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The fight against corruption

18 July 2016

The fight against corruption - read more

Corruption is toxic and should not be tolerated in any way, says Simon Osborne

In 2010, the UK Bribery Act made offering or receiving bribes, bribery of foreign public officials and failure to prevent a bribe being paid on an organisation’s behalf, a crime. If that is not sufficient to deter people from offering or accepting ‘nice little earners’, reading about the horrendous conditions in which British businessman Peter Chapman found himself imprisoned, should give pause for thought.

Mr Chapman spent a year and a half behind bars awaiting trial for bribing an official at Nigeria’s mint to secure a banknote printing contract for Australian company Securency International Pty Ltd. Six months of these were spent in a Brazilian jail awaiting extradition to Britain.

Conditions were so horrific that the case featured in a United Nations report. Dark, dilapidated cells meant for two held up to 30 prisoners, with most sleeping on the floor in extremely cramped conditions. Infested with cockroaches and other insects, some cells even had sewage leaking from the ceilings.

Judge Michael Grieve QC found that Mr Chapman paid the bribes while under ‘considerable pressure’ to achieve sales from his superiors who had encouraged, or at least connived, in the corrupt activity. He is not alone. A report in 2014 by the Paris-based Organisation for Economic Cooperation and Development (OECD) showed that bribery and corruption is rife in the western world, with bribes paid out worth 35% of the average profit on a deal and made with the full knowledge of senior management.

Corruption is corrosive and works against sustainable development. The money that businesses pay out in fines cannot be invested in the business itself. In 2015, for example, as part of the UK’s first deferred prosecution agreement, a former unit of South Africa’s Standard Bank based in London agreed to pay £21.7 million ($32.6 million) in fines and repayments of bribes and profits following an alleged bribery scandal in Tanzania.

Being found guilty of bribery can prove particularly costly for individuals. In October 2015, the Outer House of the Scottish Court of Session penalised a former chief executive who had been dismissed for misconduct for his knowledge of a scheme that paid bribes to a US customer for extra business.

The former chief executive had brought ‘unfair prejudice’ proceedings against his former employer in order to realise his substantial shareholding in the company. His involvement and knowledge of the bribery arrangement made him a ‘bad leaver’ and as such he was only entitled to 75% of par value or fair value, whichever was lower. This amounted to a difference of approximately £18 million ($27 million).

Commonwealth Secretary General Baronness Patricia Scotland QC, who was responsible as Attorney General for piloting the Bill for the UK’s Bribery Act 2010, is making an attack on corruption one of the chief themes of her Commonwealth office. She has proposed a criminal justice reform network comprising lawyers, bankers, prosecutors and law enforcement agencies to help smaller countries improve their laws and practices.

Under the proposals, agencies operating in Commonwealth countries may need to prove they are meeting anti-corruption standards to gain access to aid and loans.

Stamping out bribery and corruption is beneficial for business because it creates clarity and a level playing field. It also aligns trading nations around decent standards of corporate behaviour. The new proposals aim to make it advantageous to be compliant, transparent and non-corrupt, and to mark out those countries that are at least trying to be compliant.

If ‘no mark, no work’ is genuinely enforced, it should help to raise the standard. Furthermore, as Baroness Scotland says, ‘if we can deliver and develop something for 53 countries that delivers real change, we have then got a template to say to countries outside the Commonwealth: here is a model that delivers.’

A recent article in the Guardian suggested ways to use technology to reduce corruption:

  • Deterrents like the Trade Route Incident Mapping System in Nigeria, a crowdsourced whistleblowing system which allows truckers and small traders stuck at border check points to report corrupt officials using a mobile phone 
  • Secure case management systems with audit trails and secure workspaces that investigators can trust 
  • Automated tax collection
  • Shared information on aid, public contracts and company ownership across borders through a public registry of beneficial owners
  • Digitised public services to prevent corrupt practices by public service personnel.

Attention should be paid to local contexts. Using technology to fight corruption is not without risk in countries where the state tightly controls the internet and other communications networks.

Equally, technology does not always democratise access, as is the case in India where farmers have to submit their land registration certificates in order to access subsidised fertilisers and seeds. Not only is there ample room for corrupt officers in the land registration department to profit, even when details about land ownership and copies of these documents can be obtained through an IT booth, lack of literacy means that middlemen are still able to demand bribes.

Corruption is toxic and should not be tolerated in any way, shape or form. When Tunisian Mohamed Bouazizi set himself alight because he could not get a fruit licence and thought ‘I cannot go to the courts, I cannot go to the police and I cannot feed my family’, he demonstrated very powerfully why corruption needs to be combated.

Simon Osborne is CEO of ICSA: The Governance Institute

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ICSA: The Governance Institute
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