While its main focus remains on the abuse of public resources, Corruption Watch believes that business also has a crucial role to play in combating corruption.
The civil society organisation has reached out to CEOs of leading companies in South Africa to explore opportunities for collaboration and involve business as an active partner in fighting corruption.
Corruption Watch convened its first business colloquium on Tuesday 11 February 2014, with the support of the J&J Group Development Trust, the JSE, and GIBS. Over 50 business leaders attended the event at the Gordon Institute of Business Science (GIBS) in Illovo.
The minister of finance, Pravin Gordhan, led the discussion on the role of business in fighting corruption. He was joined on the panel by Mark Lamberti, chairman of the Transaction Capital and of Massmart; Sim Tshabalala, joint CEO of Standard Bank; Bernard Swanepoel, chairman of Village Main Reef; Isaac Shongwe , an executive director of Barloworld, and John Burke, an executive director of the JSE.
The event was the first of its kind to be convened by Corruption Watch, since the organisation was launched two years ago.
“CW’s very existence is anchored in the widely held belief that corruption cannot be effectively combated without active public participation. Business is a critical part of that public. While the private sector is certainly implicated in corruption, so too are government, political parties and elected representatives and ordinary citizens. It’s imperative that each of these sectors of society participate in combating corruption,” said David Lewis, executive director of Corruption Watch.
Gordhan, speaking ahead of this week’s State of the Nation address, urged South Africans to develop a counter-narrative to the prevailing story of corruption and to be innovative in battling it. He said that corruption was undermining nation building and ethical citizenship, key building blocks for a successful society.
John Burke, an executive director of the JSE, pointed out that business was not collectively doing enough to curb corruption in respect of procedures or training and often “cannot see a corrupt practice for what it is”. He suggested that investors did not punish corrupt behaviour sufficiently but cautioned that fining companies punished the ultimate shareholder, often pensioners, and that prosecutors should rather penalise the individuals responsible. The JSE would encourage business to get involved in the work Corruption Watch is doing.
Understanding corruption in big business
Several themes developed – though not necessarily consensus – during the thought provoking discussion from many of the country’s leading business people, including:
- Business needs to talk with a single voice;
- Small business needs a special focus;
- Company culture is the biggest determinant of behaviour;
- Inequality and the erosion of social capital must be addressed;
- Business should kill competitive advantage through corruption by working together to ‘red-card’, or name-and-shame industry perpetrators;
- Institutional investors must play a greater role in punishing companies behaving corruptly;
- Over regulation is not the answer leading to ever-expanding legal departments rather than strong, moral leadership;
- Our excellent, world-class laws to curb corruption need enforcement institutions sufficiently resourced with adequate capacity to hold the corrupt to account;
- Failure to distinguish between government and party and cadre deployment is a problem, as is lack of transparency in political party funding;
- There are contradictions between building sustainable businesses to underpin the fiscus and job creation and the short-termism of tenderpreneurism and directors incentivising businesses to manage their share prices;
- Corruption is insufficiently understood.
A digital voting poll conducted during the event revealed the following:
- 79% of the businesses represented had experienced some form of actual or attempted corruption.
- 72% of respondents said corruption had worsened over the past two years.
- 70% had lost a bid for business because of corrupt officials.
- 87% believe their competitors engage in corrupt behaviour to seize unfair advantage
- 71% have not pursued business opportunities in a market because of the likelihood of corruption
- Fewer than half had conducted a thorough due diligence to assess corruption risk, and yet 52% educate their employees to recognise and avoid and report corruption.
Corruption Watch plans to build a closer relationship with business leaders and will seek to collaboratively identify issues and develop joint programmes which advance the fight against corruption.
The organisation will shortly place a video recording of the event on its website and on YouTube.
Corruption Watch has also put together a page with anti-corruption resources for businesses. The list of resources is not exhaustive and will expand as we make new additions to it.