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« DOJ May End Africa Sting Prosecutions | Main | Smith & Nephew Reaches $22 Million Settlement »
Tuesday
Feb072012

'We Have To Fight Corruption, Or It Will Defeat Us'

Huguette Labelle, left, is the Chair of the Board of Directors of Transparency International, which calls itself “the global coalition against corruption.” Led by a Berlin-based Secretariat, TI has chapters in nearly 100 countries.

The NGO is well known for its influential Corruption Perceptions Index, an annual ranking of countries based on the perceived corruption of their civil servants and politicians. TI’s initiatives also include helping grassroots organizations fight graft, encouraging corporate compliance, and pressuring governments to enforce existing regulations. 

In addition to her work with TI, Labelle was Chancellor of the University of Ottawa and is a member of the Board of the UN Global Compact. For nearly two decades, she served as deputy minister in various departments of the Canadian government. 

She was kind enough to answer a few questions about fighting corruption. 

Would you change anything about the FCPA? 

The FCPA could be strengthened if it outlawed facilitation payments where a bribe is paid to receive preferential treatment for something that the bribe receiver is required to do by law. [This practice] sets the bar on bribery for everyone else seeking services from the bribe takers. 

How can compliance officers make their companies take corruption issues seriously? 

It is important that employees throughout the organisation know that compliance is a priority, and they will take their lead from the top. So compliance officers should start there and encourage a strong and sustained engagement by the leadership of the companies. Compliance officers should also encourage their bosses to put in place strong protection, and effective channels, for whistle-blowers. At the same time, efficient and trustworthy follow-up mechanisms are necessary to ensure the proper investigation of disclosures. 

A recent post on this blog speculated about possible links between the CPI and the European debt crisis. Low-ranking countries seemed to be hit the hardest. What are your thoughts? 

We noticed that as well. While there are obvious transparency issues about the way budgets have been managed in the past in some countries, corruption in the public sector certainly exacerbated some budget deficits as well. 

Look at the worst-hit country Greece. The size of the black economy there has been well-documented. Our chapter in Greece did a survey that showed how corruption among tax collectors facilitates tax evasion. They estimate the cost for tax arrangements is between €300 and €15,000. You can imagine what sort of money someone must be saving (and cheating the public purse of) to justify that kind of money.

A poor system of tax inspections, helped by an opaque tax code, is the root of the problem, but when individuals and companies can bribe inspectors to evade taxes, you get a problem of epic proportions. Several high profile bribery scandals in Greece did not help the exchequer either. A Greek parliamentary investigation estimated taxpayers lost US $2.7 billion to corruption over the awarding of telecom and security systems contracts for the 2004 Olympic Games in Athens. 

The lesson we must all draw from the last year of crisis is that we have to fight corruption in all its forms, otherwise it will defeat us.

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Benjamin Kessler is an editor and writer for Ethics 360. He can be contacted here.

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This post is part of our series profiling global compliance leaders. Most appear on our sponsor Ethisphere’s annual list of the 100 Most Influential People in Business Ethics.

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