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FCPA Blog Daily News

« The business community can reduce corruption risk by improving regulatory quality | Main | Indonesia: In showdown with police, the KPK blinks »
Monday
Mar022015

Mike Scher: Let's hope ‘business-side enforcement’ is the future

The FCPA Blog has been talking about the growth of global enforcement and compliance. That's good. But let’s not forget the original principle of enforcement by business organizations themselves.

Simply put, if all companies refuse to pay bribes, the bribe takers are out of business. Now called “collective action,” Peter Eigen’s explanation of  business-side enforcement from when he created Transparency International back in the 1990s still has the power to inspire. 

Collective action by companies working together, often with government support, has grown into a bedrock principle expressed in many ways.

The Basel Institute on Governance and its affiliated International Center for Collective Action is a clearing house of ideas, projects and scholarship for putting collective action into practice. At its conference last year, I was frankly shocked to learn how important and far along collective action is throughout Europe even though its almost unknown in America.

In places where government enforcement may be too weak to deter corruption, Basel facilitators like Gemma Aiolfi convene industry leaders to create anti-corruption projects and approach the local enforcement agencies to press for reforms. Where one business might suffer retaliation, a collective approach can change the enforcement landscape for all.

The justly famous Mark Pieth, scholar and Basel head, summarized a decade of progress in a recent Basel book of essays including one from Siemens' Sabine Zindera, titled “from theory to practice,” that explains how collective action is a strategic element of Siemens' compliance system.

Collective action is best known in Europe and needs to be known better elsewhere. The OECD has embraced and nurtured the growth of collective action. FCPA Blog contributing editor Brook Horowitz of the B20 Anti-Corruption Working Group and CEO of the Russia-centered IBLF Global has explained how it means getting business organizations to come together in initial, trust-building steps to adopt anti-corruption industry principles that can lead to integrity pacts not to “cheat” on nation wide governmental tenders.

What happens as the anti-corruption movement continues to grow and more companies pledge to refuse any and all bribery? Some will lose big contracts to companies that cheat and pay bribes. What then? There are two futures. Businesses will band together against the cheaters to enforce bribe-free business practices. Or little by little, the pledge not to cheat will fade away and be forgotten. Let’s hope that business–side enforcement through collective actions becomes the only game in town.

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Michael Scher is a senior editor of the FCPA Blog. He has over three decades of experience as a senior compliance officer and attorney for international transactions. He can be contacted here.

Reader Comments (1)

Isn't self-regulation wonderful.

Incidentally, the is a good read:

http://www.nytimes.com/2015/03/01/business/economy/smothered-by-a-boom-in-banking.html?_r=0

Big is bad and dysfunctional per se.

It gives rise to an absence of accountability.
March 2, 2015 | Unregistered CommenterEthan S. Burger
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