Companies and Anti-Corruption: From Commitment to Action
Organised by the European Commission, the European Development Days (EDD) brings the development community together each year to share ideas and experiences in ways that inspire new partnerships and innovative solutions to the world’s most pressing challenges.
Within this framework, Mazars sponsored a panel debate on the very pertinent question of how the private sector can contribute towards fighting corruption and bribery. For this discussion, Mazars invited several speakers from the private, public and not-for-profit sectors to share their insights through the prism of their respective experiences.
The lively debate was moderated by Roxana Family, the Chair of Law and Business Ethics at University Cergy-Pontoise. Working with students from all around the world on the issue of business law and ethics, Roxana observes that—more than ever— the young leaders of tomorrow’s world increasingly thirst for more transparency and integrity in business conduct. Out of the roughly 500 applications she receives each year for her MBA course, only 30 students are accepted, becoming the future champions of business ethics.
“You have to appeal to their competitive instincts”
However, business integrity is no new concept. Its advocates have fought for it for quite some time. David Lewis, Executive Director of Corruption Watch in South Africa, an expert in the field of anti-corruption work, shared his insight from a non-profit organization that receives around 150 complaints on unethical behavior in South Africa each month. He highlighted the fact that although the global regulatory environment has changed significantly towards reinforcing anti-corruption regimes in recent years, a lot still remains to be done. Corruption Watch discovered that the best way to engage the private sector in corruption risk prevention is to appeal to its competitive instincts. “If we can succeed in making actions against corruption and bribery a real business value that can be showcased to the public, companies will not want to lose out against their competitors” explained Lewis. Ultimately, the Corruption Watch attempts to make private companies not only “good corporate citizens” that seek to comply with ethical standards internally, but “active corporate citizens” that serve as ambassadors for other businesses to join the bandwagon called ‘integrity’.
“The cost of corruption can be measured in the distrust held by the public”
Simon Webley, Research Director at the Institute for Business Ethics, was of the opinion that companies can no longer ignore the fact that poor corporate governance affects costs in a detrimental way: “Today we can say that the cost of corruption can be measured in the level of distrust of the public in your business”. Corruption is only one form of poor corporate culture spanning from safety violations to exploitative labor to discrimination and tax avoidance. Thus, “to avoid corruption, one has to change an entire business culture” says Webley.
“Checking off formalities in public procurement contracts is not enough”
We are still far from an ideal world. Igor Soltes, MEP for Slovenia, cited a recent study published by the European Commission and pointed out that EU corruption levels have increased in 2016 (compared to 2014) especially in newer Member States. Sectors especially prone to dishonest conduct are construction, energy, transport, defense and healthcare. In these sectors, public contracts, national or European, are often allocated subjectively. This is why Mr Soltes advocates a result-based allocation of European grants to make sure that EU-financed projects are carried out efficiently, effectively and according to the negotiated terms of the contract.
“The biggest difficulty: different countries, different cultures”
Transdev is a large, multinational transport company that has sensed the way the wind is blowing: having realized that ethical conduct in business receives growing importance, it decided to mandate Philippe Levrat with the creation of an entire business ethics management system and a corresponding group policy. While drawing up and implementing the new policy and its accompanying documents, Mr Levrat realized that one of the greatest stumbling blocks is cultural difference across the company footprint. Conducting business in roughly 20 countries, Transdev sees itself confronted with various local communities and public agents; each with their own way of doing business. Mr Levrat acknowledges that “human beings need time to change” and thus, one cannot overemphasize that the launching of an ethics programme, be it in Transdev or in any other company around the world, takes time and this process has to be driven forward— constantly.
“Suddenly there is a want for transparency”
The last speaker of the panel, Howard Shaw, Mazars leading expert on anti-corruption matters, emphasized that there is a real change in attitude across the business world. Having led the UK delegation on the negotiations of the new International Standard on Bribery Risk ISO 37001, Mr Shaw observed that “Ten years ago, nobody seemed interested in drawing up an international standard in bribery risk management – then the financial crisis broke out and suddenly there is a real want for transparency”. The new standard has been developed to be applied by businesses— no matter the size— all around the world. In this manner, businesses can demonstrate to external stakeholders that they are fully managing their bribery risks; subsequently creating real commercial value. In a nutshell, he remains optimistic and senses that companies today “are moving towards a cleaner corporate world”.
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Tough anti-corruption legislation with extra-territorial reach like the US Foreign Corrupt Practices Act and the UK Bribery Act require companies to implement anti-corruption programs. Companies and their leaders must therefore put in place internal control mechanisms appropriate for the size and nature of their business, in order to address corruption risk.