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Introduction

Corruption – the abuse of entrusted power for private gain – is the single greatest obstacle to economic and social development around the world. It distorts markets, stifles economic growth and sustainable development, debases democracy and undermines the rule of law. It robs local populations, particularly in developing countries, of critically needed resources. Estimates show that the cost of corruption equals more than 5% of global GDP (US$ 2.6 trillion) with more than US$ 1 trillion paid in bribes each year

The issue has several dimensions and is immensely complex:

  • Nature – Perceptions on the nature of corruption vary. What different forms of corruption exist? What are their underlying causes and drivers?
  • Cultural contexts – The nature and magnitude of corruption differ across cultures. Actions perceived as corrupt in some cultures might be accepted or even expected in other cultures. What is acknowledged as good ethical conduct within and across cultures?
  • Metrics – Corruption is hard to measure. Most statistics on the issue are based on surveyed perceptions. What is or should be measured, and how? How can progress be determined? Is there a correlation between levels of good governance, and economic growth and foreign direct investments? Is there a correlation between a company’s systems and controls and its financial performance?
  • Role of businesses – Companies are both part of the problem and part of the solution. More companies are demonstrating leadership in fighting corruption by implementing anti-corruption programmes and adhering to various initiatives that address the supply side of corruption at the global, regional or industry levels. What best practices exist? What is the business case? Can more companies be incentivized to fight corruption? Can the “prisoner’s dilemma” be overcome? Can good ethical business conduct be turned into a competitive business advantage?
  • Role of governments – The international legal framework has been strengthened by the adoption of the Organisation for Economic Co-operation and Development and United Nations conventions on corruption. However, most governments must implement these conventions without supranational enforcement mechanisms, which undermines their effectiveness. Most governments have passed anticorruption legislation, but few effectively enforce it. Why is existing legislation often not enforced? What are the best practices? Which central players can ensure effective enforcement and how can they be persuaded to demonstrate leadership?
  • Role of civil society – Civil society organizations, the media and academia play a key role in giving businesses and governments the incentive to fight corruption. Who are the central players? What are their best practices? How can they be supported? Can civil society make use of new means of increasing transparency, such as the Internet, to fight corruption?
  • Collective solutions – The most effective solutions to fight corruption are often collective. Such initiatives focus on public and/or private sector solutions at a country, regional or global level or at an industry, cross-industry or multistakeholder level. What initiatives and best practices exist? How should they be supported? How should they work?

Insights

The Global Agenda Council on Anti-Corruption  is a high-level policy advocacy body on anti-corruption comprising members from business, government, academia and civil society. The Council advocates collective approaches that bring together all stakeholders to find sustainable solutions to the corruption challenges.

This term, the Council has found itself an interesting niche in focusing on advocacy to policy-makers to catalyse and enhance the implementation of the G20 Anti-Corruption Action Plan.

Recognizing that corruption is a severe impediment to economic growth, and a significant challenge for developed, emerging and developing countries, the G20 group of countries launched an ambitious nine-point Anti-Corruption Action Plan at its meeting in Seoul in 2010. The plan calls in part for increased public-private collaboration and engagement in tackling the corruption challenge.

After this Summit and through 2011 when France held the G20 Presidency, the Forum played a key role in collating contributions from the private sector towards implementing the Anti-Corruption Action Plan. This was done through World Economic Forum-facilitated private sector task forces called the Business 20 (or B20). One of these was the Working Group on Improving Transparency and Eliminating Corruption, which developed a detailed set of recommendations focusing on actions that both the public and private sector should undertake to help address corruption. These were presented at the G20 Summit in Cannes in 2011

The G20 Presidency then passed on to Mexico in 2012, and one of the eight new task forces set up to facilitate private sector input was the B20 Task Force on Improving Transparency and Anti-Corruption, with a mandate to synthesize the recommendations made to the Cannes Summit in 2011 and to identify and further develop recommendations that can be implemented quickly and have the most impact. The Forum assumed a similar role in collating private sector input to further the process.

The Task Force has identified and is further developing the following six recommendations or focus areas from those presented at the Cannes Summit that it feels would have the most impact if implemented:

  1. Transparency in government procurement   Create worldwide standards for transparency and procedures in government procurement, and develop programmes to encourage companies and public bodies to work together on implementation and monitoring. Work should build on the policies and procedures already drawn up by the World Trade Organization (WTO), Organisation for Economic Co-operation and Development (OECD) and World Bank to prevent, detect and remedy corruption. This recommendation will involve researching/analyzing practices already in use, identifying challenges and opportunities currently related to ensuring transparency in government procurement, and developing a guiding tool to implement the standards for transparency and procedures in government procurement identified in the G20 Anti-Corruption Monitoring Report endorsed by the leaders in Cannes.
  2. Promote, extend and implement sector-based initiatives   Build on existing private sector-driven initiatives already in place. This recommendation will survey and analyse the pros and cons of the existing sector-based initiatives (e.g. the Partnering Against Corruption Initiative in Mongolia), and make recommendations on which ones to develop further and how this should be done. Furthermore, efforts will be carried out to identify effective forms of collective action.
  3. Engage the private sector in the United Nations Convention Against Corruption (UNCAC) peer reviews and consult with the OECD Working Group on Bribery regarding its monitoring mechanism   Ensure full engagement of the business community in the international anti-corruption processes, including those of the United Nations Convention Against Corruption (UNCAC) and the OECD. This will ensure forward momentum on the anti-corruption agenda and help monitor/implement agreed work plans. This recommendation will identify suitable country pilots, and develop the necessary engagement processes and mechanisms.
  4. Create business programmes, including training, to encourage public-private partnerships focused on capacity building   Identify areas where the private sector can share best practices, training materials, education and resources to support the implementation of integrity programmes, control procedures, and to raise awareness in both the public and private sectors. Business reciprocally calls on governments to share their programmes with the private sector. Sharing best practices in executing compliance programmes with the each other could be a low-cost and immediate measure to improve the compliance environment.
  5. Encourage the adoption of business codes of conduct with a specific focus on small- and medium-sized enterprises (SMEs)   Specifically support SMEs, especially in developing countries, and develop business codes of conduct based on internationally recognized and accepted compliance principles for companies in all countries. This recommendation will survey existing codes of conduct, identify the specific challenges faced by SMEs, and develop a code that could apply specifically to these companies and have the public sector provide incentives to encourage adoption of the code.
  6. Strengthen the legal and regulatory framework on anti-corruption   Develop and build on specific recommendations identified in the B20 Cannes final report to strengthen G20 countries’ legal and regulatory framework on anti-corruption. Looking ahead, business will also explore further recommendations and provide directions for additional efforts in this focus area, also in light of the need for business to act globally on a uniform regulatory and law framework.

The Council has played and aims to continue playing an advocacy role to do the following:

  1. Ensure that the recommendations developed by the B20 Task Force on Improving Transparency and Anti-Corruption are sufficiently ambitious and represent a key pillar in the fight against corruption
  2. Push policy-makers to adopt and implement these recommendations when complete.

Key obstacles to making progress remain the following:

  1. The sensitivity around the issue of corruption means that policy-makers may not want to properly address it
  2. In the current difficult global economic climate, corruption may not be top-most in the minds of policy-makers
  3. Ultimately, the Council cannot force governments to adopt these recommendations.

Impact

The Council has taken a number of concrete steps towards advocating for the robust development and implementation of the above recommendations:

  1. Writing letters to the co-chairs of the B20 Task Force on Improving Transparency and Anti-Corruption and the seven other task forces inviting them to properly integrate governance into their respective recommendations and offering to assist them to do this.
  2. Beginning to identify key policy-makers to reach out to once the recommendations are finalized to facilitate their adoption.

Going forward into 2012-2013, the Council will focus on:

  1. Raising awareness around the recommendations above, by writing policy papers and articles to aid their advocacy efforts
  2. Holding cross-council discussions with a focus on key G20 countries, such as the Global Agenda Council on India, to aid their advocacy efforts
  3. Highlighting the progress towards implementing the recommendations above at upcoming events such as the Summit on the Global Agenda 2012
  4. Working closely with the members of the Board of the Partnering Against Corruption Initiative (PACI) on issues that may affect the private sector in the future
  5. Tackling the risk management aspect of anti-corruption to better plan, recognize and deal with the consequences of corruption within the private sector.

Disclaimer

The opinions expressed here are those of the individual members of the Council and not of the World Economic Forum or any institutions to which they are affiliated.