Thu, Feb 20, 2014

http://www.bdlive.co.za/opinion/2014/02/19/fight-corruption-in-business-or-be-tarred-with-same-brush

CORRUPTION is "literally killing us". This was the view of a panellist at a recent Corruption Watch colloquium on business’s role in combating corruption, held at the Gordon Institute of Business Science. "Service delivery protests are a direct consequence of the public resources squandered by corruption," said Mark Lamberti, chairman of Transaction Capital.

In addition to Lamberti and Finance Minister Pravin Gordhan, the panel comprised corporate executives John Burke of the JSE, Isaac Shongwe of Barloworld, Sim Tshabalala of Standard Bank and mining entrepreneur Bernard Swanepoel. About 70 corporate executives and a number of forensic auditors and lawyers participated in the discussion.

So what, concretely, does Corruption Watch want to achieve from this initiative?

It is widely acknowledged that corruption cannot be tackled effectively without active public participation. This is what Corruption Watch does. It encourages the public to participate in the fight against corruption, mainly by providing people with the reason and the platform for reporting corruption.

Our work has given us the knowledge and credibility to move from a sole focus on exposing corruption to a discussion of solutions and constructive engagement with public-sector entities. We want business to become an active participant in this public dialogue and join what the Organisation for Economic Co-operation and Development calls a collaborative solution between business, government and nongovernmental organisations.

There are compelling arguments for responding positively to this initiative.

First, although some of our most admired private and public institutions — for example the JSE, some major corporations, the South African Revenue Service, the Treasury and the auditor-general’s office — are clearly at the public-private interface where much grand corruption occurs, the present situation places an enormous burden on these few institutional and personal shoulders. More corporations, including small and medium-sized businesses, and business associations, need to be publicly associated with opposition to corruption to share the load.

Second, because key institutions are already in serious disrepute. Pertinent is the apparent lack of will and capacity on the part of the police and the prosecutorial authorities to deal with serious white-collar crime.

Why should business care?

Because it is in the uncomfortable position of being both victim and perpetrator of corruption — business may view itself as a victim; the public views it as a perpetrator. Either way, every business, large and small, faces exposure to corruption risk.

Corruption is the world’s third-largest industry, valued at more than 5% of global gross domestic product — about $3-trillion. It is estimated to increase the cost of doing business globally by 10% and adds up to 25% to the cost of procurement contracts in developing countries. The growth rate of a country afflicted by serious corruption can be as much as a percentage point lower than that of a similar country with little corruption.

But the social cost of corruption — the erosion of trust — is perhaps more devastating than its effect on economic growth. Gordhan emphasised the debilitating effect of corruption on nation-building and ethical citizenship, critical foundations of social cohesion, at the colloquium. If the public cannot trust its key providers of public services, or those who build its houses, bake its bread and safeguard its savings, then we are on the edge of that tipping point beyond which there is no return.

And finally, if you are not convinced by these arguments, then be sure that recent developments in legislation dictate that if you want to mitigate legal risk, you will actively associate with opposition to corruption.

We want to work with business people keen to combat corruption on their turf and in their institutions. We want to invite concerned business leaders to imagine how they could work together with an organisation like Corruption Watch.

We are looking for something more than a commitment to introduce a corporate anticorruption compliance programme. Necessary though that may be, it’s not enough. What we want is for business leaders to publicly identify and actively engage with us and to clearly associate themselves with our mission. And by this we mean something more than an occasional concerned speech or a few lines in an annual report.