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The fight against bribery and corruption
There is little doubt that, over the last 10 years, the international community has taken the issue of bribery and corruption more seriously, and with good reason. The World Bank has attempted to place a figure on the overall cost, estimating that $1 trillion is paid in bribes every year, representing 3% of the world's gross domestic product. The President of the World Bank, Robert B. Zoellick, describes it as 'a cancer that steals from the poor, eats away at governance and moral fibre, and destroys trust'. The cost can translate to depletion of national wealth, distortion of fair competition and the rules of free market economy; deterring investment and international aid, undermining people's trust in political and other institutions and environmental degradation. Paying bribes is also expensive - the UN Global Compact has estimated that it adds 10% to the costs of doing business in many parts of the world and adds 25% to the cost of public procurement.
But with such an ubiquitous global problem that knows no bounds, can the occurrence of bribery and corruption be eradicated without strong international efforts, which are accompanied by relevant global standards? On the other hand, given the widely differing cultural settings and stages of economic development, can global standards ever be applicable to a problem that operates in extremely different environments and affects different societies in fundamentally different ways.
Attempts at creating global standards, by way of international conventions, business principles and guidance documents, have emerged, and in the last 10 years we have seen a plethora of new initiatives aiming to create level playing fields across the world. These initiatives include:
- the OECD agreed its Convention on Combating Bribery of Foreign Public Officials, adopted into law by 37 industrialised countries
- the OECD guidelines for multinational enterprises on a range of corporate social responsibility issues, including corruption. Forty national governments have signed up to this - among their obligations as signatories is to set up a national contact point where parties can lodge complaints about breaches of the guidelines
- the UN Convention against corruption was adopted in 2005 and, as of the middle of 2008, has been formally ratified by over 100 countries around the world, but may potentially cover 193 countries
- the UN Global Compact, a voluntary initiative that provides a platform for businesses that want to publicly commit themselves to international benchmarks on human rights, environmental protection and anti-corruption
- Transparency International Business Principles for Countering Bribery & Corruption, including a separate small business edition.
There is a good argument to say that broadly-based international principles are the way forward on this issue, as there are some material differences in national law as to what constitutes an act of bribery. Facilitation fees, for example, are allowed under the US law and the OECD Convention but banned under the UK law. Similar concerns arise with corporate hospitality, which is generally accepted as common practice in business, but can conceivably be used as a tool of bribery if taken to improper and excessive lengths. These examples demonstrate that having some international acceptance that sets best practice and legal frameworks, within which eradicating the threat of bribery and corruption can take place, is needed as it helps to ensure that no country or business is receiving an unfair advantage, by choosing to interpret lightly what constitutes the act itself.
In the business world, this is especially likely to help small businesses, as the World Bank data shows that, where SMEs do pay bribes to public officials, they probably pay out much higher percentages of their annual revenues in bribes and additional payments than large companies do, which suggests that SMEs may be proportionately more affected by the problem than large firms. And while acknowledging that corruption hurts all, the UN says that the greatest pain is likely to be felt among smaller companies. With fewer resources, smaller client bases and tighter profit margins, they are thought to be especially vulnerable in any marketplace where corruption exists. Therefore, internationally accepted anti-corruption tools can indeed help small businesses effectively deal with the threat of corruption.
But while self-regulation, comprising voluntary guidelines, standards and codes of conduct, is an important aspect of the international anti-corruption efforts, dealing with an issue that has such a serious impact on economic development across the world requires strong political commitment, effective legislation and, most importantly, enforcement, which should ultimately create a background against which voluntary global standards can make an actual difference on the ground.
What's your opinion?
Can global standards help the international community eradicate bribery and corruption? What are the potential pitfalls in devising global standards on ethical issues?