Corrupt measures

Corruption distorts markets and competition, undermines the rule of law, damages government legitimacy and holds back economic development. In Africa, for example, widespread embezzlement has undermined the benefit of hundreds of billions of dollars of aid over the decades since colonial rule ended.

by Foreign Affairs

It's also big business: public officials worldwide receive $1 trillion in bribes each year, according to World Bank estimates; in Russia alone, $300 million a year is paid in bribes (a 10-fold increase in four years), while more than 2,000 companies in the UN's former oil-for-food programme were involved in kickback schemes.

The problem of corruption has been firmly on the global agenda and ostensibly made progress since the mid-1990s, with the adoption of conventions against bribery and extortion by international bodies such as the OECD and the UN, the enacting of anti-corruption laws by most countries, the codification of model behaviour by business groups and the implementation of anti-bribery programmes by multinationals. But given the scale of continuing problems, there is much still to be achieved.

It's a many-sided issue and requires a range of measures to counter: enforcement - which aims to deter future misconduct by investigating and prosecuting existing corruption; prevention - the enacting and implementation of legislation and administrative regulations that stifle corruption (including whistleblower protection laws, rules on accounting and procurement transparency and anti-money-laundering regimes); state-building - a complex process of institutional reforms aimed at creating a transparent, accountable and durable framework for a country; and the propagation of cultural values that support the other measures.

Comprehensive anti-corruption programmes need all four approaches, but progress can also be made by rich countries - often the source of bribes - by focusing on enforcement and prevention measures in their own backyards. Multinational companies, it is argued, must have anti-corruption policies that prohibit bribes of all forms, whether in the form of political 'contributions' or improper travel and living expenses for business partners.

Business leaders are vital in communicating acceptable values, as well as warnings that bribery rots a company's internal culture and is damaging for management and stakeholders. As with mainstream corporate governance, more independent monitoring of corporate anti-corruption programmes is advocated to verify the claims made by corporate websites.

Companies that choose not to submit to such verification risk accusations of hypocrisy, while being a business leader in anti-corruption policy might come to be viewed as a source of competitive advantage rather than a drag on commercial activity.

The long war against corruption
Ben W Heineman and Fritz Heimann, Foreign Affairs, May/June 2006.

Reviewed by Steve Lodge.

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