
Ask HN: How have you dealt with corruption? - puppetaccount
A technical person at a potential large government customer of ours invited me to discuss our technology with him outside the office. This could be a red flag in itself but we had met twice before and I had learned that he graduated from the same school as I and around the same time I did and we knew some people in common. Additionally, he had given me a paper of his to read which was pretty decent and said he would like feedback. In general, he seemed like an enlightened techie who was enthusiastic about our technology and technology in general. There seemed to be no red flags.<p>The first time I met him, we discussed his paper and our project in general and he was generally encouraging, saying his organization could be very bureaucratic but he really believed what we were doing was the future and he would pull for us. He also indicated he was stifled in his job and would be interested in working for us in the future. This was a bit of a red flag but considering our connections outside of this project, it seemed like it could be an innocent thing. I told him that if he decided to leave his employer he should let me know and that we were at least a few months away from thinking seriously about hiring someone with his skills.<p>When I met him the second time, he out and out suggested that we pay him to push our project through and, when I told him his employer would most likely find that objectionable, he suggested various ways of hiding it. I was too shocked to say anything, afraid he would sabotage us if I said no to his face and insulted him and the only thing I could say to him was that my cofounder is very by the book and I really have to run it past him and that he should double check to find if it is actually allowed.<p>I have no intention of paying him or dealing with him again, but I feel dirty for not telling him off on his face. I am just posting this here to vent and see if anyone else has faced similar issues. How did you deal with them? Any advice for me?<p>How could I have handled this better? I am asking this seriously. Although I did not do anything wrong (or so my partner tells me), I feel that not doing anything more assertive than what I did was wrong. :(
======
edw519
You nailed it.

If you had not stood your ground, you would have sacrificed all your hard work
for nothing.

If you had pushed any more than you did, you would have created an unnecessary
drama that would have diverted your focus.

You feel badly right now because you're normal. This shall pass.

Even the fact that you registered a puppet account to discuss this clearly
demonstrates that you know how to handle a delicate business matter. If the
quality of your product matches the integrity of your character, you have
great success awaiting you.

Respect.

~~~
puppetaccount
Thank you for your kind words.

------
gstar
I've dealt with this when I had to mop up after a predecessor made a habit of
taking bungs at a government department.

My advice to you is that you should have absolutely nothing to do with this.
You should forget the sale now (it's a possibility that it was only
entertained in the first place because your associate thought the payoff would
be likely).

If you can anonymously tip off this person's superior one way or another,
you'll be doing a good thing for everyone (citizens, colleagues, bung-seeker)
in the long run.

This advice only applies for government - in private enterprise this kind of
thing is pretty much par for the course on very big sales, but in modern times
it normally takes the form of valuable free stuff rather than cash.

~~~
puppetaccount
The dilemma is clearly between the larger good and my selfish interest in not
seeing my company hurt. The industry we operate in is very narrow and while
losing thus customer alone would hurt us a lot, having someone there say
negative things about us could destroy us. I have already written off this
customer, because if nothing else, the stress of having to manage a corrupt
person while not indulging in corruption is not worth whatever money we make
off them. But we would prefer to not get vilified in the industry because of
someone else's character flaws.

I will find out about how to anonymously report this. I am thinking I could do
it at least after a few months so at the very least it's not obvious who did
it.

~~~
percept
IANAL but it might not be a bad idea to take a few minutes and write down who
said what and when, while it's still fresh in your mind. Maybe even in some
official company record ("captain's log").

Ya never know . . .

~~~
sethg
I agree. If the situation escalates to the point where you can't avoid legal
action (e.g., your contact accuses _you_ of doing something corrupt), it would
be useful to have a paper trail for your side of the story.

------
visitor4rmindia
It makes me sad to realize I read the OP and thought "Isn't this normal?"

Then I read all your comments and realized just how different the US is from
India and how far we still have to go.

Sigh

------
alecco
Watch out! Go to a lawyer first. Always lawyer. And a good one.

FBI might squeeze you to do things you don't want to do. Also the accused will
retaliate in some way to discredit you and your company. Never deal with law
enforcement without going to a lawyer first, unless it's an emergency (911
first, lawyer 2nd.)

Lawyer first, always. Not even your co-founder as he could mess things up
(Unless he is a lawyer.)

~~~
puppetaccount
My cofounder is a solid guy. I would trust him with my life. So I have already
shared this with him.

The advice to get a lawyer is sound though. Unfortunately we don't have a lot
of money and what money we do, we would prefer to pay our handful of employees
with. We are not profitable.

But I do have some friends who went to law school. So I'll ask a friend pro
bono.

As you can imagine, any legal step would be a huge distraction, and as a
startup that really hurts us.

~~~
alecco
Cool.

> My cofounder is a solid guy. I would trust him with my life.

Good guys can mess things up unintentionally. Consequences on things this big
can affect your life forever.

> Unfortunately we don't have a lot of money and what money we do, we would
> prefer to pay our handful of employees with. We are not profitable.

If you are in US there have to be several organizations to give you free
advice on similar matters. I bet they even have 1-800 numbers.

> But I do have some friends who went to law school. So I'll ask a friend pro
> bono.

Good start.

> As you can imagine, any legal step would be a huge distraction, and as a
> startup that really hurts us.

Take this as training. Surfing the legal ecosystem is part of
entrepreneurship. Ignoring this costs (in both time an money) can cost you
more than your investment. Be smart.

I dealt with exactly the same situation but not in US. People doing that in
the open tend to have a network of support. Do not underestimate the
consequences of your (or your cofounder's) actions. Watch out.

~~~
puppetaccount
The point about organizations is a good one. I will look them up. The advice
to be very careful is also on the money. I appreciate it and will do so.
Certainly, one of the things worrying me is that he might not be alone.

Hope your situation turned out o.k.

~~~
alecco
Thanks. Yeah, it turned out well. It was a good eye opening experience for me,
personally. It's the way to learn many things. And what doesn't kill you...

------
9oliYQjP
You need to withdraw your product/service from consideration by this customer.
In other words, refuse to sell to them. Come up with any reason. This guy
sounds like your typical corrupt politician or organized criminal.

They typically do you a "favour" that you didn't even ask for, one that is
executed in such a way as to break some rules/laws however petty. Having
preemptively performed a favour for you, they have you on their books for when
they want to call on you for a return favour. Even though you don't think you
owe them one, the shady nature of that first favour is always a dark cloud
hanging over your head. They're master manipulators and blackmailers with a
balance sheet of favours. It's simply warped.

You shouldn't be afraid that he'll sabotage your bid. You should be afraid
that he'll give you the bid anyway, then call you up later saying, "look I did
this favour for you, now I need you to do X for me." From there it's a
slippery slope. The only way I've found to deal with these folks is not to
deal with them at all and deny any favours from them. I wouldn't accept a
glass of water from them if I were dying of thirst.

------
zaidf
I don't know who to hate for the repeated advice to talk to lawyers for
anything half-legal.

Hey, when people ask legal questions, they have already considered seeing a
lawyer.

------
dkokelley
My only non-professional advice is do not in any way do business with the firm
he works with until after the situation is dealt with. Even if you get the
contract through normal channels, it could blow up in your face later if this
guy was found out. Report it, and get a record of you reporting it. That way,
if anything happens, you can pull out your record and say 'we already reported
this'.

Also, assuming this is a US department, this site may be the way to go:
<http://www.gao.gov/fraudnet/fraudnet.htm>

I'm not sure if it's how you report bribe solicitors, but if it isn't I'm sure
there are similar government sites set up for that. Good luck. I don't envy
your situation.

------
percept
[http://www.washingtonpost.com/wp-
dyn/content/article/2009/03...](http://www.washingtonpost.com/wp-
dyn/content/article/2009/03/12/AR2009031201426.html)

------
fiaz
You did perfectly fine - seriously.

Alternatively, you could have gone the comedic route by making the whole thing
into a big joke, but it's not like things would have been better.

~~~
puppetaccount
Having thought about this a bit, I feel like if I had turned a cold shoulder
to his proposal to work for us in the future, he would have been discouraged
about it. I could also have communicated in some other way that we work by the
book.

At least then, we would have had the chance of working with other (possibly
non corrupt) people in the organization to get our project through. I mean
there are other people there who are enthusiastic about it.

Anyway, that's just me ranting. Thank you for your words.

------
justlearning
If I may ask - which country?

------
gojomo
Without prematurely compromising your identity or giving more details than
you're comfortable sharing, can you say

(1) which country;

(2) which level of government (fed, state, city, etc.);

(3) anything else about the geographic region or field-of-work?

------
jason_tko
Running an IT service business for 7 years, I've run into a number of dubious
situations. Heres a couple.

A client introduced me to a salesperson who works for a competitor company. We
sat down for coffee, and his opening line was that he has a million dollars of
deals in the pipeline (which would have been a very welcome addition to the
bottom line), and he was interested in bringing all these customers to my
business. Immediately after this, he asked for a very large base salary, which
was a bit surprising given the time passed in the interview, but I suppose
within general norms.

In any case, I was interested in bringing him on board, but since we're a
smaller company, I'm very careful with my hiring decisions. As you all know, a
wrong hiring decision can cause all sorts of problems and headaches for a
small focused team.

So I started by asking him some more questions about his background, and some
typical interview questions. Then he says :

"Actually, I know a good way we can start our relationship. There's a guy at
work I really hate - a total prick. What if I were to give you all of his
leads before he closes them? I can't give you an introduction or anything of
course, but I can give you the client information, and the decision makers
names, and you would have to sell them yourself! What do you think?"

I was taken back, and I responded : "Well, I'd need to examine the ethics and
legality of that arrangement."

He responded : "Hey - we're all ethical here. This is just a way for us to
start collaborating."

I ended the interview, already decided that I wouldn't hire him. If he was
offering me this deal after knowing me for 20 minutes, how could I trust him
as my salesperson once I hired him?

After this interview, I called a mentor to get his take. His immediate
response was "Here's what you do. You call the CEO of the company he works
for. Say 'I know we're competitors, but some information directly relevant to
your company has come my way.' Meet up with him, and tell him exactly what
happened. He'll be fired on the spot."

I didn't end up doing that. The salesperson was not the most moral of people,
but he had a family to support, and it's very difficult to find a job in this
down-market.

Another unrelated story - a customer manager who was a friend came to me and
asked me for a kickback from the project he awarded me. Thinking back, he
might not have realised how difficult a situation he put me in. Providing him
with any kind of monetary payment would have been a touchy situation for many
reasons, so I sat down with him and said something along the lines of :

"Actually, we're already running right against our profit margins for this
project. Since you're a friend, I gave you a much bigger discount than I
normally would give. I'd end up losing money here if I gave you a finders fee
for this particular project. The fee I'd be able to pay probably wouldn't be
worth your risk in accepting that kind of fee, or my risk in paying it. But,
if you come across any other opportunities in different companies, I regularly
provide finders fees for those situations so I'm happy to organise that for
you."

By framing any kind of payment as risky, and by telling him we're not making
much from this project because of our friendship, he dropped the issue, and
everything turned out alright.

In summary - I tend to deal with corruption by avoiding it or deflecting it
wherever possible. I don't tend to take the aggressive route of reporting it,
or going after people.

~~~
puppetaccount
Thank you for sharing your experiences. They gave me some very useful
perspective.

~~~
jason_tko
Glad to hear that.

Sometimes these situations are ambiguous, and confusing. In some cultures,
this would be a normal part of doing business and it's commonly accepted. In
some places, you can even claim these 'bribes' against tax...!

Generally it comes down to being comfortable with your choices, and ensuring
that everything you do is completely legal.

If you need to invest $1,000-$2,000 for a lawyer to write a legal opinion, and
this will make it likely to safely get a deal worth $15,000, it may be the
right decision.

Good luck!

~~~
mbenjaminsmith
I've lived in 'some culture' for years and I can say that 1) yes, there are
situations where you can account for bribes in your taxes but 2) it's still
never normal or accepted.

I've never been in the situation where there was the illusion that what was
talking place was ok. It's dirty, cloak and dagger (making gifts or payments
is always an exercise in creativity) and heads generally roll if it's exposed.

~~~
eru
Money spent for corruption was tax deductable in Germany until a few years
ago. Though only when you used it on a non-German or outside Germany or so.
The reason ran along the lines of `Everyone else is doing it, so we just level
the playing field for German companies.' I am glad this hypocrisy ended.

~~~
ckinnan
The U.S. was one of the first nations to make it illegal for its own citizens
to pay bribes overseas with the 1977 Foreign Corrupt Practices Act. The bill
passed even though the US knew we'd lose business overseas. It was also very
steady U.S. pressure that helped move Europe to do the same a couple decades
later-- this was on the top of the U.S. trade agenda with Europe for a long
time.

~~~
eru
Thanks.

------
seven
Do not put yourself into a position in where you are susceptible to blackmail.
This is a big risk when dealing with dubious stuff. (edit: s/the biggest/a
big/)

------
dasht
So, really and truly this government guy hit you up for a bribe?

Tonight, write down every detail, sign and date (ideally with witnesses).
Tomorrow morning, call the FBI. After speaking with the FBI, unless they
advise otherwise, brief your CEO.

Only do these things if you are really, really sure the guy actually hit you
up for a bribe but if you are - I think you should do these things.

-t

~~~
puppetaccount
Already briefed my partner. Calling him again in a few minutes.

Calling the FBI is tricky. I don't have any proof and as a small company, I
would prefer not to have a scandal (even with us on the right side of it) be
our first introductiion to the rest of the small community. In essence, what I
am saying is doing the perfectly right thing would hurt us.

I am thinking seriously about anonymously reporting this though. I don't know
if that even works but at least I can say I tried.

~~~
bcl
Do the country a service and stand up for what is right. You may lose this
sale, but you will have your honor and integrity.

~~~
jrockway
Let's outlaw corporate lobbying before we worry about some small-fry with a
few-thousand dollar software contract.

~~~
dantheman
Lobbying is very different than corruption. Lobbyists, in theory, are supposed
to present the case and frame issues so that politicians can make informed
decisions.

------
ratsbane
I've been trying to compose a response to this, describing a similar situation
I was involved with. I just can't do it without saying more than is prudent. I
was slow to catch on to what was going on but I did the right thing when I did
and the guilty weren't punished. I don't mind talking more about it privately.
The lesson I learned was that there are a lot of good, honest, and competent
people around but there a few who aren't and I wish I hadn't wasted time and
frustration with people who were willing to put up with that corrupt few.
You've got a tough problem but it sounds like you have good judgment. I hope
it works out well for you.

~~~
puppetaccount
I understand not wanting to share specifics. Thanks for sharing your
experience, your good wishes and your offer of advice.

At this point I think I am done thinking about this for the day. If I come
back to this I will definitely reply to your latest comment to ask for advice.
(Wish HN had private messaging).

------
Edinburger
I worked for a small company in Europe selling software into much larger
companies. I am pleased to say that over four years, there were only a couple
of times when I think we lost a sale because of corrupt tactics by a
competitor and even then, I can't be sure. Certainly, we sold a fair amount of
software and didn't have to bribe anyone. These were small deal sizes though,
less than ~$50k and I think corruption probably gets more prevalent with
larger deals. Certainly I have seen much more questionable behavior in other
businesses such as consulting and outsourcing which is why I wouldn't want to
spend my days selling those kinds of services.

------
jhg
Welcome to the real world, Neo.

Kickbacks is what drives business deals in many countries, including the US,
Canada and you name it. That's an integral part of business culture. In some
places to a lesser degree, in some - to greater. Government contracts are
especially lucrative type of deals, and I would very _surprised_ if you
somehow waltzed in from the street without any prior connections and got a
contract. You have to "know" people, you have to have "contacts" and you have
to work to keep these "contacts" alive. Take a guess what it usually
translates to.

Just say, no, can't do and walk away.

~~~
lucifer
"Just say, no, can't do and walk away."

Yes, but talk to a lawyer first before talking to _ANYONE_ else.

------
Mz
I don't see any benefit to taking a strong stand face-to-face. It's not like
he would see the light or something. It would only ensure that he has a heads
up, putting you in a seriously dangerous position.

------
raffi
Wow. Just wow. I don't know what agency/department you're dealing with and I'm
making an assumption that you're in the US.

Try searching for "fraud, waste, and abuse" and your agency's name in Google.
If you're dealing with the DoD, try these folks:

<http://www.dodig.mil/HOTLINE/fwacompl.htm>

Not sure if this falls under FWA but if you talk to someone at the IG
(Inspector General) office, they'll point you in the right direction.

The other option is to go to your boss and see how your company wants to
handle this.

~~~
puppetaccount
No boss. This is my company. Have a cofounder who knows.

Appreciate the links.

------
elviejo
An effective way to deal with corruption is to make it clear that you don't
participate in it.

It only takes for you to fail once and then everybody will know that you are
ready to de "business" with them.

Whereas if you make a name for yourself as a clean contractor, you will also
attract other kind of customers. Even inside government itself, but from other
branches. Government is such a big beast, that there is plenty of honest
people inside of it too.

~~~
puppetaccount
Not being honest is not, and has never been, an option I would consider.

------
paulcarey
A contrasting approach - when Mo Ibrahim set up a mobile network in African
counties he knew a no-bribe approach wouldn't fly, so bribes were limited
$30,000.

[http://www.guardian.co.uk/lifeandstyle/2009/feb/01/mo-
ibrahi...](http://www.guardian.co.uk/lifeandstyle/2009/feb/01/mo-ibrahim)

~~~
Edinburger
I didn't read it that way, I read it that because he set things up in the way
he did, "Effectively, no one could now pay a bribe."

------
fauigerzigerk
You did the right thing. You are the victim in this situation. Nobody,
especially not yourself, should expect that you damage your own cause beyond
not participating in the crime. If everybody acted like you did, corruption
would not exist.

------
zackattack
<http://www.youtube.com/watch?v=fRcamEx7EmA>

Just kidding.

