Efforts on anti-corruption has taken a front seat
for the past couple of years. The beginning of 1990s saw several
international organisations introducing anti-corruption instruments to
make the functioning of businesses clean. With globalisation and
business opportunities spread across the globe, companies have to follow
the norms of several countries. Strong anti-corruption rules of USA and
Britain has led many companies to introduce anti-graft initiatives in
their working. However, India still lags behind.
In the recently
published Ease for Business Index (2014) constituted by the World Bank,
India ranked 134 amongst 189 nations in the world (the lower bottom),
indicating that India is an investment / business averse country. Ease
for Business Index takes into account, procedures of obtaining licenses,
permits, tax regulations and infrastructure facilities. Lack of
transparency and accountability shrouds all the above procedures.
Though
India is trying to address the issue of corruption by making
legislative changes, ratifying international conventions and adopting
technology in its administrative functioning, merely rules and
regulations will not address the issue. It is important that the
business stakeholders are committed and come together to participate in
the fight against corruption.
Business Case for Anti-corruption
A
recent report of Price Waterhouse Coopers (PWC), a leading consultancy
firm, mentions that increasingly companies have recognised “corruption”
as a major threat to their business.
• 63% of the companies indicate that they have experienced corruption.
• 39% of the businesses have lost important bids due to corrupt officers.
•
Corruption leads to the damage of the brand name. Correspondingly,
companies have reported that having an anti-graft programme has a great
chance of enhancing the brand name.
• The report goes as far as
mentioning that the total money that a company spends on legal,
financial and regulatory suits due to corruption is much less compared
to the reputational damage (brand) which is done to the organisation.
• 43% of the companies do not enter a particular market which is highly vulnerable to corruption.
Risks of not engaging in the anti-corruption initiatives
• Criminal prosecution (heavy cost to the company)
• Exclusion from bidding processes
• No legal remedies in case the company increases the
cost of the materials
• Damage to reputation, brand and share price
• Regulatory censure
• Cost of corrective action
• Demotivated employees
• Uneven market, loss of business opportunities
• Policy-makers responding by adopting tougher and more rigid laws and regulations (domestic, national and international)
Benefits of introducing anti-corruption initiatives in the companies:
•
With strong anti-corruption mechanism in a company, the organisation
saves on legal suits. Further, it also attracts new companies through
rigorous business integrity policies.
• Business attracts investments from ethically oriented investors.
• Employee retention and morale of the employee increases as hard work will be the key criteria for progress of the employees.
• Increase productivity by means of a motivated workforce.
• Business can obtain a competitive advantage of becoming a preferred choice of customers, through positive branding.
• Together, businesses can create a level playing field.
• Business collaboration on anti-corruption initiatives influences positive rules and regulations.
Global
Compact Network India, is one of the local networks of UN Global
Compact; a strategic policy initiative for businesses that are committed
to aligning their operations and strategies with ten universally
accepted principles in the area of Human Rights, Labour, Environment and
Anti-Corruption. The 10th principle of UNGC is holistically dedicated
to fight against Anti-corruption in all its form. Furthering the 10th
principle Collective Action Project India provided a platform for
anti-corruption dialogue between private and public sector and
incentivise ethical behavior of businesses. The project in a phased out
manner has taken up pressing corruption issues in the Indian context, in
the spheres of public procurement, bribery and fraud, and supply chain
transparency and sustainability in India.
In the past three
years, since Collective Action was launched in India in 2011, one of the
significant achievements of GCNI has been creation of a platform for
dialogue and deliberation; with an equal number of participants from
public sector, private sector, business associations and SMEs. GCNI has
also been successful in making the businesses take notice about the
merits of adoption of international instruments, one of them being
Integrity Pact (to achieve transparency in procurement). From a time
when discussing corruption was a taboo to a time when talking and
tackling corruption is seen as a sign of sustainable business, GCNI, in a
short duration, has achieved much more than its anticipated goal of
creating awareness about graft.
In its first series of pan-India
consultation conducted during 2010-2011 titled Ethical Business for
profitability, GCNI partnered with academicians, civil society, chambers
of commerce, international business councils to share their best
practices which are being followed in various sectors. Mr. J. F. Ribeiro,
former Supercop, speaking at the Seminar in Mumbai pointed out the
importance of the topic and highlighted the need to understand and
analyse the different ethical dilemmas that companies face today,
especially with relation to corruption. Mr. N. Vittal, Former
Central Vigilance Commissioner delivering the keynote address in Chennai
emphasised that policies based on ethics, of any business, would mean
that they are legal, fair and open to public scrutiny. Any company which
does not practice such a policy is most likely to face contempt and
ridicule at some point or the other. Seminar participants in all four
cities (Mumbai, Chennai, Delhi, Kolkatta) unanimously confirmed that
business can attract and retain talent if they are branded as an ethical
business today.
In the second series of pan-India consultation
conducted between 2011-2012 titled Turning Down the Demand and Cutting
off the Supply saw increased participation from private sector and small
and medium sector enterprises (SMEs). The main aim of second series of
consultations was to know about innovated ways in which corruption could
be tackled and some of the ground realities which are not factored in
while constructing Anti-Corruption policies. Corporate Fraud triangle
was explored so that efforts could be made at all levels through
Collective Action.
In
conclusion, ‘Collective Action’ is a collaborative and sustained
process of cooperation among stakeholders. It increases the impact and
credibility of individual action, brings vulnerable individual players
into an alliance of likeminded organisations and levels the playing
field between competitors. Collective action besides representing big
private and public sector organisations also leverage equal
representation to the Medium/Small scale enterprises who despite being
major contributor to the Nation’s income fail to convey the issues and
challenges faced by them and thus become more prone to corrupt
practices.
