In a keynote speech before last-week’s International Anti-Corruption Summit in London, UK International Development Minister Justine Greening said that businesses should be doing more to add “their powerful voice to the anti-corruption agenda”.
She has a point. Greening was speaking at a conference for civil society, business and government leaders on 11 May, the day before the main summit. The sub-title of the conference was “tackling corruption together”. No one doubts that business needs to play its part. However, in what was supposed to be a three-way conference, the voices of government and civil society were much louder and more charismatic than those of the business community. The same was true at the main conference on 12 May chaired by UK Prime Minister David Cameron on 12 May.
So what’s the problem, and what should business be doing about it?
First, count the cost…
In support of her argument, Greening cited Control Risks’ latest International Business Attitudes to Corruption survey which surveyed more than 800 legal professionals working for international companies across the world. Here is the chart to which she referred:
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The implications are immediately apparent. Overall, 30% of international companies said they believed that they had lost business to a competitor in circumstances where there was strong circumstantial evidence that a competitor had paid a bribe. This figure included nearly a quarter of the US companies surveyed. However, the greatest impact was on companies based in developing countries and emerging markets: 38% of the Nigerians, 41% of the Mexicans, 43% of the Colombians and 46% of the Indonesians believed that they had lost out to corrupt competitors. As Greening points out, the costs to honest businesses are clear.
So why aren’t companies pushing back?
Well, actually, they are. In our survey, we asked companies who thought they had lost out to dishonest competitors how they had responded. By far the most popular response, chosen by 42% was to do nothing. However, a surprising 27% said that they had complained to the contract awarder; nearly 24% said they had tried to gather evidence for legal action; and 19% had reported their problems to the police. These are much more aggressive responses compared to when we asked the same question in a survey ten years ago. In 2006 only 8% of respondents said they would ask for a formal explanation from the customer, and 4% said they would lodge an appeal.
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Now there is good news for the complainers. At the London summit, one government leader after another spoke about the ‘cancer’ of corruption. Some 40 governments ranging from the UK and the US to Afghanistan, Nigeria and Indonesia made specific promises about what they were going to do to tackle the problem. It is up to business as well as civil society to hold these leaders to account. If they have a credible complaint about a lost contract, they have a greater chance of being heard.
But complaining is not enough
If business is to be a credible voice against corruption it needs to do two things. The first is obvious: it needs to put its own house in order. This requires systematic compliance, including a willingness to listen to bad news from internal whistleblowers, and act on it. The 11 May conference included short presentations from Martin Woods, a former anti-money laundering whistleblower from Wachovia bank, as well Tamara Davies, the head of compliance from Vodafone, who talked about her own company’s systems.
Going beyond compliance, individual companies need to find ways of working with other actors to build effective governance institutions. Good governance is primarily the job of governments. At a minimum, companies should not undermine existing institutions by paying bribes. More positively, working together in business or professional associations, they may be able to offer technical advice to point the way to much-needed reforms in – for instance – tax collection or government procurement.
Where are the business anti-corruption champions?
Most of the work of tackling corruption will be low-key, focussing on specific technical problems in particular countries and industries, and often hidden from view. Still, it would be good to see more business anti-corruption champions who speak from experience, and can inspire the imagination.
At the 11 May conference, there was one man who has these qualities: Sudan-born British entrepreneur Mo Ibrahim, the former chairman of the mobile phone company Celtel. He has the credibility of having run a successful company in some of the most challenging African countries, without paying bribes. But Celtel has long since been sold to the Kuwait-based company Zain, and Mo Ibrahim is now primarily a philanthropist.
The 12 May summit heard from a telecoms entrepreneur, South Africa-based Strive Masiyiwa, who is still very much engaged with contemporary African business. He told how he had walked away from a deal to purchase a telecoms stake from former Nigerian Rivers State governor James Ibori after the latter had sought payment via a Caribbean bank account. Subsequently, he had testified against Ibori in a London court. Masiyiwa’s story is a convincing example of how one businessman chose to ‘walk away’ rather than pay a bribe.
It’s easy to see why other would-be business champions hesitate to speak too loudly. If you are too outspoken, you create more enemies. There are always rivals looking for flaws in your own business model. Still, the world needs more business risk-takers, of the right kind. We need to hear their stories. It’s time to speak up.