In the oil, gas, and mining industries, the temptation to pay a bribe can be strong.
Multinational companies that dominate these industries typically agree to pay host countries for the extraction of natural resources, which involves acquiring licenses and setting up agreements that specify the terms of the process and any payments to the host country, including royalties, license fees, and bonuses.
But each company strikes its own deal with a host country, so why not just pay a bribe in exchange for a more favorable agreement? Some might see it as necessary grease in the wheels of business, the price of getting work done in countries where regulation is lax and bureaucracy the law.
However, research suggests that avoiding bribes might be a good thing—and not just because businesses could get caught and might have to pay fines, such as the $1.78 billion in penalties Brazilian oil-and-gas company Petrobras agreed to pay last year.
Read the full original article at Chicago Booth Review.