The American Way?

As they have expanded round the world, U.S.-based multinational corporations have poured hundreds of millions of dollars into dozens of foreign countries. In some of these, outright bribery or thinly disguised payoffs to politicians are the accepted way of getting just about anything done--from obtaining routine licenses to killing unfavorable tax legislation. "There is no universal ethical absolute," says Gulf Oil Corp. Chairman Bob Dorsey. "What is immoral to some is perfectly correct to others." The willingness of American corporations to go along with this system has now exploded into a spreading scandal, and the bad publicity has embarrassed both the corporations and the governments involved. Last week came one of the more dramatic reactions. The government of Bolivia, demanding to know the names of all officials who had received $460,000 in political "contributions" from Gulf in the 1960s, jailed Gulfs only known employee in Bolivia, Carlos Dorado, and demanded that Gulfs Dorsey appear in a Bolivian court to answer charges of "crimes against public order and the official economy." It also was conceivable that Bolivia could stop some $50 million in payments still owed to Gulf as a result of Bolivia's nationalization of the company's holdings six years ago.

Boliva's actions seemed a show of pique that might well pass as soon as the government found out who was paid off. The only name Gulf has disclosed so far is that of Rene Barrientos, Bolivia's President from 1964 to 1969, who received a $ 110,000 helicopter from Gulf in exchange for doing what he could to forestall nationalization and assure the company of lucrative drilling rights in Bolivia. (Barrientos died in a helicopter crash six years ago; officials assert the chopper was not the craft purchased by Gulf.) Still to be accounted for are two additional payments of $240,000 and $110,000 to Barrientos supporters.

Gulf officials in the U.S. said that they would supply names at "the earliest possible moment." (Dorsey remarked that "people just don't write memos about things like that.") Arguing for Dorado's release Gulf contended that he had "no involvement whatsoever" in the payoffs. Last week, however, a Bolivian judge ruled that there were "indications "of guilt" against him. Dorado asserted that he was only a low-level employee responsible for transport, administration and public relations. The government's real target was Dorsey, who said: "They have no power to extradite me and I have no intention of going to Bolivia." The Bolivian press report quoted a judge as saying that the Bolivians would go so far as to ask the U.S. Supreme Court to order Dorsey or a representative to La Paz.

Bolivia's moves showed just how high official anger is running against U.S. multinational firms, chiefly oil companies, for their widening payoffs. In South Korea, U.S. and Japanese firms reportedly budget 5% or 10% of operating funds to pay off avaricious local politicians and political parties.

Hidden Payments. The trigger for the current round of admissions was Dorsey's testimony two weeks ago before the Senate subcommittee on multinational corporations that Gulf had paid $4 million under pressure to South Korea's ruling Democratic Republican Party between 1966 and 1971. Mobil, Exxon and Standard Oil of California have admitted making payoffs--which they contend are legal--to politicians in Canada and Italy. Last week the Wall Street Journal reported that at least eight companies, Gulf included, had paid some $16 million to Italian politicians and bureaucrats in return for various subsidies and tax breaks.

Payoffs to foreign politicos do not themselves violate U.S. law, but hiding them on company books may breach federal corporate disclosure requirements. Last week the Securities and Exchange Commission added General Refractories Co. of Bala Cynwyd, Pa., a maker of furnace linings and construction materials, to a list of companies accused of making unreported foreign payments that already includes Gulf, United Brands, Northrop, Philips Petroleum and Ashland Oil. The SEC says General Refractories made "payments to certain foreign officials" without accounting for them, and also allowed an Austrian businessman, Hermann Mayer, to secretly accumulate 17% of the company's stock.

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