Manual for Azerbaijan companies Rena Safaralieva

SELF-ASSESSMENT  QUESTIONS  TO CHAPTER  IX.  

CORRUPTION AND BUSINESS     

   

The questions below are designed to assess  your understanding of the material.  

 

Basic notion of corruption  

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Define of corruption and list its forms.   

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Is the complete elimination of corruption possible?  

Corruption vs. ethics 

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Define the black, white, and gray  zones of economic activity?    

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What can businesses do to reduce the gray zone?    

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How does ethics relate to corruption, if corruption, according to legislation of many countries, is a 

criminal offence whereas ethical issues are often unregulated?  

Estimates of the level of corruption in Azerbaijan 

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What are the current estimates of the level of corruption in Azerbaijan, according to external and 

internal research?  

Organized crime and money laundering 

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What is the difference between organized crime in the West and that in transition economies?   

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What is the level of organized crime in Azerbaijan and why?  

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What is understood under laundering of dirty versus shadow money?  

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Please give the advantages and disadvantages of corruption and their proportion.  

Corrupt countries and international business 

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What challenges do companies face working in corrupt countries?  

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What issues are  of particular concern  to international companies  in respect to hiring  local 

contractors?  

Anti-corruption legislation and activities  

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Please list international legal instruments designed to  combat corruption.  

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Does Azerbaijan have a legal framework to combat corruption?  

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What organizations lead the global campaign against corruption?  

 

CASE STUDIES FOR CHAPTER  IX. CORRUPTION AND BUSINESS     

 

Please read the cases below and chose your answer from the options provided. Please substantiate your 

answer. The notes to cases  can be found at the end of the book.  

 

 1. My company has a good clientele base and potential for expansion. I was awarded a tender from a 

large company to cater for   their 120  employees, who work at a facility in a suburb, 120 km away from 

the city.  I will need to rent land in this suburb and construct a small warehouse close to the facility. I 

have a well designed business plan, but lack funds. I went to a private bank for a loan and realized that an 

employee of the bank’s credit department expects a “kickback’ of $10,000 for a $50,000 loan. What 

should I do:   

 

a)

 

Pay the “kickback”, because this is the way business is done in Azerbaijan?    

b)

 

Inform the bank management of extortion?  

c)

 

Try to look for another bank?  

d)

 

Ask my customer for advice?  

e)

 

Anything else?  

 

2. You own a private clinic . Some of your staff doctors  are partners and some are employees. The latter 

are paid accordingly to the income  they generate for the clinic.  Patients are  told the cost of services 

rendered  by a doctor  after examination  and requested to pay  at the cash  desk in accordance with a 

fixed price list,  depending on the diagnosis, doctor’s qualifications, and equipment used. You have 

noticed that employee doctors exaggerate the cost, while   some patients push  money  on the top of the 

official price directly to doctors. You yourself had experience with unsolicited bribes and know that 

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patients believe that if they do not “grease” the doctor, they will  not get good service.  That is not your 

policy, though, and the partners do not want non-partner doctors to earn extra. Do you:  

 

(a)

 

Ignore the extra payments? 

(b)

 

Prohibit doctors from accepting extra payments with the threat they will be fired?  

(c)

 

Post a  price list and notices asking patients not to pay extra?   

(d)

 

Make a uniform payment for all patients, regardless  of their diagnoses,  which is higher than the 

average payment   (if they want to pay more, why not)? 

(e)

 

Anything else?   

 

3. I am  a highly paid local environment   consultant  for a foreign oil  company.   I have been contracted 

several times before and am now negotiating a new contract.  I want  the contracting officer to employ my 

daughter  as a secretary  in his department and am willing to reduce my fee by 20%, equivalent to 6 

months’ of her salary. I think this is a good deal - the company will have a secretary, effectively for  free.   

I know there is a vacancy  at the department, her English is not bad, she can use a computer, and she’s 

just as bright as other young people working for other foreign companies.  So, this is not a bad deal for 

the company, and I don’t think this constitutes corruption, as  no money will change hands. Still, I 

hesitate. Should I:  

 

(a)

 

Directly suggest a deal?  

(b)

 

Inquire about the vacancy and hint that I have a qualified daughter?  

(c)

 

Send my daughter’s resume to HR? 

(d)

 

Forget about the whole thing?  

(e)

 

Anything else?           

 

4. I own a small company, consisting of a shoe manufacturing workshop and a retail shop. I recently 

increased my production capacity and opened a second shop, increasing  my  total three months  turnover 

to over 125 million manat. I therefore no longer qualify for a simplified rate of 4% of turnover anymore. 

My accountant suggests to  re-register a  second shop in my wife’s name. As for the workshop shop, I 

should  either register it  in  accountant’s  name or  register  my employees as  individual craftsmen, who 

will be taxed at 10% of profit. Should I:  

 

a)

 

Calculate the cheapest option?   

b)

 

Pay taxes as due?  

c)

 

Try to  come “to terms” with tax officials?  

d)

 

Look for “protection”?  

e)

 

Anything else?           

 

5.  I’m a procurement officer for a foreign oil company.  A particular company advises me that if I 

continue to purchase office supplies through them, I will receive 10% of the value of monthly orders in 

cash on the last day of every month.  They have assured me that they will never tell my boss, no one will 

ever know. I receive a good salary but, of course, a few extra dollars each month is always welcome and 

will benefit my family.  I have a sick mother and her medical expenses are high. What do I do:  

 

(a)

 

Agree?  

(b)

 

Refuse and report the incident to my manager?  

(c)

 

Refuse and keep the whole thing to myself? 

(d)

 

Anything else?  

  

6. You are a senior  cartographer  with a  land survey  firm. An international oil company hired your firm 

to do land survey and select  the most optimum route for a pipe line,  which  this company plans to 

construct. The  oil company   has just  received your report. You cannot be sure that  you are the single 

source of advice to  the  oil company, as they might have  ordered   this service from a number of  your 

competitors as well. So,  you have no chance to know the final route. However, due to geographic 

features of the regional  landscape (rivers and ravines),  you are sure that a particular section  cannot be 

bypassed in anyway.   You  are tempted to drop a word  and lend some money to a friend of yours  to buy 

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