Corruption is the world’s third-largest industry, valued at more than 5% of global gross domestic product — more than $3-trillion. It increases the cost of doing business globally by up to 10% on average; the growth rate of a country can be as much as 1% lower than that of a similar country with little corruption.
In SA, surveys and other evidence suggest it is getting worse, Corruption Watch’s short history bears this out: we have received about 2,200 reports from the public, with the volume of information becoming sufficiently dense for us to start identifying patterns.
Reports come from all corners of the country, with small towns featuring significantly. They cover every form of corrupt conduct: "petty" corruption — bribes paid to traffic cops, vehicle-licensing officials and home affairs and housing officials; "serious" corruption, as in major tender fraud; and nepotism in appointments, which facilitates further corruption when the appointees have influence over budgets and resources. Most concerning are reports pertaining to the criminal justice system involving police officers, prosecutors and magistrates.
The accounts are not limited to public sector employees and institutions. We hear about corrupt lawyers, healthcare professionals, auditors and forensic specialists. Every corrupt public sector tender presupposes a private-public relationship. So business, as both perpetrator and victim of corruption, has a strong imperative to actively combat it.
In many instances, it has done just that. Business associations have drawn up codes of ethics and compliance for their members. Some firms already have anticorruption compliance programmes in place. And for those that are not persuaded by ethical arguments or the merits of self-regulation, we have tough, if grievously under-enforced, anticorruption laws, powerfully complemented by the extraterritorial reach of the punitive US and UK anticorruption statutes.
Companies ignoring the changing landscape do so at their peril. Apart from the economic and commercial consequences of corruption, the risk to reputation is immeasurable. Arguably the greatest cost of corruption is its corrosive effect on the trust between the public and public-and private-sector leaders. Business conduct during the economic crisis has eroded public confidence in these institutions. Business can resurrect trust by playing an active role in combating corruption.
There are two ways in which business can engage with Corruption Watch in combating corruption. Our principle mission is to generate greater public participation. We want to encourage the public to report corruption and we want to participate in creating an environment less conducive to corruption. Business can help us do both.
Business leaders can contribute to creating an environment hostile to corruption. What does business think, for example, about a proposal that anticorruption compliance programmes be made a requirement for a JSE listing?
Our call is for business to participate publicly in this debate, acknowledging its own responsibility for corruption and its seriousness about fighting it.
We are also actively seeking projects on which we can jointly embark to help the businesses with integrity outshine their more reluctant competitors and start shutting down the "supply side" of corruption. Brands are built on integrity.
We want CEOs and shop stewards to publicly sign our anticorruption pledge and encourage their managers, employees and members to do the same. We want access to your websites, your intranets, your closed-circuit TV or radio channels, your team-building exercises, your customer magazines and any other communications platforms that you use. We would ask your employees, suppliers and customers to report on corruption in all its forms. We could work with you to formulate our messages.
Enabling and encouraging your employees and your customers to become active participants in the battle against corruption is the least you can do.
Corruption is a deeply rooted social phenomenon. It cannot be tackled by law enforcement instruments alone. If you want to give meaning to the notion of corporate citizenship, you will publicly engage with the difficult business of combating corruption.
This article was first published on Business Day, 7 September 2012. This is an extract from a presentation to a joint Nortons Inc-Sacci seminar on white-collar crime.