January 07, 2011

A Moral Case for Corruption? <p style="text-align: justify;">According to&nbsp;<a href="http://www.transparency.org/policy_research/surveys_indices/gcb/2010" target="_self">Transparency International’s 2010 Global Corruption Barometer</a>&nbsp;6 out of 10 people believe corruption has increased over the last 3 years. Surprisingly, this view is most prominent in North America and Western Europe. This disturbing development may, in part, be explained by a view expressed recently by a logistics expert in an article titled&nbsp;<a href="http://www.bbc.co.uk/news/business-11957514" target="_self">The dilemma of bribes: to pay or not to pay</a>&nbsp;on BBC News: “There is no moral obligation for anyone to refuse to pay bribes. But there are moral obligations to make sure that workers have work to do and that they are not starving. It is very easy to stand up and cast your moral vote against corruption, but that doesn’t help anyone get a job, it doesn’t help them survive.”</p> <p style="text-align: justify;">But there are those who think differently: In its&nbsp;<a href="http://www.bond.org.uk/data/files/Bond_Anti-Corruption_Paper_October_2010.doc" target="_self">Anti-Corruption Paper</a>&nbsp;the Bond Anti-Corruption Sub Group, a working group made up of some of Britain’s leading NGOs finds that “Bribery is not a victimless crime nor a regrettable but unavoidable cost of doing business abroad. Bribery undermines the rule of law and the principle of fair competition and entrenches bad governance.”</p> <p style="text-align: justify;">Corruption has been on many companies’ agendas due to the US Foreign Corrupt Practices Act (FCPA) which prohibits the paying of bribes to public officials and most businesses are sincere in seeking to comply with the law. However many campaigners are quick to point out that the problem of corruption is not limited merely to bribery. Wikileak-ed documents and cables on Uzbekistan, Kazakhstan, Russia and many other countries have been painting a clear picture of how corruption distorts international development and trade efforts and damages whole countries. A 2007 study estimated that corruption costs African countries $148 billion per year, i.e. 25% of the continent’s GDP. The number is staggering, especially when the case is made that much of the development aid paid by donor countries would not be needed if holes were properly plugged. Global Witness has provided consistent&nbsp;<a href="http://www.globalwitness.org/library/time-transparency" target="_self">research and studies into the effects of corruption on resource-rich countries</a>&nbsp;and a key recommendation they and others have made is for the public disclosure of multinational companies’ basic payments for resources to a state (see for example the&nbsp;<a href="http://www.publishwhatyoupay.org/" target="_self">Publish What You Pay</a>&nbsp;campaign).</p> <p style="text-align: justify;">The UK’s new <a href="http://www.legislation.gov.uk/ukpga/2010/23/contents" target="_self">Bribery Act</a>, expected to come into force in April 2011, is a first attempt to set a higher and more comprehensive standard. The Act brings national legislation up to par with international law and raises the bar globally on anti-bribery measures. Importantly, it criminalises both the giving and receiving of a bribe – whether it involves public or private actors and it extends liability to companies for failing to prevent the payment of bribes by their employees. The Act’s application is very wide and the corporate offence will apply to corporate bodies and partnerships both incorporated and formed within and outside of the UK which carry on their business or part of their business in the UK. Controversially, the Bribery Act’s definition of bribes includes euphemistically titled facilitating payments, i.e. payments made for the purpose of expediting or facilitating the performance by a public official of a routine governmental action, a practice permitted under the FCPA. How the new law will affect the business landscape and whether it will be appropriately enforced remains to be seen.</p> <p style="text-align: justify;">As companies undertake efforts to become more sustainable corruption is clearly an area to be addressed. A first step for many companies will certainly be to ensure compliance with the new British requirements. However, in the absence of further compelling legislation like the Bribery Act they should be in no doubt that both the moral and the business case argue against corruption and in favour of increased transparency.</p>


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