Tag Archives: anti-corruption compliance

Self-Deception – The ethical bleach that removes the willingness to speak up 

23 Wednesday Aug 2017

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Originally posted on the “Ethic Intelligence” blog, Wendy Addison, Founder and CEO of SpeakOut SpeakUp Ltd, discusses the process of self-deception as it relates to corporate compliance and ethics. According to Addison, self-deception is the ethical bleach that removes the willingness to speak up.The “should self” behaves according to ethical principles and in line with our idealized self, whereas the “want self” is characterized by self-interest and relative disregard for ethical considerations. These two selves are in conflict with one another and distract people away from their intrinsic values. The question for employers becomes how can compliance-training programs be designed to empower employees to act on their “should self” instincts?

Wendy lived through an eleven-year battle against corporate corruption in a case known as South Africa’s Enron, the biggest corporate disaster in South Africa’s history. Since securing justice she has maximised her experience through the study of social psychology and the neuroscience of decision-making at Stanford University in addition to being accredited to train for Social FitnessTM, a course developed over 25 years at Stanford by Professor Emeritus Philip Zimbardo and Dr Lynne Henderson, Ph.D.  Read More...

A Common Approach to Mitigate Corruption, Environmental and Labor Risks in Global Supply Chains

18 Friday Aug 2017

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The challenge of improving ethical standards in global supply chains begins with the complexity of today’s commodity networks. Richard Locke, responsible for supply chain management in such leading firms as Nike, Cola-Cola and HP, indicates current challenges come from two major shifts from supply chains in the past: changes in the geography of global manufacturing – from advanced industrial states to developing countries, and in the organization of production – which includes thousands of independent suppliers typically located in emerging markets.

This shift has important implications for achieving international ethical standards. There is a lack of visibility of second- and third-tier suppliers and gaps in accessing real-time information on supply chain activities, disparate local regulations that may not integrate well with industry requirements, and the inherent unforeseen risks of being a small business. Simultaneously, legal and regulatory developments as well as consumer pressure across the global North are pushing multi-national corporations (MNCs) and their third-party providers to have measures in place that comply with global anti-corruption norms, and environmental and labor standards.  Read More...

Open Data: An Innovative Approach to Anti-Corruption Compliance in Brazil

30 Tuesday May 2017

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Photo Credit: Micklefield Grade 4 (https://micklefieldgrade4.wikispaces.com/around+the+world)

Anti-corruption compliance remains a big challenge in Brazil, as corruption is embedded throughout Brazilian society, weakening government institutions and the economy as a whole. Brazil currently ranks 79th out of 168 countries in Transparency International’s Corruption Perceptions Index. In the private sector, “the majority of businesses surveyed as part of the Global Competitiveness Report believe that the diversion of public funds to companies, individuals, or groups due to corruption occurs frequently in (Brazil).” According to the 2015-2016 report, “corruption scandals have undermined trust in both private and public institutions.” In addition, “the 2009 World Bank/IFC Enterprise survey reports that nearly 70 percent of surveyed companies perceive corruption as an “major constraint” for doing business in Brazil.”

In 2015, as part of the Group of Twenty (G-20), Brazil agreed on a set of G-20 Anti-Corruption Open Data Principles. These principles aim to make crucial data open to the public, so “civil society can monitor things like the use of public resources including how taxes are spent and how contracts are awarded.” In turn, this open data can play a significant role in combatting corruption, as it would make it easier to hold governments and the private sector to account for their actions.  Read More...

The FIFA Scandal: What We Can Learn about Ethics and Compliance

29 Monday May 2017

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Photo Credit: Wikimedia Commons (https://commons.wikimedia.org/wiki/File:Uruguay)

Soccer (or “football” depending on your geographic orientation) is often referred to as the “beautiful game.” Of late, as recently as this month, the sport has become a bit less beautiful. The Fédération Internationale de Football Association (known as FIFA), the international governing body of soccer, has been embroiled in a corruption scandal that has rocked the organization to its core.

It began in May 2015. Fourteen FIFA officials were arrested and indicted in connection with an investigation by the US Federal Bureau of Investigation (FBI) and US Justice Department into wire fraud, racketeering and money laundering, spanning a period of 24 years. That December, 16 more officials, including two FIFA vice-presidents, were arrested on similar corruption charges. Since then, the events snowballed into a full-blown scandal, with longtime FIFA President Sepp Blatter and other top officials banned from FIFA activities. The investigation into FIFA has revealed a toxic culture of unethical behavior, non-compliance and corruption that started from the top and trickled down to every facet of the organization.  Read More...

The Private Sector-Sized Gap in Our Collective Corruption Libraries

11 Thursday May 2017

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Photo Credit: Henri Pitkänen (via Flickr)

A new bookcase spurred me to go through all of my old grad school books, including those from a class on international corruption. I immediately noticed a trend among these books: all of them focused on the role of the government, rather than the private sector, in creating, sustaining, and cleaning up corruption. Leafing through the books I could see that there was a private sector gap in not only my bookcase but also the most cited models of corruption and governance, which means that there is a real opportunity to re-analyze these models through the lens of the private sector.

For example, in one of the most influential books on corruption, “Corruption and Government: Causes, Consequences, and Reform,” Susan Rose-Ackerman concludes that:

“Fundamental change requires commitment from the top of the government and a willingness to follow through as the anti-corruption effort unfolds.  Read More...

Facing the Elephant in the Room

01 Monday May 2017

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Photo Credit: OECD Integrity Forum (via Flickr)

The Organisation for Economic Co-operation and Development (OECD)’s Global Anti-Corruption & Integrity Forum, held annually for five years now at the OECD headquarters in Paris, is the leading international event on integrity and anti-corruption. I had the opportunity to attend the 2017 edition, learn from the other participants, and share CIPE’s experience in working on anti-corruption. This year, the Forum brought together about 1,300 attendees, including policymakers as well as the private sector, civil society organizations, and academics. The Forum’s theme, “In the Public Interest: Taking Integrity to Higher Standards,” highlighted the importance of combating corruption for better public governance.

In his opening remarks, OECD Secretary General Angel Gurría emphasized that corruption scandals prevalent in both the private and public sectors – and the scale of impunity – have contributed to the global erosion of public trust in business, government, public institutions, and the media.  Read More...

Chaebol Reform: A Top Priority for the Next South Korean Administration

25 Tuesday Apr 2017

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Photo Credit: Wikipedia (https://en.wikipedia.org/wiki/Hanjin)

What are the primary economic concerns for the next South Korean administration?

According to a poll conducted by Han-kook Research on April 17, “Job Creation” (34.1%) ranked as one of the top priorities for the next administration. “Resolving polarization” (20.6%), “small and medium-sized enterprise (SME) empowerment” (20.4%) and “chaebol reform” (12%) were the next biggest priorities. However, considering the current Korean economic structure, there is no doubt that every economic concern mentioned above is chaebol (South Korean business conglomerate) related. According to statistics in 2015, the combined revenues of the five largest chaebols accounted for 58% of South Korea’s GDP. This figure already seems problematic, but in addition to this fact, it was further revealed by the political corruption case involving the former president that crony capitalism has confused the South Korean market and inhibited the growth of SMEs for a long period of time.  Read More...

Building an Ethical Culture

12 Wednesday Apr 2017

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For any company to reach its full potential, a change toward a culture of compliance and ethics is needed. This change should start from the top, with management leading the way. However, to truly foster an environment of compliance and ethics, everyone in the organization must be on board. Companies are open systems, filled with various networks and levels of relationships. Therefore, a holistic approach to building an ethical culture is required and must focus on every level of the system (individual engagement and motivation, interpersonal interactions, group dynamics, relationships among groups, and interactions with external stakeholders).

According to Alison Taylor, Director of Business for Social Responsibility, there are five levels at which companies should build an ethical culture: individual, interpersonal, group, intergroup and inter-organizational. At the individual level, employees will likely be more receptive to a culture of ethics if they are rewarded and their performance measured based on compliance and ethical behavior in the workplace.  Read More...

The Birth of the New Samsung?

28 Tuesday Mar 2017

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Photo Credit: NBBJ (via http://www.nbbj.com/work/samsung-r5-research-building-and-landscape/#)

On February 28, 2017, Samsung unveiled the “Business Renovation Proposal” (The Proposal, hereinafter) on its official website. The Proposal contains several measures aimed at strengthening Samsung’s transparency and compliance mechanisms, as a result of the conglomerate’s involvement in the recent political scandal in South Korea. Samsung is suspected to have illegally given approximately $37.8 billion to Soon-Sil, Choi (who allegedly engaged in improper relations with the South Korean government by influencing her “friend”, Former President Geun-Hye, Park.) in order to garner business benefits from the former President.

In the Proposal, there are three notable provisions regarding compliance for Samsung. First, Samsung subsidiaries would engage in self-management, focusing specifically on their own board of directors. This suggests there wouldn’t be any interference from the Samsung Group on their subsidiaries’ business activities. In the same context, Samsung closed their Future Strategy Office, which worked as a control tower (as a large conglomerate, Samsung had a special decision-making unit that crucially affects all subsidiaries in the Group… It has been documented that the control tower took charge of vast areas of the Group’s business such as strategy, planning, HR, etc.) that engaged in the business of all subsidiaries and directed giving illegal support to Choi.  Read More...

Raising the Stakes for Anti-Corruption

20 Monday Mar 2017

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Photo Credit: US Army Europe (via Flickr)

Corruption is like a cancer, draining the health of an economy if it is allowed to spread unchecked. In fact, it’s such an insidious problem that in 2016 the International Monetary Fund (IMF) estimated the direct cost of bribery alone to the global economy to be between $1.5 and $2 trillion annually. And there’s a long list of what that figure doesn’t include: other forms of corruption apart from bribery, indirect costs of corruption like lost tax revenue and lost economic opportunities for the poor, and intangibles like public distrust of institutions and eroded governance. (And a note to the discerning readers – this conservative IMF estimate even factors in methodological considerations such as varied understandings of corruption, perceived vs. actual levels of corruption, and aggregating indices.)

But let’s take a step back for just a moment and consider the why: why is corruption bad?  Read More...