977 which prohibits U.S. firms ...
  3. Lobby

    A group of like-minded people banded together to influence an ...
  4. Kickback

    The payment of something of value to an individual with the goal ...
  5. Corruption

    Dishonest behavior by those in positions of power, such as managers ...
  6. Proxy Tax

    A tax on lobbying or political expenses that exceed an allowable ...
Related Articles
  1. Markets

    Why Lobbying Is Legal And Important In the U.S.

    Political lobbying is again at a heightened spend level, and again being criticized; making it important to remember lobbying's legality and importance.
  2. Markets

    Lobbying: K Street's Influence On Wall Street

    Corporate lobbyists have the power, influence and political backing to affect your portfolio. Find out how.
  3. Investing

    What are Business Ethics?

    Business ethics is the system of laws and guidelines by which business professionals and corporations operate in a fair, legal and moral fashion. It’s a broad topic, covering everything from ...
  4. Investing

    Why These Industries Are Prone To Corruption

    Corruption is like life in that it exists pretty much everywhere the conditions are favorable.
  5. Markets

    The Economic and Social Effects of Corruption

    Corruption results in inefficiencies in the operations of emerging economies, and prevents such economies from reaching the maximum level of development.
  6. Markets

    The Pitfalls Of Financial Regulation

    Regulatory actions usually have lofty intentions that end up with unintended and negative consequences.
  7. Investing

    Why FIFA Can't Give the 2022 World Cup to Qatar

    Learn about the high price tag for the 2022 World Cup in Qatar, along with allegations of human rights abuses and bribery scandals in the bidding process.
  8. Markets

    Money And Politics

    Learn about the progression of events and legislation that shaped and influenced today's political environment.
  9. Markets

    Justice Dept. Comes Up Short in Wal-Mart Probe

    After four years investigating bribery allegations against Wal-Mart (NYSE: WMT) executives in foreign countries, BloombergBusiness reports the Justice Dept. is coming away with nothing substantial. ...
  10. Managing Wealth

    Risks Associated With Government Contracts

    Government contracts can be rewarding, but they also come with a variety of risks.
RELATED FAQS
  1. How do business ethics differ among various countries?

    Find out why business ethics differ between countries, including laws relating to controversial topics that may differ from ... Read Answer >>
  2. What are the advantages of a limited government in connection with a capitalist economy?

    Read about the advantages of limited government, why free markets are more efficient and how social cooperation grows where ... Read Answer >>
  3. In what ways does government regulation impact the insurance sector?

    See how government regulation of the insurance sector leads to higher prices, more risk and a system where the consumer has ... Read Answer >>
  4. Why is overhead cost allocation sometimes manipulated on an income statement?

    Learn why companies sometimes manipulate overhead costs to boost the appearance of overall profitability, and other reasons ... Read Answer >>
  5. What are the different groups involved in corporate governance?

    Learn about the challenges inherent to defining and executing corporate governance, and understand why different groups work ... Read Answer >>
  6. How does the government influence the securities market?

    Governments generally say they don't like to take an active role in the securities market (except for regulating it); however, ... Read Answer >>
Hot Definitions
  1. Bond Ladder

    A portfolio of fixed-income securities in which each security has a significantly different maturity date. The purpose of ...
  2. Duration

    A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. ...
  3. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  4. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  5. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
  6. After-Hours Trading - AHT

    Trading after regular trading hours on the major exchanges. The increasing popularity of electronic communication networks ...
Trading Center