Corruption is Worth $3 Trillion – and Growing In the fight against corruption, business and governments should be on the same side. If corruption were an industry it would be the world’s third largest, accounting for around five percent of Global GDP. Corruption is a corrosive evil; it’s bad for business, bad for government, and very bad indeed for society as a whole. It’s also a topic that attracted quite a bit of attention at this year’s World Economic Forum (WEF) meeting in Davos, Switzerland. For companies, tackling corruption adds significant costs in areas like enhancing systems and controls, recruiting staff with subject matter expertise and training others. It also presents a major risk to a company’s single most important asset – its brand. For governments, corruption has a massively negative impact on investment in key areas like infrastructure, healthcare and education, all of which are drivers of social progress, unlike corruption which drives inequality and associated social unrest. Most governments depend on business to implement their key investment programmes. However in markets where corruption is rife companies are increasingly likely to reduce their investments, preferring to look elsewhere to grow their business and create jobs. Worse still businesses may withdraw entirely from markets where they believe the risk of sanctions or reputation damage exceeds potential economic benefits. So business and governments need to get on the same side in the fight against corruption and be very vocal about it. Through the work of the B20 under the Australian presidency, the business community developed some simple recommendations aimed at levelling the playing field for business investors including: Harmonise relevant legislation and incentivise business to self-report where they have failed to comply. Get all G20 countries to adopt the G8 principles regarding transparency around beneficial ownership of shell companies. Have all G20 countries sign up to the OECD Anti-Bribery Convention or the UN Convention against Corruption. I attended a number of events in Davos looking for new ways to combat corruption. But there is no silver bullet. This is not just about adequate legal and enforcement frameworks, nor is it just about compliance by business. We need a new approach for combatting corruption where governments and business move from a relationship that is all too often adversarial to one where they are working together. This requires real commitment from the business community. We need more CEOs to take personal ownership, engage their executive teams on the issue, and be passionate about it in their communications to staff. They need to be clear that any form of corrupt activity is contrary to the company’s values and is completely unacceptable. The battle against corruption is undoubtedly a marathon rather than a sprint, but when CEOs lead by example and take personal ownership of an issue, organisational change can happen and real progress can be made.
Posted on: Tue, 27 Jan 2015 04:24:05 +0000
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