Corruption: The Enemy of Development

21/06/2012

Long-termed CSR and development initiatives that last are based on a non-corrupt culture. The Danish companies making business in developing countries should bring our tradition of an anti-corrupt business culture with them.

In Denmark, we rarely think of corruption. An explanation to this is of course the fact that Denmark, confirmed by various international studies, is not a corrupted country in particular. The latest study by Transparency International shows that bribing, as a way to get access to a public service (citizen service centre, education, medical care, court and police), is almost non-existing in Denmark. And we have also been in the top of the Transparency International’s Corruption Perceptions Index as a corruption-free zone.

Unfortunately, the situation is not quite like this if we take a look at those developing countries, where many Danish companies are establishing and making business these years – it is quite the contrary, to be honest.
 
Businesses should stand together in the fight against corruption
 
You might well remember that when Kofi Annan introduced the UN Global Compact principles in 2000, there were nine principles. After the enactment of the UN Convention against Corruption in 2003, the UN Global Compact Leaders Summit – with great support – decided to add a tenth principle:
 
Businesses should work against corruption in all its forms, including extortion and bribery.
 
This was a strong signal to the world that the private sector also backs the fight against corruption and with the UK Bribery Act we also see a shift in strategy. A couple of years ago, many companies indicated a zero tolerance policy towards corruption, but no concrete action was seen. 
 
Say No to facilitation payments
 
When operating in corrupt countries you will often meet bribery in the form of facilitation payments, 
which are small payments or gifts to secure or expedite the performance of a routine or action to which the company is entitled. Facilitation payments are typically demanded by low level – and low income – governmental officials. 
 
Even though they are small amounts they are as prohibited as bigger bribes in most countries. They are by law considered as bribes no matter small or big. But in many developing countries these laws are weakly or not at all enforced.
 
Businesses are saying that facilitation payment is unavoidable and only occurs in small amounts. But now I hear examples of people saying “no” to facilitation payment. And this is working – without damaging their business! Companies are also starting to count the total amount of facilitation payment paid and it adds up – it is not small amounts.
 
We have to get started fighting facilitation payment and it requires an effort, change of attitude and determination. A joint action will definitely be the most effective.
 
There are ways that you can mitigate the risk of facilitation payments
 
You and the company should have a clear statement: that the company will not engage in corruption at any time or in any form to back you up when travelling and making business in corrupt environments. The best solution is to never get started. Because if you do, a public official knows that you are a potential offer and willing to pay. Therefore, he will keep chasing you and the amounts he require will increase.
 
Before a specific trip to a specific corrupt environment you should prepare a pre-trip briefing about the risks you might face: 
 
  • What kind of bribes and facilitation payments will you meet? In which situations? Can you avoid these? How?
  • What are the consequences of you saying “no” to bribes?
  • Exactly what you are allowed to do regarding social events like sightseeing, dinners, theatres, sport events, concerts, clubs etc.? What is a reasonable priced event? May spouses participate?
  • Would you feel okay if the event was reported in the newspaper the next day?
  • What could an acceptable gift be? Is cash acceptable? Are gifts like sunglasses, bags, electronic equipment acceptable? What if it is a birthday present? 
 
Let me remind you that flowers are an appropriate gift in most countries! 
 
I welcome those initiatives where companies also join the fight against corruption and facilitation payments and take a clear stand against it in both words and acts. There are specific Codes being made with concrete directions for employees about what they can and cannot do. 
 
Some years back we turned the blind eye to corruption or even had a tax deduction. But new initiatives move us from general policies towards concrete directions. And with the UK Bribery Act from 2011 we will all learn to have adequate procedures in place. Overall, things look better for the future fight against corruption.
 
 
The United Nations Convention against Corruption, 2003: http://www.unodc.org/documents/treaties/UNCAC/Publications/Convention/08-50026_E.pdf
The Transparency International’s Corruption Perceptions Index: http://cpi.transparency.org/cpi2011/results/#CountryResults

By: 
Birgitte Bang Nielsen

http://danishresponsibility.dk/our-bloggers