Huguette Labelle

Corruption is the single greatest obstacle to economic and social development around the world, diminishing the impact of everything from company-sponsored education programmes to multi-stakeholder partnerships on HIV/AIDS. With over US $1 trillion paid in bribes each year, according to the World Bank, the magnitude of value lost is comparable to the GDP of the entire African continent.

Businesses have the potential to close the tap on bribe money – to stem the supply side of corruption. That is their responsibility, but also their opportunity, to shape a fairer world.

The Global Compact’s addition of the 10th Principle on anti-corruption and transparency in 2004 was cause for celebration for organizations like Transparency International (TI). It was proof that the message the anti-corruption movement had been promoting for a decade – that corruption was bad for business and bad for people – had been recognized by the business community.

In the post-Enron era, we have seen, and continue to see, that corruption has a powerful impact on the corporate bottom line. A scandal can wipe out the senior echelons of a given company, or even the entire company. Even the implication of corruption can be enough to do considerable damage.

But the case for the Global Compact’s 10th Principle is also based on stark economic and social realities, particularly corruption’s negative impact on investment climate and the billions of people in our world who are striving for a better life.

A growing consensus
Understanding of corruption has grown tremendously. Transparency International has been integrally involved in catalysing this sea-change in awareness through nearly 100 national chapters across the globe. The TI Corruption Perceptions Index has frustrated many governments, but it has become a tool used across the globe to highlight the abuse of public office for personal gain.

Bilateral donors and multilateral development institutions have mainstreamed anti-corruption into their programming, both in the initiatives they fund and in the way they fund them. Development banks are increasingly debarring companies found to have engaged in corrupt behaviour – another bottom line consideration, particularly for companies dependent on large infrastructure projects.

Governments and financial institutions in developed economies are cooperating in efforts by developing countries to repatriate assets stolen by corrupt officials. For example, Nigeria’s Economic & Financial Crimes Commission has reported that over US $5 billion in stolen funds have been returned to the country over the last four years, money now available to build schools and hospitals and repair railway lines.

The global legal framework
All of this has been taking place against the backdrop of an expanding international legal framework that, properly implemented, sets global standards for transparency and anti-corruption and has the potential to eliminate safe havens for corrupt practices or corrupt actors.

In 1997, the OECD penned the Convention on Combating Bribery of Foreign Public Officials, making it a criminal offence. This convention is of great importance in that it binds almost all of the world’s major exporting countries into a common agreement, minimizing concerns that anti-corruption legislation means a competitive disadvantage.

In 2003, we saw a broader instrument come into force: the United Nations Convention against Corruption. With provisions on criminalizing foreign bribery, whistleblower protection and transnational legal assistance in investigating corruption, the UN convention creates global benchmarks for anti-corruption legislation, and expands the framework beyond signatories to the OECD convention.

Commitment vs. ambivalence
These international agreements represent a great opportunity, yet we see dangers of backsliding and wandering focus. Despite having signed the UN convention, many pivotal countries have yet to ratify it. This wavering underpins Transparency International’s consistent call for a robust monitoring system. Monitoring is vital for solidifying trust in governments and giving them credit where they have been working to meet their commitments under the UN Convention.

Similarly, even though it has been ratified, the OECD convention faces significant challenges in the form of questionable political priorities, with governments finding a variety of reasons not to face head on the problem of foreign bribery by their companies. Although laws alone are not the answer, enforcement needs to be strengthened to put an end to the perception of impunity for public officials and business people.

For business, this is becoming all too clear. The Siemens scandal cut a broad swath through that company’s top management tier. And news of a federal investigation in the United States into corruption allegations cost BAE 8 percent of its share price on the New York Stock Exchange in a single day.

It is not enough to rely on corporate culture to keep a company clear of corruption. Top management introducing a set of strong ethical rules is not sufficient without a continuing management effort to enforce those rules.

Transparency International has developed a tool for precisely this purpose. The Business Principles for Countering Bribery, which have also been adapted for use by small- and medium-sized enterprises, offer a generic framework for companies looking to introduce a no-bribes policy.

Fighting corruption for a sustainable future
Some argue that there is too much focus on corruption and that there are more pressing topics, such as ridding the world of poverty or stemming climate change. But these other goals will remain unattainable if we do not tackle corruption.

We need to continue working with governments to improve governance and work harder at convincing more companies, large and small, of the benefits of conducting business with integrity. The days of bribery as a business strategy are over. The cost is simply too great, both for companies that bribe, but above all for the ordinary people that shoulder the cost for distorted decision making and stolen public funds. It is for them and for future generations that this campaign must be waged.

Huguette Labelle is Chair of the Board of Transparency International. She also is Chancellor of the University of Ottawa, Vice President of the International Union for the Conservation of Nature, Vice President of CRC Sogema, and a member of the Board of the UN Global Compact.  She is a Trudeau mentor and provides advisory services to national and international organizations. Labelle is a Companion of the Order of Canada, and has been awarded honorary degrees from twelve Canadian Universities. She has also received the Vanier medal of the Institute of Public Administration of Canada, the Outstanding Achievement Award of the public service of Canada, the McGill Management Achievement Award and l’ordre de la Pleiade. She holds a Doctor of Philosophy, Education.