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Photo Credit: DFID (via Flickr)

Although the international development community aspires to noble ends, the firms and organizations therein are not free from the same compliance challenges that face corporations with more naked profit motives. Adam Smith International (ASI), the largest international development contractor for the United Kingdom’s Department for International Development (DfID), can attest to that point. In February 2017, ASI suffered a major blow when DfID froze all future contracts with ASI after uncovering unethical behavior on the part of ASI. These firm-specific compliance issues, however, serve as the entrée to a broader conversation about the roles of ethics, compliance, and the public in the arena of international development.

ASI earned their DfID sanction by hiring an ex-DfID employee who then used their access to proprietary DfID documents to help ASI gain inside information into how to win big DfID contracts. ASI also sought to influence the results of parliamentary hearings by making up glowing letters of support, supposedly from its beneficiaries. In both of these cases, ASI sought to cover up their wrongdoing with more deception. Taken together, these cover ups reveal a toxic culture that had been given the time and space to fester.

To their credit, ASI has taken these compliance problems seriously by initiating a set a major changes. ASI started their culture shift at the top, an approach suggested in a previous CC Trends post. Four founding executives (three now and one after a transition period) are stepping down without financial packages. Despite this and other initial steps in the right direction, the UK development community is still skeptical of whether ASI can engineer such a large internal culture shift. Only time and transparency will tell.

Moving beyond the individual case of ASI, the broader UK aid community has faced growing public scrutiny over the past few years. This scrutiny has yielded major shakeups within the UK aid community: ASI’s overhaul, a restructuring of DfID’s funding priorities, the end of DfID’s streams of unrestricted core funding for non-profits, and a general squeezing out of small and medium-sized UK development firms and organizations. Some of these changes bring greater transparency to the community, while others may yield less unambiguously positive outcomes. For example, higher compliance standards demanded by DfID have imposed greater internal monitoring costs on small and medium-sized development practitioners. But beyond the normative discussion of these shifts, is the question of why there is greater scrutiny now than in the past? Why is the public taking a more active role in defining ethics in international development work? And what does this mean for compliance and ethics?

The surprising force driving this change is a set of midmarket UK tabloids, chief among them the Daily Mail. Over the past few years, the Daily Mail has been regularly publishing stories that question the ethics of international development practitioners and of aid in general. These stories range from legitimate investigations into malpractice (as was the case for ASI), to misleading stories that, for example, warn readers that their tax dollars are funding terrorists. Regardless of their accuracy, all of the stories are couched in combative and critical language. Cumulatively, these stories have resulted in the erosion of public opinion of aid and a siege mentality on the part of development practitioners.

ASI’s overhaul and the changing environment for aid in the UK offer lessons and beg questions.

The case of ASI shows that international development firms and organizations, like corporations, are not free from compliance issues. In the absence of a culture of compliance, unethical behavior can metastasize and incentives can run amok. Once these warts are aired out to the public, however, it not only hurts an individual brand but can also lead to an undermining of public faith in aid in general. Should, however, international development firms and organizations be held to higher standards than corporations?

Corruption on the part of international development organizations may be subject to more intense scrutiny due to the perception that it is taking resources away from those in need. But how can donors enforce best practices among their grantees/contractors without imposing onerous costs on them? In the context of a hostile media campaign, how can international development practitioners strike a balance between transparency and protecting their work and their partners?

International development organizations, regardless of their tax status, must foster a culture of compliance, but how should changes in public opinion and ethics shape compliance standards?

Peter Glover is a Program Assistant for the Program Coordination Unit at CIPE.