Ethical Performance
inside intelligence for responsible business


Firms still failing to report anti-corruption activities

October 2012

The world's largest companies may be contributing to the corruption culture, says a report by global civil society group Transparency International (TI), which claims organisations still provide too little information about their anti-corruption activities so their impact across various countries is unclear.

It says around half of the 105 companies it surveyed published nothing about their anti-corruption programmes and organisational transparency, though there had been some improvement since its last report in 2009.

The study, published last month, said many related businesses – often operating in poor, vulnerable countries – were hidden and corporate holdings unreported. In addition, most companies revealed little or no financial data on a country-by-country basis.

TI recommends that companies publish full details of their anti-corruption programmes, complete lists of subsidiaries, affiliates, joint ventures and other related businesses, and financial accounts for every country of operations, available also on their websites. In particular, financial companies are asked to improve their reporting on transparency-related issues, and extend anti-corruption programmes to their supply chains.

In addition, governments and the EU are recommended to apply these policies to companies under their jurisdiction, in line with a recommendation by the UN Convention Against Corruption (EP, July 2012, p3).

Investors have a role to play by insisting on comprehensive anti-corruption data, says TI, which urges civil society groups to help monitor multinational businesses' openness to encourage them to “improve the depth and scope of their commitments to transparency and, in particular, to improve their level of anti-corruption reporting”.

Andrew Kakabadse, professor of international management development at the UK's Cranfield University, said that bribery and fraud costing billions of pounds affects up to 80% of business deals outside Europe and the US.

He said: “Corruption is rife and getting worse in high-growth export markets, promoted by both the [UK]Foreign Office and Downing Street.”

Kakabadse believes business cannot be transacted in two-thirds of the world without bribes. He said: “In Turkey, Greece, most of South America and many Asian countries, some sort of 'transactional cost' is likely to be incurred.”

Cash and favours are routinely demanded by politicians, civil servants, business leaders and other middlemen, he says.

Among the countries he highlighted was Greece, where the government claims bribes by Siemens from the late 1990s to 2007 cost taxpayers €2bn ($2.57bn, £1.59bn) in overpriced hospital and defence contracts, and Bangladesh, where the Canadian oil and gas multinational Niko Resources was fined nearly $10m (£6.2m, €7.8m) for bribing a cabinet minister.

Kakabadse concludes: “Companies need to train, review and isolate senior managers who hold front-line positions negotiating with government officials, politicians and middlemen.”

Global | Corruption


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