It doesn’t pay to bribe a Prime Minister. “If you bribe a head of state, the amount you get from the contract is subsumed by the value of the bribe itself because the head of state extracts all the value of the bribe,” says professor Raghavendra Rau.

Rau, the Sir Evelyn de Rothschild professor of finance at Cambridge Judge Business School, has other interesting findings from new research that he recently published. According to him, companies gain from bribery; the gain could be as much as $7 for every dollar of bribe paid. But if you bribe a CEO, you’ll probably end up a loser. CEOs know their worth — look at the fat pay packets they give themselves (compensation committees are normally a farce). So it is better to start at the lower end instead.

According to Rau, his research shows that inefficient rather than best-performing companies pay bribes. “From the point of view of society, it’s terrible because the worst kind of companies are winning the contracts and that amounts to a distortion of resource allocation in an economy,” he says. All this should be interesting for companies (and politicians too).

So who’s paying? Indian companies and business groups have long bought licences. With the Licence Raj having faded away, there are other ways to line your pockets. The environment and land acquisition have become the biggest hurdles for new projects these days.

The main culprits are, of course, the multinationals — they have more money. The Wall Street Journal gives several examples of the US Justice Department targeting MNCs. Enron, of course, is the name on everybody’s lips. The company admitted that it had paid several million dollars to “educate” Indian politicians.

Among other cases are Lucent Technologies. The company did not disclose that it had spent millions of dollars on the Disney World and Las Vegas trips of some 1,000 Chinese officials. These were shown as factory tours. “German industrial conglomerate Siemens AG agreed to pay $800 million in US fines to settle bribery investigations involving alleged payments to government officials,” says the paper.

There is another side to the picture. According to Transparency International, Indian firms are the most prepared to pay bribes when they are doing business abroad. The top five are India, China, Russia, Turkey and Taiwan. The main reason is that these economies are expanding rapidly and their foreign forays have increased manifold. But, given that a lot of their expansion is to the Western world, these countries must also take the blame.

What does one do when faced with a bribe (to give or to take) in corporate life? Most people will advise you to stick to the straight and the narrow. If you do, others will run away with the spoils. A far better way is to discuss the issue in industry bodies and work out a common policy. If everyone is in the same boat, it is far more difficult to win a deal through bribery.

When it comes to a question of individual ethics, it’s your choice. Most companies have rules on what sort of gifts you can accept. It is also good to remember, like Macbeth, that “we still have judgement here”. Bribes either go out again as bribes or they sit in your closet and keep you in a perpetual state of panic.

A GROWING MENACE

The impact of corruption in India (%)

• Corruption is a deterrent and a key risk to the projected 9 per cent GDP growth rate – 31

• Corruption skews the level playing field and tends to attract organisations with lesser capability to execute projects – 100

• Corruption creates inefficiency in the system and hence increases the cost of operations – 99

• In many cases corruption is induced by the private sector – 68

• Corruption has had a direct impact on your business and reduced your company’s growth which it could have otherwise achieved – 45

• Corruption has reduced your ability to access funds from domestic financial markets – 11

• Corruption has reduced your ability to access funds from overseas financial markets – 16

Source: KPMG’s Bribery and Corruption Survey 2011