subscribe: Daily Newsletter

 

Zero tolerance for corruption needed

0 comments
Zero tolerance for corruption needed

Business leaders have an ethical role to combat bribery and corruption, as an economic and business imperative.
Leaders need to mobilise the power of their workforces to drive a business culture that has zero tolerance for corrupt practice, says PwC Forensic Services.
Bribery and corruption is rife, reaching a crossroads in some countries to the extent of incapacitating governments and policy makers that have to deal with a spate of corrupt scandals.
It is estimated that $1-trillion is paid each year in bribes globally, and that $2,6-trillion is lost to corruption.
Trevor White, forensic services partner at PwC South Africa, says: “South African organisations will benefit from embracing transparency and driving ethical behaviour and leading responsibly in the wake of the current economic and political uncertainty.”
Tackling corruption is the focus of massive effort and an ever-expanding body of rules and regulations across the world. Despite numerous efforts and initiatives to combat the scourge of corruption it remains arguably the single biggest issue facing societies worldwide.
Although South Africa slightly improved its score in the recent Corruption Perceptions Index (CPI) from 44 to 45, its rank in relation to 176 countries on the index fell three points to 64.
“Given the profound harm that corruption inflicts on both citizens and societies, we believe that tackling it ranks as the biggest single challenge for all of us,” says White. “Dealing with it demands action that goes beyond developing a compliance programme and including a line item on a risk register.”
PwC has developed a report predicting five forces that will reshape the global and South African landscape of anti-bribery and anti-corruption over the coming five years.
“Corporations and business leaders have the ability – an economic as well as a moral obligation – to help tackle these issues, by taking steps to prevent corruption and in confronting corruption where they see it arising,” White says.
“By doing this, they won’t just be seen as good corporate citizens, but can make a positive difference to the world as a whole.”
Trevor Hills, PwC Forensic Services southern Africa leader says: “Taking determined action will also help close the global trust deficit, to which corruption and inequality are major contributors. Our 20th annual Global CEO survey also confirms there is a growing awareness that global corporations are accountable to an expanding array of stakeholders, including societies and local communities.”
PwC puts forward five predictions for the next five years and beyond:
* Enforcement will continue to evolve and spread geographically: We believe that enforcement will continue to expand and evolve globally in the coming years – and that this well-established direction of travel will be unaffected by the changing political and economic landscape. The enforcement of anti-bribery and anti-corruption regulations is spreading rapidly beyond jurisdictions such as the US and the UK, with more territories starting to take the problem seriously. In addition, the advancing globalisation of enforcement mirrors the megatrends reshaping economies and societies worldwide, in particular the ongoing shifts in economic power, which are helping to foster closer international collaboration between enforcement agencies.
* Societal action will be more effective than toothless compliance regimes or unenforced regulation: Public sentiment over inequality and corruption has been given a voice in recent years by the rise of social media. People suffering the consequences of corruption now have not only the motivation but also the means to expose, denounce and confront any wrongdoing, often with the support of NGOs and the press. Experience shows that when it comes to embedding ethical values and changing behaviour across an organisation, culture trumps unenforced rules and regulations. The threat of public exposure is more likely than an enforcement action to push leaders and workforces to embrace cultural change.
* Technology will enable automated and preventative compliance: In the next five years digital technology such as artificial intelligence (AI) and automation technologies will deliver substantial improvements in the speed and efficiency of anti-corruption compliance strategy and processes. These technological advancements will also enable anti-corruption compliance that’s not only faster but also more insightful, providing rapid warning of problems and enable management to mitigate risk.
* As societies become increasingly cashless, facilitation payments will fall: A number of countries across the world are well advanced in replacing physical cash with electronic means of exchange. Notes and coins now represent 2% of Sweden’s economy with 7.7% in the US and 10% in the euro area. Globally, it’s estimated that the rise of electronic payment systems and cryptocurrencies means the number of transactions in physical cash could fall by 30% in five years. The more traceable and auditable nature of electronic money means its rising usage will potentially help to drive out bribes and facilitation payments.
* Ethical and transparent businesses will become the new norm: Corporate information and activities are heading irreversibly towards greater public transparency and visibility. With more scrutiny from social media and NGOs businesses are finding that ever higher levels of openness are being demanded by the public and forced by regulation. Some organisations are trying to hold back the tide of transparency by hiding behind data protection and confidentiality. But those that embrace transparency can gain a competitive edge, by using it to drive culture change and ethical behaviour.
The five drivers that we have highlighted point to one underlying fact: that an approach to anti-bribery and anti-corruption based on ‘just complying’ with the relevant regulations by doing the minimum possible is no longer acceptable or sustainable.
“Instead, company boards and leaders should look to go beyond compliance by embedding an ethical culture within their organisation,” Hills says. For organisations and governments, this culture needs to shape everyday decisions and behaviour by all their people in every country, supported and enabled by the right technologies.
Not all businesses will achieve this in five years. But those that succeed in doing so will be well-placed to win the battle for revenues, customers, talent and public trust, White adds.