Kickbacks

“Sigismund’s dacha is being taken away!” Inna shouted, sharing the sensational news that her acquaintances had hit her with in the woods.
“That’s right, they’re picking the right ones!” thundered Sokol-Kruzhkin! “It’s about time! We need to fight against the crooks!”
“But why is he a crook?” Dima exclaimed, genuinely outraged. “He knows how to live.”
“Tell me,” Semen Vasilyevich burst in, “what kind of earnings does the deputy director of a one-story knitwear factory have to build himself a two-story mansion?”
“That’s his business,” Semitsvetov interjected conciliatorily.
– No, ours! – Righteous anger consumed my father-in-law. – We will relentlessly pursue those who live, let’s say, on unearned income!

At the time, while in Ukraine published the magazine “Corruptor of Ukraine” is actively being sold here. such Writing anything else about kickbacks seems absurd. And writing about what I intended to write feels naive. Okay, I might come off as a Don Quixote, but I have always been against kickbacks. And here’s why.

1. The first and most important characteristic of a kickback is that it is personalized. In other words, we pay someone to “open the gates” for our business. It’s fine if this action is a one-time thing. For example, we pay the guard at the hospital gate to let us through onto the premises. However, very few businesses are one-time affairs, and by finding ourselves a “paid accomplice” on the client’s side, we end up depending on a specific individual. Yes, business is a social phenomenon, but this concerns the interests of groups rather than specific people. It is quite unpleasant when you, as the director or owner of your business, find yourself dependent on a shady character with a hairy hand.

• First of all, he is not incorruptible and can be “lured away,” and the greed of such people is significant.Shara, my son, has no volume.The text does not contain any translatable parts. Returning it as is: «).
• Secondly, he is an employee hired by someone. If he is the director, then he is hired by the shareholders. (It makes no sense for the owner to take a kickback), which means he can be fired.
• Thirdly, he might start blackmailing you at the most inconvenient moment.
• Fourthly, competitors may find out that you have “trustees” either on the client side or on the government side, and they could exploit this information to undermine your business.

Let’s assume you are a landlord of office spaces and you are negotiating with the tenant’s manager (who is a hired manager) that 10% of the rent will go directly into the pocket of this hired manager.
You will occasionally receive comments like, “We want to move because your rent is too high,” hinting that there are better kickback opportunities elsewhere. You might get an unexpected blow when that person is removed from their position, but the kickback agreement, somehow legally formalized with the niece of your mother-in-law’s sister, must still be honored. On top of that, another “effective manager” has started demanding a kickback. Furthermore, you are a criminal, and even if you don’t end up in prison, your reputation will be tarnished, and the shareholders of other tenants will start asking for discounts (read: closing down kickbacks) or will begin to change landlords, suspecting their managers of kickbacks. You shouldn’t put yourself at such risk. Your “paid ally” might realize the consequences you could face if this information becomes public, and you’ll have to persuade them not to spread it.

2. By the way, about criminal practice. Here’s a recent case. history It shows that even if you have experience with bribery, you can still be cornered, and by paying fines and naming your “paid associates,” you lose the opportunity to grow your business. On one hand, they fear you, like Kozlevich: even if there is no kickback, you still won’t be able to prove that it didn’t happen. On the other hand, everyone who knows that your company is capable of kickbacks will demand them, even if that is no longer part of your practice. Moreover, a criminal offense is always a criminal offense. When thinking about how to ease your business, also consider your peaceful sleep at night and the ability to see your children. Honestly, nothing is worth sacrificing your everyday human happiness.

3. The third very unpleasant aspect of kickbacks is the swamp into which your business can sink. It’s very easy to start this damaging practice, but nearly impossible to stop it. If you are, say, the director of the Ukrainian office of an international leasing company and your business practice involves paying kickbacks to your clients through “shadow” companies for cash withdrawals, and at the same time, a large portion of your clients are already dependent on these kickbacks, then the decision to simply stop paying them is akin to deciding to lock up the office and leave a resignation letter for all employees on the desk. And the directive to “just stop” may come from your shareholders, who have reviewed the history I referenced in point 2.

4. By the way, about international companies. If you’re a local player, everything is fine, but if you’re part of a large global business, you might face the following issues. When a local bank “motivates” a local financial manager to place their company’s deposit in that bank, it’s all good. However, this story can also be told differently: International Bank A is bribing employees of International Holding B. And no one will care that this is happening in Ukraine… or even in Zimbabwe. This could be enough not only to damage the company’s reputation but also to lead it to global isolation, similar to the “Kozlevich” case, and even to crash its stock prices.

5. It’s interesting to look at kickbacks from another perspective. If your company has a practice of employees receiving kickbacks, or even if there’s just a suspicion of such a practice, you face a whole range of problems related to conflicts of interest. You can no longer be sure that your procurement manager is choosing the best and cheapest options. They might opt for something more expensive and more amenable to their interests. I once flew on a plane with a hired director from a foreign company. This person was completely out of touch with the topic of the post, just exuding a “kickback” style of business and fundamentally disbelieving in the honest motives behind purchasing their product. He said something like this:

— By the way, we’re moving to a new office!
— Oh, congratulations!
— Gorgeous office. We paid 200,000 dollars just for the design.
— Apparently, a good designer.
— Yes, of course. This is my wife. She is an excellent designer.

The person didn’t even realize how it sounds from the outside.

6. The issue of product purchasing was raised. Paying kickbacks is akin to using cheat codes in a game. IDDQD — and off you go! However, if your client’s need for the product is expressed only as a need for a kickback, you face an unpleasant phenomenon — a lack of business development. You won’t get recommendations — they can’t. The person who decided to choose you didn’t do so because their company needed something, but because they want to “make a quick buck” through criminal activity.

I find it interesting to discuss my conversations with risk insurance companies. They ask me how to boost sales, and I respond with home insurance plus an agency network. Why? It’s break-even, has little chance for corruption, and theoretically can be sold to anyone who owns property. Do you know what question they ask in return? Drumroll…: “Will people actually buy this?” It’s a disaster—those running insurance companies simply don’t believe that a client, who isn’t being pressured by loans, laws, or “schemes,” can make a rational decision to protect themselves from the potential consequences of a fire. How can you sell something you don’t believe in?

7. Additionally, your portfolio of non-kickback clients stops growing because your product appears expensive. Its actual utility is less than its price, as the kickback is included in the cost. Always, the ultimate payer of the kickback is the buyer of the product or service, not the supplier. The recipient of the kickback is essentially robbing their employer. And if the recipient is a government employee, then they are robbing the entire country, every individual taxpayer. However, I digress into ideology The fight against kickbacks is not a struggle that benefits suppliers in order to “earn more.” They will make their money regardless. In every business, there is a threshold of earnings that no businessman will go below, and if their costs are rising, it means that their clients’ expenses are increasing as well.

Of course, an uncompromising stance on this issue is impossible in our society. However, if your practice is to avoid paying kickbacks, your business is more resilient and less dependent on external factors. The objective decision of your client to work with you is much stronger and more beneficial than any subjective considerations. When thinking about whether to pay a kickback or not, consider whether the recipient of the kickback brings you added value. If they do, then they are simply an agent earning a commission. If they are just a bribe-taker, then you should walk away from them. How can a kickback recipient provide you with added value? For example, they might bring you a stream of new clients by recommending or “strongly suggesting” that they use your services.