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Global Agenda Council on

Corruption

Raising Our Game: Next


Steps for Business,
Government and Civil
Society to Fight Corruption
Disclaimer

The views expressed by the individual authors in this publication do not necessarily reflect those of the World Economic
Forum or all members of the Global Agenda Council on Corruption. The World Economic Forum and/or members of the
Global Agenda Council on Corruption undertake no obligation to publicly revise or update any statements contained herein,
whether as a result of new information, future events or otherwise, and they will under no circumstances be held liable for
any loss or damage arising in connection with the use of the information in this publication.

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Contents

Global Agenda Council on Corruption


1. Introduction 5

A brief introduction to the Global Agenda Council on Corruption 6

Introductory remarks 10
By Cobus de Swardt and Mark Pieth

3
Today’s international anti-corruption governance landscape: its nature and where it should be 12
heading
By Tareq Bouchuiguir and Michael Pedersen

2. Recommendations to Business 17

In the face of corruption: do the right thing 18


By Alan Boeckmann

How companies can best empower a chief ethics and compliance officer in preventing, detecting 20
and sanctioning corruption
By Keith T. Darcy

A culture of ethics is key to an effective anti-corruption programme 22


By David T. Seaton

How business organizations can best encourage and support companies in fighting corruption 24
By François Vincke

3. Recommendations to Governments 27

Transnational corruption threatens global security 28


By Robert I. Rotberg

Using private actions to fight corruption 30


By William T. Loris

Parliamentary oversight of the electoral process; political campaign financing; who can mind the 32
store?
By John G. Williams

What can the OECD Anti-Corruption Convention contribute to reducing commercial corruption? 34
By Mark Pieth

INTERPOL calls on the business community to support the world’s first International Anti- 36
Corruption Academy
By Ronald K. Noble

4. Recommendations to Civil Society 39

How civil society can best recognize public and private sector players that demonstrate 40
leadership in fighting corruption
By Cobus de Swardt and Peter Eigen

5. Recommendations on Multistakeholder Partnerships 43

Public-private partnerships against corruption: a solid foundation for success 44


By Dimitri Vlassis

Businesses and multilateral development banks – a key partnership in the fight against 46
corruption
By Ngozi N. Okonjo-Iweala
Global Agenda Council on Corruption
5
Raising Our Game: Next Steps for Business,
Government and Civil Society to Fight Corruption

1. Introduction
Global Agenda Council on Corruption

A brief introduction to Global Agenda Council on Corruption

The World Economic Forum’s Global Agenda Council on Corruption (GAC on Corruption) is
comprised of leaders from across regions and stakeholder groups. Drawing on the World
Economic Forum platform and convening power, the Council is uniquely positioned to shape the
global agenda on corruption.

Members of the Global Agenda Council on Corruption


6

Co-Chairs:
Mark Pieth, Chairman, Working Group on Bribery, Organisation for Economic Co-operation and
Development (OECD), Paris
Cobus de Swardt, Managing Director, Transparency International, Germany

*Alan Boeckmann, Chairman and Chief Executive Officer, Fluor Corporation, USA
Keith T. Darcy, Executive Director, Ethics & Compliance Officers Association (ECOA), USA
**Hussain Dawood, Chairman, Dawood Group, Pakistan
*Peter Eigen, Chair, Extractive Industries Transparency Initiative (EITI), Germany
**Jorge Hage Sobrinho, Minister of State, Office of the Comptroller General of Brazil (CGU),
Brazil
*Mo Ibrahim, Chairman, Mo Ibrahim Foundation, United Kingdom
José Miguel Insulza, Secretary-General, Organization of American States, Washington DC
*Eva Joly, Special Adviser, Norwegian Agency for Development Cooperation, Norway
*Donald Kaberuka, President, African Development Bank (ADB), Tunis
*Georg Kell, Executive Director, Global Compact Office, United Nations, New York
* Irene Khan, Secretary-General, Amnesty International, United Kingdom
**Hassan Marican, President and Chief Executive Officer, PETRONAS (Petroliam Nasional),
Malaysia
*Luis A. Moreno, President, Inter-American Development Bank, Washington DC
William T. Loris, Director-General, International Development Law Organization, Italy
Ronald K. Noble, Secretary-General, International Criminal Police Organization (Interpol), Lyon
Ngozi Okonjo-Iweala, Managing Director, World Bank, Washington DC
Robert I. Rotberg, Director, Program on Intrastate Conflict, John F. Kennedy School, Harvard,
USA
David T. Seaton, Senior Group President, Fluor Corporation, USA
**Peter Y. Solmssen, Executive Vice-President, General Counsel and Member of the Managing
Board, Siemens, Germany
François Vincke, Chair, Anti-Corruption Commission, International Chamber of Commerce
(ICC), Paris
Dimitri Vlassis, Chief, Corruption and Economic Crime Section, United Nations Office on Drugs
and Crime (UNODC), Vienna
John G. Williams, Chief Executive Officer, Global Organization of Parliamentarians Against
Corruption (GOPAC), Morinville

* member of the GAC on Corruption in 2008/2009


** member of the GAC on Corruption as of 2009/2010
Global Agenda Council on Corruption
Global Agenda Council on Corruption Issue Description

Description of the issue


Corruption, the abuse of entrusted power for private gain, is the single greatest
obstacle to economic and social development around the world. It distorts
markets, stifles economic growth and sustainable development, debases
democracy and undermines the rule of law. It robs local populations, particularly in
developing countries, of critically needed resources. Estimates show that the cost
of corruption equals more than 5% of global GDP (US$ 2.6 trillion) with over US$

7
1 trillion paid in bribes each year. Because of corrupt practices, half of each year’s
US$ 50 billion in development aid does not reach its intended recipients.

Dimensions
• Nature: Perceptions on the nature of corruption vary. What different forms of
corruption exist and what are their underlying causes and drivers?
• Cultural contexts: The nature and magnitude of corruption differ across
cultures. Actions that are perceived corrupt in some cultures might be accepted
or even expected in other cultures. What is acknowledged as good ethical
conduct within and across cultures?
• Metrics: Corruption can hardly be measured. Most statistics on the issue are
based on surveyed perceptions. What is or should be measured, and how?
How can progress be determined? Is there a correlation between levels of good
governance and economic growth/foreign direct investments? And between a
company’s systems and controls, and its financial performance?
• Role of businesses: Companies are both part of the problem and its solution.
An increasing number of companies are demonstrating leadership in fighting
corruption by implementing anti-corruption programmes and adhering to various
initiatives that address the supply side of corruption at the global, regional or
industry levels. What best practices exist? What is the business case? How can
more companies be incentivized to fight corruption? How can the prisoner’s
dilemma be overcome? How can good ethical business conduct be turned into
a competitive business advantage?
• Role of governments: The international legal framework has been
strengthened during recent years with the adoption of the OECD and UN
conventions on corruption. But most governments must still fully implement all
provisions of these conventions and no supranational enforcement mechanisms
are in place, undermining their effectiveness. Most governments also have
passed anti-corruption legislation but few effectively enforce it. Why is existing
legislation often not enforced? What are the best practices? Which central
players can ensure effective enforcement, and how can they be incentivized to
demonstrate leadership?
• Role of civil society: Civil society organizations, including the media and
academia, play a key role in incentivizing businesses and governments to fight
corruption. Who are the central players? What are their best practices? How
can they be supported? How can they make use of new means of increasing
transparency, such as the Internet?
• Collective solutions: The most effective solutions to fight corruption are often
collective in nature. Such initiatives focus on public and/or private sector
solutions at a country, regional and/or global level, and/or at an industry, cross-
industry or multistakeholder level. What initiatives exist? What are the best
practices? How can initiatives be supported? How should they work together?
How should initiatives be held accountable?
Global Agenda Council on Corruption

Global Agenda Council on Corruption: Council Report, Summit on the


Global Agenda, Dubai, United Arab Emirates 7-9 November 2008

The views expressed here emerged from the council meeting and do not
necessarily reflect the views of the World Economic Forum or those of all the
council members.

1) What is the state of the world on this issue and how is the economic crisis
impacting it?
8

The Global Agenda Council on Corruption expressed alarm at the slow pace of
the fight against corruption and highlighted the need for sustained and strong
leadership in this fight.

The Global Agenda Council on Corruption agreed on the crucial importance of:
• building public-private partnerships to strengthen anti-corruption initiatives
• creating and strengthening incentives which will encourage the fight against
corruption by all stakeholders
• grounding anti-corruption measures in accountability established through
democratic empowerment of the public
• establishing national strategies and promoting measures for combating
corruption which can be implemented and robust, and take into account the
state of development of the jurisdiction concerned
• ensuring that the current financial crisis does not impede progress in the fight
against corruption.

2) What should be done to improve the state of the world on this issue, and by
whom?

The Global Agenda Council on Corruption urges:


• Governments participating in World Economic Forum activities to demonstrate
strong leadership by ratifying and fully implementing the United Nations
Convention Against Corruption, the OECD Convention on Corruption and the
relevant regional anti-corruption conventions
• Corporate Members of the World Economic Forum to demonstrate strong
leadership by becoming signatories to the Partnering Against Corruption
Initiative (PACI) and fully implement the principles of the initiative

Over the next year the council committed to:


• formulating a time-specific and detailed action plan
• expanding its private sector membership
• exploring issues such as political finance and the relationship of transnational
crime and corruption
• exploring possible actions on coalition-building, accountability and incentive
mechanisms
Global Agenda Council on Corruption
Global Agenda Council on Corruption
Open Letter to Participants of the World Economic Forum Annual
Meeting, Davos-Klosters, Switzerland, 28 January – 1 February 2009

Open letter from the World Economic Forum Global Agenda Council on
Corruption

Dear participants in the World Economic Forum Annual Meeting 2009,

9
In the context of the World Economic Forum Annual Meeting 2009, please allow
us to bring to your attention the recommendations made by the World Economic
Forum Global Agenda Council on Corruption (GAC Corruption) at the Forum’s
recent Summit on the Global Agenda in Dubai.

The Global Agenda Council on Corruption urges:


• Governments participating in World Economic Forum activities to demonstrate
strong leadership by ratifying and fully implementing the United Nations
Convention Against Corruption, the OECD Convention on Corruption and the
relevant regional anti-corruption conventions
• Corporate Members of the World Economic Forum to demonstrate strong
leadership by becoming signatories to the Partnering Against Corruption
Initiative (PACI) and fully implement the principles of the initiative

Please find below a list of GAC Corruption members. You are welcome to contact
any one of the members during the Annual Meeting 2009 or afterwards. Should
you wish to communicate with the council as a whole, please contact Michael
Pedersen, Council Manager, at Michael.Pedersen@weforum.org.

Best regards,

Cobus de Swardt Professor Mark Pieth


Co-Chair, GAC Corruption Co-Chair, GAC Corruption
Managing Director, Transparency Chairman, Working Group on Bribery,
International Organisation for Economic Co-operation and
Development (OECD); Chairman of the Board,
Basel Institute on Governance
Global Agenda Council on Corruption

Introductory remarks

Mark Pieth, Chairman, Working Group on Bribery, Organisation for Economic


Co-operation and Development (OECD), Paris; Co-Chair, Global Agenda Council
on Corruption
Cobus de Swardt, Managing Director, Transparency International, Germany; Co-
Chair, Global Agenda Council on Corruption

“All that is necessary for the triumph of evil is for good men to do nothing.”
10

– Edmund Burke, Irish Statesman and Political Philosopher

Corruption, the abuse of entrusted power for private gain, is the single greatest
obstacle to economic and social development around the world. It distorts
markets, stifles economic growth and sustainable development, debases
democracy and undermines the rule of law. It robs local populations, particularly in
developing countries, of critically needed resources. Estimates show that
corruption’s price tag equals more than 5% of global GDP (US$ 2.6 trillion) with
over US$ 1 trillion paid in bribes each year.

The cost of corruption is undeniable, and the backdrop of the global economic
crisis provides a devastating impetus to end this plague in all its forms. Now is the
time for us to unite our expertise and capabilities. We must look ahead to forge a
future free of corruption through individual and concerted action, and by
recognizing and incentivizing leadership.

The Global Agenda Council (GAC) on Corruption has assembled an exceptional


array of experts in business, government and civil society around the vision of a
corruption-free world. As part of an unparalleled network of issue councils
established by the World Economic Forum in 2008, the GAC on Corruption is one
of 70 influential councils comprising some of the world’s foremost thinkers and
high-level decision-makers; each is tasked with helping to shape the global
agenda on their respective issue, individually as well as collectively.

In its first year, the GAC on Corruption mainly focused on two overarching
recommendations that were shared in an open letter to participants in the World
Economic Forum Annual Meeting 2009 in Davos. Governments participating in
World Economic Forum activities were urged to demonstrate strong leadership by
ratifying and fully implementing the United Nations Convention against Corruption,
the OECD Convention on Corruption and relevant regional anti-corruption
conventions. Corporate Members of the World Economic Forum were called on to
demonstrate strong leadership by not only becoming signatories to the Partnering
Against Corruption Initiative (PACI), but also fully implementing the principles of the
initiative.

These core recommendations are reflected in each council member’s contribution


to this publication, with their expertise illuminating constructive ideas on how
businesses, government and civil society can take the fight against corruption to
the next level. Council members themselves will continue to build on and advance
the recommendations in 2009 and 2010, both as individuals and collectively, as
they take on the many challenges ahead.

Despite the established presence of international and national legal frameworks,


such as the United Nations Convention against Corruption and the OECD
Convention on Combating Bribery of Foreign Public Officials in International
Business Transactions, there are no signs that the magnitude of the problem is
decreasing. Corruption is a two-way transaction, with a demand and supply side,
and thus cannot be solved with a single stroke. It is the duty of governments and
businesses to take responsibility and fully commit to confronting this problem. The
expertise of the GAC on Corruption members, as showcased in this publication,
provides concrete steps towards meaningful progress.
Global Agenda Council on Corruption
To mount a successful battle against corruption, it is critical that governments,
businesses and civil society work together hand-in-hand, at a local level as well as
regionally and globally. These essential partnerships will enable actors to enhance and
support each others’ efforts, to use and share expertise and best practice, and to
innovate and create synergies.

Each sector must also develop its own strategies for approaching the issue of corruption
within its internal structures and scope of operations. The GAC on Corruption members
put forward recommendations that respond to the specific needs and the areas

11
particularly vulnerable to corruption within each sector.

Business

• Ensure that CEOs adopt, promulgate and enforce strong codes of ethical behaviour
based on a philosophy of zero tolerance, for example by devising and implementing an
effective anti-corruption programme along the lines of the World Economic Forum
Partnering Against Corruption Initiative (PACI) Principles
• Incorporate anti-corruption standards as well as a range of other ethics and
compliance standards into risk management programmes
• Ensure the empowerment of chief ethics and compliance officers in preventing,
detecting and sanctioning corruption
• Seek industry specific solutions to effectively overcome the prisoner’s dilemma and
competitive disadvantages

Government

• Ensure balance in the finance of political parties by creating openness, transparency,


an informed electorate, vigorous debate and an independent parliament
• Recognize how the combination of transnational corruption and organized crime
creates new threats to world peace
• Make sure that national law enforcement agencies are quicker in picking up
transnational bribery cases
• Ensure that victims of corruption are granted the means of taking civil legal action
against perpetrators
• Provide better recognition to companies demonstrating anti-corruption leadership

Civil society

• Work alongside businesses to address bribery and help instil transparency and
accountability into the very core of their operations
• Provide independent research on where reform is needed and how well governments
and businesses are performing

As business, government and civil society work to realize these recommendations, they
must also seek to build bridges and partnerships. Corruption is a collective problem and
lasting solutions must be collectively forged. The GAC on Corruption members spotlight
the achievements that collaborations have already accomplished, for example the power
unlocked by multilateral development banks in forming effective partnerships with
companies to promote anti-corruption measures. Similarly, the Extractive Industries
Transparency Initiative (EITI) and the International Anti-Corruption Academy serve as just
two inspirational cases of effective, existing public-private partnerships.

It is our hope that the ideas in this publication act as a catalyst to change traditional
mindsets and to elevate not only the discussion, but also the dynamism of the fight
against corruption.
Global Agenda Council on Corruption

Today's international anti-corruption governance landscape:


its nature and where it should be heading

Tareq Bouchuiguir, Research Analyst, World Economic Forum


Michael Pedersen, Associate Director, World Economic Forum; Head of
Partnering Against Corruption Initiative (PACI); Council Manager, Global Agenda
Council on Corruption

* The views expressed in this article are the views of the authors and do not
12

necessarily reflect the views of the World Economic Forum.

Abstract

Despite numerous international and regional anti-corruption conventions against


corruption as well as several international, self-regulatory private sector anti-
corruption initiatives, progress in the fight against corruption continues to be slow.
This article outlines the nature of today’s international anti-corruption governance
landscape. It suggests the need for both governments and businesses to
demonstrate political will and leadership in fighting corruption by giving more teeth
to existing governance frameworks, partly by encouraging all relevant players to
endorse such frameworks, partly by putting in place monitoring mechanisms,
sanctions, rewards and supranational enforcement.

The Nature of Today’s International Anti-Corruption Landscape

A wealth of international anti-corruption measures is in place to combat


corruption, including international and regional conventions as well as
international, self-regulatory private sector anti-corruption initiatives. The nature of
these measures is outlined below.

International and Regional Conventions

United Nations Convention against Corruption (2003)1


– The only truly global legal instrument to combat corruption, entering into force at
the end of 2005
– Currently 140 parties out of a possible 163
– Broad definition of corruption
– Discretionary provisions regarding the private sector
– No review mechanism available
– Provisions recognize the need for shared responsibilities between law
enforcement agencies of countries in the case of cross-border corruption
activities

Inter-American Convention against Corruption (1996)2


– Adopted by governments that are members of the Organization of American
States (OAS)
– Broad definition of corruption
– Follow-up mechanism for the Implementation of the Inter-American Convention
against Corruption (MESICIC) is in place. It consists of a committee of experts,
who conduct technical analysis of the implementation of the convention by state
parties
– Provisions include preventative criminalization and regional assistance
cooperation measures

1
United Nations Convention against Corruption: http://www.unodc.org/unodc/en/treaties/CAC/index.html
2
Inter-American Convention against Corruption: http://www.oas.org/juridico/english/Treaties/b-58.html
Global Agenda Council on Corruption
The Council of Europe Criminal Law Convention (1998)3 and the Council of
Europe Civil Law Convention (2003)4
– Adopted by governments that are members of the Council of Europe
– Broad definition of corruption
– A common monitoring mechanism in place, GRECO, the Group of States
against Corruption
– GRECO monitors the implementation of the conventions through mutual
evaluation. It provides recommendations to governments perceived to not be
complying with the provisions laid out in the conventions

13
The African Union Convention on Preventing and Combating Corruption
(2003)5
– The convention has been ratified by 53 member states of the African Union
– Broad definition of corruption
– The non-discretionary provisions cover bribery of a public official
– The monitoring mechanism in place takes the form of an Advisory Board,
monitoring the progress of each state in complying with the convention. State
parties are required to report their progress to the Advisory Board annually
– Calls on state parties to ensure the participation of civil society in their
monitoring process

OECD Convention on Combating Bribery of Foreign Public Officials in


International Business Transactions (1997)6
– Adopted by governments that are members of the Organization for Economic
Co-Operation and Development (OECD)
– Addresses bribery of public officials and aims at ensuring that corruption does
not distort fair competitiveness in international business transactions
– Entered into force in 1999 and is implemented in 38 OECD member states
– The OECD Working Group on Bribery monitors the implementation and
application of the convention. The working group evaluates whether national
legislation and its enforcement are adequate enough to implement the
convention. Evaluations are prepared through country visits to government
officials, private sector and civil society representatives, and self and mutual
evaluations

International, Self-Regulatory Private Sector Anti-Corruption Initiatives (Cross-


Industry, Cross-Region)

ICC Rules of Conduct and Recommendations for Combating Extortion


and Bribery (1977, followed by revisions)7
– Detailed, voluntary business principles outlining the nature of bribery, and what
kind of management systems and processes companies should put in place to
prevent, detect and sanction bribery in their organizations
– Broad definition of bribery, i.e. bribes and extortion
– Developed by the International Chamber of Commerce (ICC) Anti-Corruption
Commission
– ICC speaks with authority on behalf of enterprises from all sectors around the
world. The ICC Commission on Anti-Corruption brings together experts from a
wide range of business sectors and national backgrounds. It encourages self-
regulation by business in confronting issues of extortion and bribery, and
provides business input into international initiatives to fight corruption

3
Council of Europe Criminal Law Convention on Corruption: ttp://conventions.coe.int/Treaty/EN/Treaties/Html/173.htm
4
Council of Europe Civil Law Convention on Corruption http://conventions.coe.int/Treaty/EN/treaties/html/174.htm
5
The African Union Convention on Preventing and Combating Corruption: http://www.africa-
union.org/Official_documents/Treaties_%20Conventions_%20Protocols/Convention%20on%20Combating%20Corruption.pdf
6
OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions
http://www.oecd.org/document/21/0,3343,en_2649_34859_2017813_1_1_1_1,00.html
7
Combating Extortion and Bribery: ICC Rules of Conduct and Recommendations:
http://www.iccwbo.org/uploadedFiles/ICC/policy/anticorruption/Statements/ICC_Rules_of_Conduct_and_Recommendations%
20_2005%20Revision.pdf
Global Agenda Council on Corruption

United Nations Global Compact (UNGC), Principle 10 (2004)8


“Businesses should work against corruption in all its forms, including extortion and
bribery.”
– Voluntary principle within the framework of the United Nations Global Compact
(UNGC), which has mandatory requirements for business participants to
disclose annually performance changes in the issue areas, including corruption
– Principle derived from the United Nations Convention against Corruption
– UNGC requires explicit company commitment by means of CEO signature
– UNGC has more than 6,000 signatories
14

– UNGC seeks to advance responsible corporate citizenship to ensure that


business is part of the solution to the challenges of globalization, as outlined in
10 principles covering human rights, labour standards, environmental standards
and corruption
– UNGC has a large number of country-specific networks

Transparency International (TI): Business Principles for Countering Bribery


(2003 followed by revisions)9
– Detailed, voluntary business principles outlining the nature of bribery and what
kind of management systems and processes companies should put in place to
prevent, detect and sanction bribery in their organizations
– Developed by Transparency International (TI) and a multistakeholder and
international steering committee of companies, business associations,
academics, union representatives and civil society organizations
– Broad definition of bribery, i.e. bribes, political contributions, charitable
contributions and sponsorships, facilitation payments as well as gifts, hospitality
and expenses
– The principles were originally published in 2003 and were revised in 2009. The
new version emphasizes the importance of public reporting, among other things
– Transparency International is a global coalition against corruption, addressing
corruption through a wide range of tools and over 90 national chapters.

World Economic Forum Partnering Against Corruption Initiatives (PACI)


Principles for Countering Bribery (2004)10
– Detailed, voluntary business principles outlining the nature of bribery and what
kind of management systems and processes companies should put in place to
prevent, detect and sanction bribery in their organizations
– Developed by a group of companies under the umbrella of the World Economic
Forum in collaboration with Transparency International and the Basel Institute on
Governance. Derived from Transparency International Business Principles for
Countering Bribery
– Broad definition of bribery, i.e. bribes, political contributions, charitable
contributions and sponsorships, facilitation payments as well as gifts, hospitality
and expenses
– PACI currently has 144 signatories from across industries and regions.
Engagement in the initiative requires explicit company commitment by means of
CEO signature
– PACI signatory companies are invited to self-assess implementation of the PACI
Principles once a year in a Highlighting Achievers Survey
– As a risk-mitigation platform developed by the private sector for the private,
PACI offers companies tools and activities at three levels; 1. company specific;
2. within and across industries; and 3. public-private sector collaboration

8
United Nations Global Compact; Principle 10: "Businesses should work against corruption in all its forms, including extortion and
bribery." http://www.unglobalcompact.org/AbouttheGC/TheTENPrinciples/principle10.html
9
Transparency International: Business Principles for Countering Bribery:
http://www.transparency.org/global_priorities/private_sector/business_principles
10
World Economic Forum Partnering Against Corruption Initiative: http://www.weforum.org/en/initiatives/paci/index.htm
Global Agenda Council on Corruption
Where Should Today’s International Anti-Corruption Governance
Landscape Be Heading?

In recent years, a substantial number of international and regional anti-corruption


conventions as well as several international, self-regulatory private sector anti-
corruption initiatives have been devised to advance the fight against corruption.
Although unprecedented in nature, today’s international anti-corruption
governance landscape needs more teeth to become more effective.

15
Given the current nature of the landscape, the following changes would
substantially increase the effective implementation of international and regional
anti-corruption conventions as well as international, self-regulatory private sector
anti-corruption initiatives:

• Aligning measures in general and defining the issue of corruption more broadly
in particular (beyond bribes to public officials)
• Making all elements of all measures non-discretionary
• Getting all relevant players to endorse relevant measures, governments as well
as businesses
• Establishing review mechanisms with teeth, i.e. the possibility of imposing
sanctions on laggards
• Devising rewards for governments and companies demonstrating leadership
• Putting in place strong global and regional supranational enforcement
mechanisms, i.e. a specific International Corruption Court or extending the
scope of the International Criminal Court

Progress in the fight against corruption continues to be slow. There is an urgent


need for political will and leadership, across governments and businesses, to
implement measures to effectively address the issue and create a level playing
field.
Global Agenda Council on Corruption
17
Raising Our Game: Next Steps for Business,
Government and Civil Society to Fight Corruption

2. Recommendations to Business
Global Agenda Council on Corruption

In the face of corruption: do the right thing

Alan Boeckmann, Chairman and Chief Executive Officer, Fluor Corporation, USA

Abstract

With bribery and other forms of global corruption placing CEOs and their
companies increasingly at risk, CEOs should create a culture of doing the right
thing, develop a comprehensive ethics and integrity programme and consider
18

participation in global partnerships such as the PACI, the Partnering Against


Corruption Initiative.

While managing risk has always been a top agenda item for business leaders,
today’s CEOs face an extraordinary array of challenges in an environment of
intense public and legal scrutiny. They are increasingly accountable not only for
financial performance but also for lapses in ethics or judgement beyond their
immediate control. There is no better example than global corruption, and the
laws and codes of international conduct that constitute today’s serious effort to
discourage such activity.

Enforcement in the United States under such laws as the Foreign Corrupt
Practices Act of 1977 has risen sharply. The Department of Justice and the
Securities and Exchange Commission have become increasingly willing to charge
individuals. Under federal sentencing guidelines, companies with effective anti-
corruption programmes that cooperate with investigators and proceed to identify,
correct and report violations are much better off than those that ignore such risks
or give only lip service to anti-corruption initiatives.

What is a concerned CEO to do? Here are three broad suggestions.

First, and most important, the CEO must lend his or her imprimatur to a zero-
tolerance policy against corruption. She or he must lead by creating a culture
where everyone knows that it is okay to do the right thing, even when that might
mean losing money. Fluor has walked away from multimillion dollar projects in
countries where corruption is so institutionalized that there is no other way to
work. We believe that the sacrifice of today’s missed business opportunity is well
worth the long-term benefits of creating a more level playing field. And, it is this
type of leadership behaviour that helps employees feel safe in making equally
“right” decisions in the face of corruption. Above all, those of us at the top of the
organization must set an appropriate example.

Second, a company needs a comprehensive compliance and ethics programme,


which includes developing and coordinating compliance activities in business lines
and functional groups. Such activities include risk assessments to determine
needs, establishing codes and policies, providing training and conducting
investigations. CEOs must assure that their companies create strong codes of
ethics and conduct, along with rigorous training programmes, hotlines that provide
anonymity when reporting problems and ongoing monitoring of performance.
Additional details can be found in the article by my colleague, David Seaton.

Third, and finally, CEOs can gain from participation in sector, national or global
initiatives to end or at least minimize the scourge of corruption. Having seen first-
hand the damage that corruption can do, I was pleased to help establish the
World Economic Forum’s Partnering Against Corruption Initiative (PACI). Working
collaboratively, we created a multinational task force of participating companies
from Europe, Asia, the Middle East and North America, and developed and
adopted benchmark “Business Principles” that address ethical conduct regarding
bribes, facilitation payments, political and charitable contributions as well as gifts
and sponsorships.
Global Agenda Council on Corruption
Since its formation in 2003, more than 140 companies from the global energy,
engineering and construction, mining and metals, professional services, food and
beverage, chemicals, consumer goods, logistics and transport, insurance and
healthcare industries have signed on to the PACI. In so doing, they have agreed to
maintain a zero-tolerance policy towards bribery and corruption and to implement
a broad-based anti-corruption programme to guide the behaviour of their
employees. The PACI provides them with a useful array of services such as
training and assessment materials. It also collaborates with organizations such as
Transparency International, the World Bank and regional development banks to

19
forge effective anti-corruption measures.

For a host of reasons, it is in the self-interest of business leaders to protect


themselves and their companies while discouraging illegality by those with whom
they deal. Above all, it is the right and proper thing to do.

References
http://www.weforum.org/en/initiatives/paci/index.htm
http://www.fluor.com/sustainability/ethics_compliance/Pages/the_code.aspx
http://www.transparency.org/
Global Agenda Council on Corruption

How companies can best empower a chief ethics and


compliance officer in preventing, detecting and sanctioning
corruption

Keith T. Darcy, Executive Director, Ethics & Compliance Officer Association


(ECOA), USA

Abstract
20

The most lethal threats to any organization are misconduct within its own walls,
how it engages with the public and corruption. Creating strong anti-corruption
initiatives with the firm, chief ethics and compliance officers (CECOs) need to
embed a system of values and philosophy of life into the culture of the
organization. The absence of it, especially in these frightening times, can only lead
to anomie, cynicism, despair and continued corruption. It is the CECO that must
make moral awareness happen. When the values and behaviours are at stake, the
CECO is the principal architect of the corporate conscience and the one most
responsible for the moral agenda.

First, the chief ethics and compliance officer (CECO) must be a “chief”, an
executive level officer reporting to the board of directors and involved in the
strategic and policy decisions of the firm. It is not likely that a lower level employee
would have the clout to intervene at the executive level, let alone be privy to
decisions being made in the C suite. The CECO must be part of the company’s
power structure to be effective.

Second, independence of the CECO is critical. In some companies the board


hires, fires, determines compensation, benefits and the responsibilities of the
CECO. Independence can be further assured by providing an employment
contract, ample severance, indemnification and full D&O insurance (Directors and
Officers Liability Insurance) coverage. Board-backed independence can ensure the
CECO has the appropriate authority to carry out his or her mandate.

Third, CECOs should have a direct line and unfiltered reporting relationship to the
board.

Fourth, Directors must allow time on the board agenda for periodic progress
reports from the CECO. Directors should also ask the CECO during every closed
executive session – or even over coffee or at lunch – “What are you personally
worried about or think we should know?”

Fifth, CECOs must have adequate resources to act as an agent of the governing
authority in addressing issues of corruption.

Sixth, in addition to meeting regulatory standards of compliance, CECOs must


contribute to building a culture of values. Research strongly indicates compliance
programmes quickly become “check-the-box” programmes. Culture is what drives
behaviour in organizations.

Seventh, CECOs must create awareness (training, communication, etc.) at all


levels of management regarding all possible forms of corruption including bribery;
illegal gratuities; conflicts of interest (especially family relationships); false
statements and false claims; phantom vendors; sole source awards; unnecessary
purchases; extortion; mail and wire fraud; conspiracy; embezzlement; failure-to-
report corruption, etc.).

Eighth, management and CECOs must regularly assess corruption risks for
likelihood (probability); materiality (significance); mitigation factors.
Global Agenda Council on Corruption
Ninth, CECOs must work closely with auditing to monitor high and medium risk
areas.

Tenth, CECOs must create an anticipatory checklist to manage corruption risks,


and protocols for dealing with red flags as they arise.

Clearly, the most lethal threats to any organization are misconduct within its own
walls, how it engages with the public and corruption. Reputation risk today is
clearly as great as financial risk; it can destroy brands and threaten the very

21
existence of the franchise. In addition to creating strong anti-corruption initiatives
with the firm, CECOs need to embed a system of values and philosophy of life
into the culture of the organization. The absence of it, especially in these
frightening times, can only lead to anomie, cynicism, despair and continued
corruption. It is the CECO that must make moral awareness happen. When the
values and behaviours are at stake, the CECO is the principal architect of the
corporate conscience and the one most responsible for the moral agenda. This
cannot happen without the strong support and involvement of the board of
directors.
Global Agenda Council on Corruption

A culture of ethics is key to an effective anti-corruption


programme

David T. Seaton, Senior Group President, Fluor Corporation, USA

Abstract

Building and implementing an effective anti-corruption programme requires a solid


foundation of underlying core values and an established culture of ethical
22

behaviour throughout the organization. Employees and third parties must be made
aware of acceptable behaviour and taught what to do if they encounter it.

Based on our experience at Fluor, devising and implementing an effective anti-


corruption programme is like building any other structure. A solid foundation on
which to add all of the necessary elements that comprise a comprehensive
solution is needed.

At Fluor, the foundation includes a set of underlying core values and a culture of
ethical behaviour. Integrity has been one of Fluor’s four enduring values (the others
being safety, teamwork and excellence) throughout our nearly 100-year history.
Today, we have a comprehensive Fluor Code of Business Conduct and Ethics. It
includes topics from financial controls and conflicts of interest to doing business
globally and to health, safety and the environment. Messages are simple and
direct: “If you know it’s wrong, don’t do it”; “If in doubt, ask”; and “Looking the
other way is not acceptable”.

Based on our experience, several recommendations are worth passing along.

One is to incorporate anti-corruption and a range of other ethics and compliance


standards into your risk management programme, beginning when a project is still
only a prospect. I suggest you limit the number of third-party agents, and when
they are involved, exercise due diligence and watch for signs of inappropriate
behaviour. You should also see that your partners – in our case, suppliers and
contractors – are aware of your expectations as to business conduct and ethics.

Next, a number of specific elements are important in creating and maintaining an


effective anti-corruption programme. One starting point is to adopt and
promulgate a code of conduct, such as the Partnering Against Corruption Initiative
Principles for Countering Bribery (the PACI Principles) with their emphasis on zero-
tolerance. You should constantly seek new ways to communicate this material. In
Fluor’s case, we will roll out a “Speaking Up” campaign this year to further
emphasize the importance of compliance and ethical concerns.

A third recommendation is to place great emphasis on, and invest significant


resources in, the development of proprietary training to prepare employees for the
day when someone, openly or subtly, demands a bribe in one form or another.
Make sure they know the law, as well as company policies and expectations, and
that there are people to whom they can turn for help. We provide annual
company-wide training of our overall code, with special emphasis on key risk
areas such as anti-corruption. Since 2007, almost 2,000 sales and marketing,
project management, field operations, procurement and other employees in more
than 25 offices in 15 countries have received live anti-corruption training.

Four, all salaried employees must certify each year that they understand and
accept your code of business conduct and ethics. Strongly encourage employees
to report potential violations, first to their manager or supervisor, and then if
necessary to experts in such areas as Corporate Security, Human Resources,
Legal Services, Internal Audit, HSE or Corporate Compliance. For those not
comfortable with these avenues, establish a hotline operated by an independent
third party.
Global Agenda Council on Corruption
Five, seek the leverage that results from making anti-corruption everyone’s
responsibility. Be on constant lookout for “red flags”, such as the statement:
“That’s just how it’s done here.” “No,” we reply. “That is not how it’s done. If we’re
going to do business, we’ve got to do it ethically.”

Through my travels representing Fluor, I have seen first-hand how corruption,


particularly in developing countries, hurts companies, countries and their citizens.
Monies squandered in such illegitimate payoffs are funds diverted from much-
needed public projects, resulting in roads not built and schools and hospitals not

23
constructed. While much has been done by governments and NGOs to fight
corruption, global business must step up and get involved. I believe we have a
real opportunity to make a meaningful and positive impact.

References
http://www.weforum.org/en/initiatives/paci/index.htm
http://www.fluor.com/sustainability/ethics_compliance/Pages/the_code.aspx
http://www.transparency.org/
Global Agenda Council on Corruption

How business organizations can best encourage and support


companies in fighting corruption

François Vincke, Chair, Anti-Corruption Commission, International Chamber of


Commerce (ICC), Paris

Abstract

Reviewing the International Chamber of Commerce’s anti-corruption activities from


24

its history provides conclusions on what it can do, as a business organization,


going forward in the fight against corruption and extortion. Its members will
continue to work on a voluntary basis, despite criticism of self-regulation.
Providing precise and explicit advice to its members (specially SMEs) on how to
tackle corruption in sensitive cases such as whistle-blowing, dealing with
intermediaries and facilitation payments remains a priority. The ICC needs to be
prepared to support and advise companies in emerging countries especially
during transformative periods which their economies go through, to reach a level
playing field. Compliance efforts of member companies should be better
recognized.

1. Introduction
In more than 30 years of anti-corruption in a global business organization,
successes and setbacks have been experienced. One can learn from both. What
can reasonably be expected in the future? What can be recommended on such a
basis?

2. Achievements
Launching of anti-corruption recommendations for business in 1977
• Rules and recommendations, without requiring signing in or individual adhesion
• Recommendation to adopt a corporate code of conduct, based on the concept
of self-regulation
• Creation of an expert panel, to which extortion (attempts) may/should be
reported

1977-1994
• Back to “business as usual”
• (Almost) no files are reviewed by the expert panel
• Some large companies (also outside the US) start with codes, but scholars
express scepticism about the implementation of the rules and the codes

1994-2003
• Rules revamped in 1995: condemnation of all corruptive practices, based on
business case for anti-corruption; companies also to have integrity programmes;
still no requirement to sign in or to show individual adhesion
• Expert panel, which had become an embarrassment, disappears
• Two first editions of anti-corruption handbook
• Building contacts with international public organizations and full endorsement of
OECD instruments

2003-now
• Third review of rules and handbook; handbook recognized as useful tool but
sold in small quantities
• UN Convention against Corruption welcomed by business and seen as a
promise of a level playing field
• Proposal for reporting extortion (attempts) to ICC Commercial Crime Services
fails because of lack of interest of business
• Proposed cooperation with one or more audit firms to “monitor” progress by
companies not accepted
• Guidelines on whistle-blowing issued; guidelines on intermediaries in the
making; guidelines well accepted
Global Agenda Council on Corruption
• Advocacy with international public organizations on certain issues (i.e. private-
to-private corruption)
• Cooperation on selected issues with UN Global Compact, World Economic
Forum Partnering Against Corruption Initiative and Transparency International
(i.e. RESIST, Resisting Extortions and Solicitations in International Transactions)

3. Lessons learned
It is impossible to go back to “business as usual”, even if there is huge pressure
because of the present crisis*. Anti-corruption awareness is such that anti-

25
corruption has become part and parcel of the level playing field policy of
business organizations.

Anti-corruption efforts by business should be based on voluntary action.


Companies do not want to register extortion attempts in which they were the
victims, and they do not want to be “monitored” on their integrity policies. There is
no desire to adopt a signing-in procedure or a compulsory reporting system.
There is a timid move towards certification.
Global Agenda Council on Corruption

SMEs continue to be a headache. Certain believe that, due to their size, they
don’t have to comply to the same extent as big companies. Business
organizations do not have convincing SME policies.

Companies welcome precise and realistic advice from business organizations


on fighting corruption. National ICC chapters (mainly in smaller countries) report
that SMEs frequently require precise counselling on how to react in specific
situations**. Countries from emerging economies will have to adapt to new and
sound practices. Business organizations should be ready to give advice on
26

“transition period” problems

Companies express desire to receive explicit advice (and not general expressions
of intent) on difficult and sensitive issues such as:
• whistle-blowing***
• hiring, renewing and remunerating intermediaries (what kind of due diligence is
required for hiring an intermediary and at what level should their fees be?)
• facilitation payments or zero tolerance****

Companies also want to have readily usable material for training their personnel.
This will probably be the main use for RESIST.

Companies require a (better) recognition of their (often important) efforts in


compliance programmes. Recognition is either of a psychological nature
(authorities expressing appreciation), of a legal nature (alleviation of corporate
criminal liability sanctions for complying with all requirements of a full compliance
programme), or of a technical nature (through certification processes).

A less frequently expressed desire from companies is to have model anti-


corruption clauses (with audit rights and right to declare a contract void in case
of non-compliance).

Companies will want to have the support of business organizations in sector-


related initiatives or other forms of collective action.

Business wants to see anti-corruption as part of the fight against economic


fraud (a CEO is not interested in making subtle differences between different
criminal qualifications). There is a desire to have a general view on all Corporate
Social Responsibility concerns (including human rights, use of natural
resources, labour conditions, etc.).

* ICC has launched in May an enquiry (ICC-IFO) containing i.e. a question asking if business is going to
increase or decrease anti-corruption efforts during the crisis

** See Deloitte, “Fortifying Anti-Corruption in Today’s Corporation, Survey Conducted by the Economist
Intelligence on behalf of Deloitte”, on the question ‘From which of the following sources would most
likely lead to changes in your organisation’s anti-corruption programme?”, 18 % of the respondents
answered ‘Advice from outside organisations TI, WEF/PACI, UNGC and ICC’

*** The idea of having Guidelines on Whistle-blowing did not come from the central organisation but
from ICC France.

**** Which are often viewed as an obstacle rather than a facilitation.


Global Agenda Council on Corruption
27
Raising Our Game: Next Steps for Business,
Government and Civil Society to Fight Corruption

3. Recommendations to Governments
Global Agenda Council on Corruption

Transnational corruption threatens global security

Robert I. Rotberg, Director, Program on Intrastate Conflict, John F. Kennedy


School of Government, Harvard University, USA

Abstract

The improper use of public office for private gain still motivates most corrupt
practices by national and regional politicians. In the 20th century world, however,
28

corruption also facilitates major illicit people, weapons and drug trafficking
activities. It also, worryingly, makes possible the potential spread of terrorism and
the proliferation of nuclear fuels and devices. This new transnational character of
modern corruption, and its ability to undermine global security, needs to be
recognized. The only antidote is strengthened governance, based on committed
national leadership, throughout the developed and developing worlds.

Corruption is a human condition and an ancient phenomenon. From


Mesopotamian times, if not before, public notables have abused their offices for
personal gain; both well-born and common citizens have sought advantage by
corrupting those holding power or controlling access to perquisites. The exercise
of discretion, especially forms of discretion that facilitate or bar entry to
opportunity, is a magnetic impulse that invariably attracts potential abusers.
Moreover, since nearly all tangible opportunities are potentially zero sum in their
impact on individuals or classes of individuals, it is almost inevitable that claimants
will seek favours from authorities and that authorities, in turn, appreciating the
strength of their positions, will welcome inducements.

Until avarice and ambition cease to be human traits, corruption will continue to
flourish. Self-interest dictates the using and granting of favours. Merit will
determine outcomes and advancement only in a minority of nations, and the
riptide of corruption – even in the most abstemious nations and societies – always
exists as an undertow to be resisted. Indeed, in many nations, obtaining even
rightful entitlements in a timely fashion, or at all, is characteristically subject to
inducement. Almost everywhere, and from time immemorial, there is a
presumption that the most desirable outcomes are secured through illicitly
pressed influence or hard-bought gains.

Corruption is common everywhere in the early 21st century and almost no nations
and no collections of leadership are immune to the temptations of corruption. We
know more than ever before about the mechanisms and impacts of corruption.
We also know that corrupt practices are more egregious and more obscenely
excessive in the world’s newer nations. But what is truly novel in this century is
that corruption is much more a threat to world order than ever in the past.

Corruption is no longer largely confined to the political sphere, where wily


politicians and their officials siphon money from the state, fiddle bids, or demand
emoluments for giving citizens what are rightfully theirs. There is a new critical
security dimension to corruption, compromising world peace and stability. Now
areas of the globe are positively at risk because of corrupt practices within states
and the impact of such practices across transnational borders.

The peace of the world is systematically compromised by corruption that


facilitates the possible proliferation of weapons of mass destruction, that assists
the spread of terror and terrorist practices and that strengthens the malefactors
who traffic illicitly in humans, guns and drugs, and who launder money. Corrupt
practices undercut noble international efforts to improve health, educational
attainments, welfare, prosperity and human rights of the inhabitants of the
troubled planet. No arena of human endeavour is immune to the destructive result
of corruption. Numerous areas of the globe, especially within the post-Soviet
sphere, are controlled by criminals and criminalized states whose entire focus is
Global Agenda Council on Corruption
the promotion of corruption. In Africa, Zimbabwe, Guinea-Bissau and Equatorial
Guinea are offering the foremost examples.

Old-fashioned forms of corruption persist alongside and facilitate the spread of the
newer, more potentially destructive modes of corruption. Indeed, as great as are
the wages of sin within national borders and national governments – and almost
nothing has diminished those rewards – they are just as large if not much greater
across borders. There has been a quantum leap in all forms of trafficking,
particularly that of humans (mostly women and children, and some male slaves)

29
and in drugs, with new beachheads for South American-derived cocaine and
marijuana in Africa and Afghan, heroin in Asia and the ex-Soviet hinterland. Light
weapons and small arms are smuggled along some of the same routes, and
nuclear and other WMD smugglers often coexist with human and drug traffickers
– all varieties encouraged by open or corrupt borders and officials at all levels.
Some of the criminalized states specialize in such activities. Other nation states,
such as North Korea, depend on the open sores of corruption to accrue foreign
exchange.

For all these reasons, the battle against corruption is more urgent than ever
before. Global security depends first on being aware of the new threats to world
peace and the transnational combination of corruption and organized crime, and,
second, on reducing and containing corrupt practice everywhere. The usual
nostrums are still important: improved surveillance; enhanced accountability and
publicity; better policing; stepped-up forms of punishment; and new multinational
agreements. But strengthened leadership and reformed governance are also
critical in the battle against the old as well as the new forms of this ancient and
continuing human disease. Indeed, closer attention to better national governance
is the best antidote to the spread of transnational corruption.

Reference
Robert I. Rotberg (ed.), Corruption, Global Security, and World Order (Brookings,
2009).
Global Agenda Council on Corruption

Using private actions to fight corruption

William T. Loris, Director-General, International Development Law Organization,


Italy

Abstract

State-initiated criminal prosecution has not achieved the level of deterrence


required for a real breakthrough in the control of corruption. Alternatives need to
30

be considered. Empowering individuals with the right to initiate actions under


specially designed criminal laws that allow such individuals to share in any
resulting penalties, and taking greater advantage of existing private rights of action
that victims of corruption can exercise against perpetrators, are proposed ways of
achieving this. As the victims of corruption achieve increasing success in their
private actions, prosecutors would have fewer opportunities to refrain from
pursuing wrongdoers and legislators might be more willing to consider “qui tam”
approaches.

State-initiated criminal prosecution has not achieved the level of deterrence


required for a real breakthrough in the control of corruption. Alternatives need to
be considered. I believe there are two key strategies that could provide a boost to
national anti-corruption efforts. The first is to empower individuals with the right to
initiate actions under specially designed criminal laws that allow such individuals to
share in any resulting penalties. The second is to take greater advantage of
existing private rights of action that victims of corruption can exercise against
perpetrators.

The idea of granting a private right of action aimed at establishing liability for acts,
which are also the subject to public jurisdiction, is not new. As early as the 14th
century, English courts allowed so called qui tam* actions under which a private
party could be heard on matters which were of alleged interest to the Crown.
Where the court ruled in favour of the party who initiated the action (the “relater”),
the relater was entitled to a share of the penalties imposed on the defendant.

Qui tam actions have found their way into a number of US statutes, including the
US False Claims Act (“FCA”), one of the most important US federal anti-fraud and
anti-corruption statutes. The FCA criminalizes the presentation of fraudulent
invoices by suppliers to the government. Aaron R. Petty writes in his note, “How
Qui Tam Actions Could Fight Public Corruption”** that in total, “over US$ 15 billion
was recovered under the FCA between the 1986 amendments and the end of
fiscal year 2005, including US$ 9.6 billion recovered under the qui tam
provisions…the total recovery by relaters in that period was over US$ 1.6 billion.”

There are several concepts implicit in the qui tam approach:

1. The empowerment of private parties to bring actions under a criminal statute


exponentially multiplies opportunities for detection. Corporations that lose
business as a result of corruption are in a far better position than the public
authorities to know when corruption has occurred.
2. The approach counters the natural fear of retribution by providing strong
financial incentives for whistle-blowers.
3. The very presence of an army of potential relaters at every turn substantially
reduces the space in which the potentially corrupt can operate.
4. There needs to be well-crafted procedural requirements in the qui tam process
to protect the accused against spurious claims.

Of the two private action options, the inclusion of qui tam provisions in relevant
anti-corruption legislation and regulations will require a greater amount of effort.
Enacting legislation that challenges powerful interests and the status quo is never
easy, so a concerted outreach and education effort is necessary to convince
Global Agenda Council on Corruption
affected parties, including the general public, to apply pressure on legislators.
NGOs can play a significant role in raising the visibility of this issue and initiating
debate, but a focus on civil action, my second proposal, will also play an
important role in improving the impetus for reform.

Most legal systems would already allow the victims of corruption or other crimes
to seek civil remedies for damages they suffer at the hands of criminals. Every
poor mother who is forced to pay a hospital administrator a bribe to secure
medical treatment of her sick child has a right to seek the return of that payment.

31
Every firm that is unfairly excluded from a public procurement has the right to
damages. The fight against corruption could be substantially strengthened if the
victims of corruption were to systematically assert those rights in civil cases where
the burden of proof is lower than in criminal actions.

The right of private parties to maintain private actions for damages arising out of
corruption in national courts has been reinforced at the international level. The
Council of Europe’s Civil Law Convention on Corruption and the UN Convention
against Corruption are two examples. These are generally aimed at cases
involving businesses where damages can be in the millions. However, to deal with
corruption at the national or local level, and even for petty corruption, the use of
existing national law will normally suffice. The challenge here is to overcome the
victims’ fear of retribution.

As a first step, national anti-corruption bodies, citizens groups, NGOs, legal aid
providers and chambers of commerce must undertake a joint review of the local
laws to determine the best way for the victims of corruption to take civil legal
action against perpetrators. This must include relief from penalties imposed on the
payer of a bribe and transferral of those damages to the corrupt official.

Second, to facilitate the prosecution of civil claims, we must improve access to


justice for civil matters. Establishing support programmes, including pro bono
representation, to assist the poor in taking civil actions would encourage them to
move forward. A workable strategy would be to pilot this approach in cases of
petty corruption where the perpetrators would enjoy little protection. With some
initial successes it could then be extended to more serious cases of corruption.
This “tsunami” approach could help establish precedents at the petty corruption
level which would be important in building momentum for the approach.

As the victims of corruption achieve increasing success with their private actions,
prosecutors would have fewer opportunities to refrain from pursuing wrongdoers
and legislators might be more willing to consider qui tam approaches. Hopefully,
as the tsunami begins to surge, we will witness a virtuous perfect storm, where
the general public, the victims of corruption and the public authorities act together
to overwhelm the fear and helplessness upon which corruption thrives.

* The phrase qui tam comes from the Latin, “qui tam pro domino rege quam pro
se ipso in hac parte sequitur,” which translates as “who pursues this action on our
Lord the King’s behalf as well as his own.”
** 39 U. Mich. L. J. Reform 851
Global Agenda Council on Corruption

Parliamentary oversight of the electoral process


Political campaign financing: who can mind the store?

John G. Williams, Chief Executive Officer, Global Organization of


Parliamentarians Against Corruption (GOPAC), Morinville

Abstract

The governing party or coalition with the majority of members in parliament has a
32

vested interest in ensuring its own future and continued dominance of the political
landscape. Therefore it will use that majority to protect its position. Yet, it is
parliament that has the constitutional authority to pass legislation governing
political parties and their financing, so how does one solve the conundrum?
Openness, transparency, an informed electorate, vigorous debate, an independent
parliament, all parts of a functioning democracy, are by far the best ways to
ensure balance in political party finance.

It is trite to say that parliaments, as the representatives of the people, are the best
places to ensure that political party financing is fair to all. The governing party or
coalition with the majority of members in parliament has a vested interest in
ensuring its own future and continued dominance of the political landscape.
Therefore, it will use that majority to protect its position. Yet, it is parliament that
has the constitutional authority to pass legislation governing political parties and
their financing. How can this conundrum be solved?

Like most other political problems, this situation cannot be solved overnight, but
prevention is much better than cure. Parliament is not the only institution that has
the capacity to exercise accountability in a country. Civil society and an
independent media can also exert significant accountability in a democratic nation.
These two pillars of accountability in a democracy share the stage with political
parties as the communication links between government/parliament and society at
large.

The general concept of fairness sits well with society at large. Society wants
political choice at elections and equal opportunity for the party and candidates of
their choice. In addition to fair and honest elections, this means a generally level
playing field for the parties and candidates.

With a number of civil society organizations focused on upholding democratic


principles and a media that is not obstructed from reporting on awkward political
issues, a serious imbalance on political financing can be brought to the attention
of the public. When political finance becomes an issue during an election, political
parties will respond by presenting a position of fair play to the voter.

In addition to the normal rules regarding funds raised and spent during an
election, “off balance sheet” items can also seriously affect the fairness of
elections. In countries where democracy is weak, the most common is dominance
of the media by the governing party and a biased presentation of party and
election coverage. There is no dollar cost attached to this kind of political finance.
When this problem exists, it is exacerbated by the lack of fair debate of the issues
presented to the public at the election. Candidates and the policies of the ruling
party are feted and lauded while other candidates and their issues are sidelined or
ignored. On a more subtle basis is a preferential bias in the media for parties and
candidates of their choice. The media have tremendous influence over public
opinion and need to be cognizant of their responsibilities and be accountable for
them.

The other off balance sheet item is third-party financing of issues that are topical
in an election but not central to it. There is the argument that free speech should
not be restricted such that multimillion dollar campaigns to affect the outcome of
Global Agenda Council on Corruption
an election by supporting or condemning a candidate’s stance on a particular
issue are allowed. But free speech does not need a megaphone, and it is not free
and certainly not fair if influential lobby groups use it to affect the outcome of an
election.

With all the vested interests at play and the stakes exceedingly high, i.e. the
winner governs the country, the first rule of democracy comes into play: get
everyone engaged. Public debate informs the public. Their capacity to hold their
representatives accountable is the strongest influence on parliament and the best

33
motivator for parliamentarians to ensure that campaign financing is in the best
interests of the public. Therefore, it behoves parliament, as the institution that
represents the people and ensures their well-being is served by government, to
enact legislation that provides for free and FAIR elections.

Failure to ensure fairness in elections of which financing is a major part allows


dominant parties to consolidate their power to the exclusion of others. Openness,
transparency, an informed electorate, vigorous debate, an independent parliament,
all parts of a functioning democracy, are by far the best ways to ensure balance in
political party finance.

With that perspective, suggestions to develop, maintain and enhance


transparency and accountability in political finance are:

1) Ensuring that there is an independent electoral commission with powers and


credibility to oversee elections

2) Giving power to the independent electoral commission to report on issues


such as abuse of process and campaign financing in general

3) Requiring that all parties and candidates file audited reports with the
commission on the sources of all election financing in a standard format

4) Requiring that all parties and candidates file audited reports with the
commission on all campaign spending in a standard format

5) Provide clear definitions of illegal campaign activities including a demarcation


line between free speech and political persuasion during an election with
appropriate penalties

6) Through access to information, provide real opportunity for media, civil society
and citizens at large to obtain information on election financing
Global Agenda Council on Corruption

What can the OECD Anti-Corruption Convention contribute to


reducing commercial corruption?

Mark Pieth, Chairman, Working Group on Bribery, Organisation for Economic


Co-operation and Development (OECD), Paris; Co-Chair of the Global Agenda
Council on Corruption

Abstract
34

In 1997, the OECD enacted both a Convention (on criminal law) and a Council
Recommendation (on non-criminal issues) to combat corruption in international
business relations. Although it is narrowly focused on the supply side of bribery, it
is probably one of the most effective anti-corruption instruments currently in place,
in particular because of its strict provision to monitor government and corporate
implementation and application efforts.

The OECD Anti-Corruption Instruments (the Convention and the Revised


Recommendation of 1997) are far more focused than other international
instruments. They deal exclusively with the bribery of foreign public officials and, in
particular, address the role of managers and exporting industries in bribery. They
use all available legal means from criminal law to tax law, public procurement
rules, and accounting and auditing standards. In essence, they extend the model
of the US Foreign Corrupt Practices Act to the 37 member states of the OECD
Working Group on Bribery, making up to approximately 70% of exports and 90%
of foreign direct investments worldwide.

One of the key features of the OECD anti-bribery approach is its particular
combination of treaty law and soft law. Additionally, the OECD Working Group on
Bribery monitors the implementation and application of its instruments in a
rigorous peer review process. Regular discussions on ongoing cases as well as
country surveys have motivated member states to upgrade their anti-corruption
systems. In particular situations, the Working Group has requested countries to
report on case-related work (e.g. the ongoing procedures on companies like
Siemens, BAE, Halliburton or Total). Although the approach only covers part of the
problem of commercial bribery (the supply side as well as certain abuses of
financial centres), it is probably the most stringent of initiatives in force to date.
Nevertheless, there remains a lot to do; in several jurisdictions substantial legal
deficits (e.g. insufficient corporate liability) have been identified and other countries
find it difficult to process even blatant bribery cases. Finally, even where the laws
are up to standard, greater efforts are frequently required to raise public and
private awareness. The intended monitoring role of the OECD Working Group is to
remind countries in an impartial manner of their international obligations.

One of the main effects of the OECD’s work on corruption has been to motivate
corporations worldwide – be it directly or by raising legal risk – to upgrade their
compliance systems and to live up to the standards to prevent law enforcement
action. Thereby, public sector work dovetails with the anti-corruption efforts of the
private sector.

What should governments do to further the OECD’s goals?


– In several member states, persistent deficits in comparison to the Convention
standards exist; they are clearly identified in the “Phase 2” reports of the OECD
Working Group on Bribery. Countries are invited to follow up on these issues
as quickly as possible.
Global Agenda Council on Corruption
– Law enforcement agencies are still slow to pick up transnational bribery cases
in many member states, in some cases for lack of resources, in others
because adequate training is missing, in yet others because political will is
insufficient. These deficits should be urgently tended to.

What should companies do?


– Companies can contribute to reducing transnational bribery by upgrading their
internal compliance systems and by making sure they are applied in all
subsidiaries and by agents and other third parties worldwide.

35
– Companies may want to cooperate in industry specific groups to further focus
on the particular problems of a sector.

References
– OECD Policy Brief, Fighting Bribery in International Business Deals, September
2008
– OECD Working Group on Bribery, Annual Report, Paris 2007
– Mark Pieth/Lucinda A. Low/Peter J. Cullen, The OECD Convention on Bribery,
A Commentary, Cambridge 2007
Global Agenda Council on Corruption

INTERPOL calls on the business community to support the


world’s first International Anti-Corruption Academy

Ronald K. Noble, Secretary-General, International Criminal Police Organization


(INTERPOL), Lyon

Abstract

Education and training for a new generation of law enforcement officers,


36

government officials and business professionals are crucial in light of today’s


challenges in fighting corruption. INTERPOL is spearheading this effort in
collaboration with the Austrian government and the United Nations Office on
Drugs and Crime. By forming strong partnerships among all stakeholders,
including the private sector, the necessary knowledge and skills will be passed on
to those in the best positions to make a real difference. In the end, we will see
hope where there was none: we will see resigned attitudes towards corruption
replaced by the conviction that something can be done to defeat it.

Corruption poses one of the greatest threats to political, social and economic
stability in the world today. It is also one of the most vexing challenges for
governments, law enforcement and businesses in both developed and developing
countries to eliminate.

Corruption perpetuates poverty, hinders democratic development and scares off


foreign investment. It destabilizes institutions, which in turn become the silent
partners of terrorist networks and organized crime groups. Just as it undermines
the rule of law, it rigs the game against legitimate commercial activity to the point
where bribing a government official becomes not an issue of inconvenience or
added costs; it becomes a matter of survival.

INTERPOL knows that we can win over corruption only if we deploy the
indispensable human component with the tools and knowledge required to defeat
corruption in commerce, the administration of justice and the machinery of civil
government.

That is why INTERPOL, in partnership with the government of Austria and the
United Nations Office on Drugs and Crime (UNODC), moved to create the world’s
first International Anti-Corruption Academy (IACA) to educate and inspire a new
generation of law enforcement officers, government officials and business
professionals to fight corruption in all of its forms.

We are leading this effort jointly because virtually every survey taken in high-
corruption countries identifies police corruption as one of the top three most
prevalent types of dishonesty, because law enforcement officers are the ones
called in to investigate claims of corruption, and because the UNODC is
responsible for overseeing the implementation of the United Nations Convention
against Corruption.

Set to open in Vienna in 2010, IACA will meet this overwhelming need in several
important ways:

First, it is founded on the principle that corruption must be fought


comprehensively across sectors. Only by forming strong partnerships among all
stakeholders – government, law enforcement, the private sector, civil society and
the international community – will we be able to replace our resigned attitude
towards corruption with the conviction that we can overcome it.
Global Agenda Council on Corruption
Second, IACA’s student body will be global, diverse and properly positioned to
make a difference in this effort. Rather than focusing only on police training, it will
provide instruction to all anti-corruption professionals or those who hope to enter
the field in all countries and it will draw on the experience and expertise of
businesses around the world that confront issues of corruption each and every
day.

Third, its curriculum will be integrated and comprehensive. Designed by a skilled


group of global professionals including police, scholars, business professionals,

37
educators and others, the IACA approach will address all types of corruption with
every available training tool.

Fourth, our collaboration with the UN is a tremendous opportunity to broaden the


Academy’s reach, to enhance global economic development and to help promote
transparency and the rule of law.

By being inclusive and fostering private-public partnerships, we will ensure that


the necessary knowledge and skills reach those in the best positions to actually
make a difference.

It is no coincidence that countries that score the highest in anti-corruption surveys


are also some of the most economically vibrant in the world. It is in everyone’s
best interest that the Academy succeeds in obtaining the strong support of
governments and the private sector.

If we take these steps and see them through, we will reduce corruption by
teaching all how best to prevent, investigate and prosecute it. With the business
sector at the table, we can ignite a dialogue and create partnerships that will lead
to notable progress in transparency and accountability, thereby making our
citizens safer, our governments stronger and our businesses healthier.

In the end, we will overcome the most pervasive and dangerous aspect of
corruption: the belief that nothing can be done to stop it.
Global Agenda Council on Corruption
39
Raising Our Game: Next Steps for Business,
Government and Civil Society to Fight Corruption

4. Recommendations to Civil Society


Global Agenda Council on Corruption

How civil society can best recognize public and private sector
players that demonstrate leadership in fighting corruption

Peter Eigen, Chair, Extractive Industries Transparency Initiative (EITI) and Founder
and Chair of Advisory Council, Transparency International, Germany
Cobus de Swardt, Managing Director, Transparency International, Germany; Co-
Chair of the Global Agenda Council on Corruption
40

Abstract

Effective societal and governmental institutions need to be in place to tackle


corruption. But the emergence of corporate social responsibility has seen new
players join forces in the global combat against corruption: the private sector and
civil society. Civil society can best fulfil its role when it recognizes the benefits of
engaging constructively with the public and private sector players, when it
recognizes the challenges faced by governments and business in fighting
corruption and when it recognizes its role as a consensus builder and watchdog.
The stronger the partnerships between the three players are, the greater the
successes will be in the fight against corruption.

It has long been acknowledged that to tackle corruption, effective societal and
governmental institutions need to be in place. Meanwhile, the relatively recent
emergence of the corporate social responsibility movement has seen the private
sector become a potentially powerful new partner in the global fight against
corruption. It is critical that these relationships between government, the private
sector and civil society continue to mature and that innovative new synergies are
identified.

As with all relationships, all three actors must engage constructively together. Civil
society can best fulfil its role when it recognizes:

• benefits of engaging constructively with public and private sector players


• challenges faced by governments and business in fighting corruption
• how civil society can best contribute

Above all, civil society must perform its key role as a consensus builder and
watchdog. Civil society participation lends decision-making legitimacy, but with
this comes the responsibility to unflinchingly hold both government and business
to account.

As companies struggle to deal with the global economic downturn, there is


concern that some executives might resort to corrupt practices to secure
business. However, the business case against corruption is irrefutable. Scandals,
such as those at Enron, Satyam and Siemens, serve as a warning that corrupt
practices make for bad publicity and bad business. And while trust in corporations
has receded, civil society is perfectly placed to step forward with critical, but
constructive, input and credible expertise for companies’ anti-corruption efforts
globally and locally.

In recognition of the challenges that companies face when implementing anti-


corruption policies, civil society should work alongside business to address bribery
and help instil transparency and accountability at the very core of their operations.
To this end, Transparency International (TI) developed a common anti-bribery
code, the Business Principles for Countering Briberyi, by working with a group of
multinationals and non-corporate stakeholders. Its value is acknowledged by
Global Agenda Council on Corruption
global initiatives such as the UN Global Compact and the World Economic
Forum’s Partnering Against Corruption Initiative. By signing up and honouring
these principles, companies send a strong signal to investors, business partners
and the general public that they are committed to clean, ethical business.

Operating in environments where corruption is rife can see companies confronted


with difficult or even threatening demands. TI co-designed RESISTii (Resisting
Extortions and Solicitations in International Transactions) to help business counter
solicitation and extortion demands in the most efficient and ethical manner, as well

41
as reduce the probability of such demands being made. RESIST was developed
with more than 20 companies and organizations, and the World Economic
Forum’s Partnering Against Corruption Initiative, the International Chamber of
Commerce and the UN Global Compact.

Independent research conducted by civil society identifies exemplary practices in


the area of anti-corruption. Singling out leaders can set new standards based on
best practice and engineer positive change. For example, one-third of companies
assessed in TI’s 2008 Report on Revenue Transparency of Oil and Gas
Companiesiii were considered high performers. Highlighting best practices
provides the means for civil society to engage compellingly with the corporate
community to improve transparency in this sector.

The same benchmarking principle can be used with governments. Civil society
research can show how well governments are performing in relation to their peers.
For instance, the worldwide recognition and significance for foreign direct
investment of TI’s Corruption Perceptions Indexiv means that many governments
attach great importance to their country’s score and are willing to make necessary
reforms. For this purpose, diagnostic studies, like TI’s National Integrity Systems
Studiesv, can provide governments with clear evidence where specific reforms are
needed most.

A leading model of how government, business and civil society can join forces is
the Extractive Industries Transparency Initiative (EITI)vi. As a global standard for
companies to publish what they pay and governments to disclose what they
receive in oil and gas revenue, the EITI seeks to turn the “resource curse” into the
blessing it should be.

Governments and companies that implement the EITI show investors and
international financial institutions serious intentions about good governance,
transparency and accountability. Companies mitigate potential political and
reputational risks, and demonstrate their contribution to a country by making all
payments to governments visible to the public eye. By providing such a facilitating
platform, civil society can more effectively safeguard the general public’s interests
and hold governments and companies to account.

Along with business and government, independent and critical civil society
organizations play an integral part in the solution necessary to confront major
global challenges and achieve sustainable outcomes. The stronger these
partnerships are the greater the successes will be.

i http://www.transparency.org/global_priorities/private_sector/business_principles
ii http://www.transparency.org/global_priorities/private_sector
iii http://www.transparency.org/policy_research/surveys_indices/promoting_revenue_transparency/in_english/companies_report_2008
iv http://www.transparency.org/policy_research/surveys_indices/cpi/2008
v http://www.transparency.org/policy_research/nis
vi http://www.eitransparency.org/
Global Agenda Council on Corruption
43
Raising Our Game: Next Steps for Business,
Government and Civil Society to Fight Corruption

5. Recommendations on Multistakeholder
Partnerships
Global Agenda Council on Corruption

Public-private partnerships against corruption: a solid


foundation for success

Dimitri Vlassis, Chief, Corruption and Economic Crime Section, United Nations
Office on Drugs and Crime (UNODC) ) and Secretary, Conference of the States
Parties to the United Nations Convention against Corruption (UNCAC), Vienna*

* The views expressed in this contribution are those of the author and do not
necessarily reflect the position or views of the United Nations.
44

Abstract

Increased awareness, lower tolerance levels and the sense of urgency caused by
the financial crisis point to the need for the establishment and strengthening of
partnerships between the private and public sectors to effectively fight corruption.
These partnerships must be forged quickly and be based on the notion of equality
and comparative advantage. They require leadership and vision but hold great
potential for all involved and, ultimately, the achievement of success in the fight
against corruption.

We have come a long way from the word “corruption” being almost taboo two
decades ago to corruption topping the political agenda and occupying centre
stage in public discourse. This shift did not happen overnight. Credit for this
change is shared by several visionaries, who took considerable risk and worked
often against the tide, either privately, or through and within institutions. Those
individuals have displayed leadership and foresight, and helped shape public
opinion and policy-making by detecting early the pernicious effects of corruption
on every value modern societies hold dear. They had to dispel many myths,
including the one about corruption being an incurable disease afflicting some
societies or cultures.

Growing awareness brought with it lowered levels of tolerance. The increased


presence of corruption in the public debate also created heightened expectations,
together with a sharpened focus on those responsible for solving the problem.

The rise in awareness and the decrease in tolerance galvanized significant action.
A prominent example has been the United Nations Convention against Corruption
(UNCAC), with comprehensive and groundbreaking provisions, unmatched by
other legal instruments. The UNCAC is important because of the records it broke:
it was negotiated in less than two years, came into force at about the same time
and at present has acquired 136 parties – more than two-thirds of the entire
membership of the United Nations. In turn, the UNCAC has prompted national
action around the globe. It has brought about new legislation in countries big and
small, developing and developed and, most importantly, has set in motion a wave
of institution-building that has not been paralleled by any other international legal
instrument in the last couple of decades.

However, the inherent complexity of the phenomenon (especially when it manifests


itself on a grand scale) and the rather superficial reporting (sometimes bordering
on the sensational) by the media have conspired against an in-depth
understanding of the problem. Consequently, people are still prone to operate on
the basis of perceptions, especially regarding the roles of those who need to act
together to achieve results. It is not unusual, for example, for the public sector to
be perceived as lacking political will every time an incident of corruption makes the
headlines, or for the private sector to be vilified collectively as a result of the
actions of some of its members. Ironically, public perception about the extent and
seriousness of corruption shifts upwards in proportion to more rigorous
enforcement which exposes more cases of corruption.
Global Agenda Council on Corruption
Effective action against corruption requires synergies and alliances. This is also
one of the key tenets and crucial messages of the UNCAC. One such alliance
involves the public and the private sectors. For many years, the conventional
thinking held that these two sectors have clearly distinct roles and responsibilities,
which intersect sparingly and only when required. In more recent times, economic
and political theory put a high premium on the desirability of an environment of
freedom of operation for business. Accordingly, governments reduced or
altogether removed regulation in progressively larger segments of the economy.
On the other hand, the private sector was keen to safeguard its flexibility and

45
freedom of operation through progressively more extensive self-regulation. The
financial crisis has shone the spotlight on the considerable limitations of that
approach. The question is whether the pendulum will swing too far to the other
side and whether the sense of urgency brought by the crisis will leave room for
sombre and impassionate thinking to strike an optimal balance.

Increased awareness, heightened expectations and the pressure created by the


financial crisis are all factors that argue in favour of charting an anti-corruption
course based on forging meaningful and long-lasting partnerships between the
private and public sectors. The term “partnership” entails equality, and that
concept must be the cornerstone of these relationships. Both partners must
contribute their strengths and pull their weight. The public sector can bring
political leadership and the commitment to genuine reform, openness and
transparency, as well as consistent and effective enforcement of the law. The
private sector can contribute innovation, the ability to calculate and take risks, and
the orientation towards achieving measurable results and adding value. The public
sector should display the willingness to critically revisit its methods, systems and
operations. The private sector must work to change attitudes and recognize that it
is as much part of the problem as of the solution. Both sectors need to clearly
delineate the significant common ground that exists between them and cultivate
relationships through the pursuit of common interests. Joint work is needed to
articulate clearly and appreciate the significant benefits that partnerships bring.

The numerous areas where partnerships can be forged and pursued with
concrete results in relatively short time include procurement in sensitive areas,
such as defence, or vulnerable sectors such as health, energy or construction (all
often shrouded in myth and perception). They also include the broader area of
education, where joint investment can provide the means to future generations of
citizens and public and private sector leaders to resist the temptation of
corruption.
Global Agenda Council on Corruption

Businesses and multilateral development banks – a key


partnership in the fight against corruption

Ngozi N. Okonjo-Iweala, Managing Director, The World Bank, Washington DC


The author acknowledges input from Brian Pinto, Francesca Recanatini, Adrian
Fozzard and numerous other World Bank Group colleagues.

Abstract
46

Multilateral development banks can take concrete steps to discourage corruption


and, thereby, help reconcile the profit-maximizing goals of businesses with the
developmental goals of economic growth and poverty alleviation.

Corruption and bad governance are costly for developing countries. Private
investment is reduced and public resources wasted, with harmful consequences
for economic growth, poverty alleviation and human development outcomes
ranging from infant mortality to literacy [see references]. Corruption at the top is
the most costly because the bad example set by national leaders permeates the
whole country, leading to the wastage and theft of public resources, the
degradation of public institutions, especially in the key fiscal, financial and judicial
sectors, and economic stagnation.

In a free market setting, the goal of businesses is to maximize profits and


shareholder value. However, corruption distorts the allocation of resources either
because of favouritism shown to a particular company, which effectively gives it
monopoly power, or by artificially inflating the cost of a public investment project
contracted via a corrupt procurement process, or by condoning unnecessary
investments which have zero and even negative social rates of return. But
businesses could also suffer; a recent survey by Ernst & Young [2008] highlights
the costs of corruption for companies in terms of lost market opportunities, fines
and penalties.

Hence, there is a dilemma. Businesspeople and associations have an interest in


eliminating corruption and promoting fair competition, but a few powerful
corporations could exercise undue influence on a country’s governance, thereby
biasing public policy and the business environment in their favour. These efforts,
especially in weaker states, could deteriorate into abetting bad governance and
corrupt practices. The challenge, therefore, is to create a set of incentives and
institutions that will harmonize the shareholder value-maximizing goals of
businesses with the social goals of rapid economic growth and poverty alleviation
by building on the interactions among businesses, governments and public
entities, civil society and multilateral development banks shown in Figure 1.
Global Agenda Council on Corruption
Figure 1: Corruption and Economic Agents

47
Multilateral development banks should take the lead in three areas, some aspects
of which are currently under consideration and discussion within the World Bank
and its partners.

Set an example by promoting transparency and accountability in pubic


procurement while deterring theft of public resources
– Promote e-procurement and dissemination of procurement information such as
the public disclosure of bid awards and progress reports to limit corruption in
procurement, and implement third-party monitoring of development banks’
operations
– Encourage adoption of complaint-handling and whistle-blower protection
systems
– Support countries’ efforts to recover the proceeds of corruption spirited
abroad, such as through the UNODC-World Bank Stolen Asset Recovery
(StAR) Initiative, thereby ending theft with impunity

Strengthen incentives and penalties for individual companies


– Assess possibility of including no-bribery clauses in development banks’
contracts and give teeth to sanctions for fraud and corrupt practices
– Establish Anti-Corruption Board and coordinate efforts to apply sanctions
across development banks and international financial institutions, and
disseminate information about past corrupt actions among potential
bidders/investors
– Promote private sector participation in Voluntary Disclosure Programmes, such
as the one developed by the World Bank that encourages companies to adopt
business practices that contribute to a more competitive and healthy private
sector
– Encourage governments to subject officials handling Bank funds to the income
and asset disclosure regime of the national authorities, and identify such
officials as politically exposed persons [PEPs]
Global Agenda Council on Corruption

Support efforts to promote the demand for good corporate governance


and help improve the business climate and the financial system at the
country level
– Implement reforms focused on strengthening corporate governance, financial
reporting and auditing (including regulation of professions)
– Create integrity networks involving the private sector both at the national and
local level that can mobilize collective support for individual reforms (see for
example, www.fightingcorruption.org)
– Support global multistakeholder coalitions around industry-specific standards
48

(such as EITI, CoST, MeTI) and the extension of Publish What You Pay and the
Kimberly Process to other sectors
– Launch a contest to identify and finance innovative initiatives promoted by
business sector leaders to address corruption

References
– Bardhan, P. (1997): “Corruption and Development” Journal of Economic
Literature 35 (3), pp.1320-46.
– Ernst and Young (2008): Confronting Corruption: The business case for an
effective anti-corruption programme:
http://www.pwc.com/extweb/pwcpublications.nsf/docid/974053FED579A78A
CA2573EF002CC5E9/$file/confronting_corruption_printers.pdf
– Friedman, Eric, Simon Johnson, Daniel Kaufmann, and Pablo Zoido-Lobaton
(2000): “Dodging the Grabbing Hand: The Determinants of Unofficial Activity in
69 Countries,” Journal of Public Economics, 76: 459-493.
– Gupta, S., H. Davoodi and R. Alonso-Terme (1998), “Does Corruption Affect
Income Inequality and Poverty?”, IMF Working Paper, WP/98/76, IMF.
– Mauro, Paolo (1995), “Corruption and Growth”, Quarterly Journal of
Economics, August, 1995.
– Tanzi, V. and H. Davoodi (1997), “Corruption, Public Investment and Growth”,
IMF Working Papers, WP/97/139.

Contacts
– Anders Agerskov, Senior Policy Officer, World Bank
– Bernard Becq, Chief Procurement Officer, World Bank
– Simeon Djankov, Chief Economist, World Bank
– Pascale Dubois, Sanction Evaluation and Suspension Officer, World Bank
– Djordjija Petkoski, Lead Specialist, World Bank

Internet Resources
Businesses fighting corruption: www.fightingcorruption.org
Global Compact:
http://www.enewsbuilder.net/globalcompact/index000277804.cfm?x=bd2Hd2m,b
b6LfBj8,w
TRACE International: https://secure.traceinternational.org/Default.asp?
Center for International Private Enterprise: http://www.cipe.org/index.php
http://crisistalk.worldbank.org/
World Bank Voluntary Disclosure Program: http://go.worldbank.org/0YOV31KG10
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