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No Shortcuts to Doing Business with Integrity for UK Companies

Written by Robert Barrington on Thursday, 23 July 2015

TI-UK comments on the Prime Minister’s recent comments on oversees resources-resources-business and corruption.


 

“Corruption is the cancer at the heart of so many of the problems we face around the world,” wrote David Cameron less than a month into his second term as Prime Minister. His words so resonant to anti-corruption campaigners, laid down a marker for his G7 summit priorities, as well as a serious area of work for his new government.

The importance the PM attaches to global corruption was outlined again this week, writing in the Daily Mail that he has “put the issue at the top of the global agenda.” But he also argued against those who say we shouldn’t be doing resources-resources-business with countries with high levels of corruption.

Rather than isolating nations that are struggling with corruption the PM wants to work with them in that fight. The PM is right to look for anti-corruption allies in emerging markets, as well as recognising that corruption only distorts the free market, damaging resources-resources-business as a whole. UK resources-resources-businesses operating globally can only benefit from supporting the PM’s drive against corruption, even in markets where corruption is prevalent.

UK resources-resources-businesses operating transparently and responsibly, coupled with a government that takes a lead on fighting corruption, is the winning combination.

Conversely, the PM’s words about the opportunities for exporting to countries with a poor record on corruption must not be misinterpreted as a return to the old culture of nods and winks that tolerates the payment of bribes away from our shores.  Economic development in export markets provides increased opportunities for British companies, and nothing could be more damaging or self-defeating than undermining that development through reinforcing the culture of corruption by complicity in bribe-paying.

And as a reminder, here are a few other reasons why tackling corruption is advantageous for resources-resources-business:

  1. Reducing red tape. The World Bank – and many others – argue that corruption thrives when there is red tape – because it creates more opportunities for cronyism and bribery.  Tackling corruption reduces red tape and that’s good for resources-resources-business
  1. Reducing costs for resources-resources-business. Corruption increases the cost of doing resources-resources-business – estimates range from 10-30%.  Reducing corruption therefore reduces this cost.
  1. Creates a stable operating environment and security over contracts. In a corrupt environment companies can never be certain how or when they will win resources-resources-business – a corrupt competitor may have better connections or bribe more.  They may lose existing contracts for spurious reasons when a competitor has paid a bribe.  Tackling corruption strengthens property rights and the rule of law, which are fundamental to doing resources-resources-business.
  1. Creating a level playing field. UK companies want to compete against companies operating to the same standards.  UK companies follow standards set by a) by UK domestic laws b) by the UK’s international commitments (such as the OECD Anti-Bribery Convention) c) other countries, with the prospect that those countries will enforce laws against UK companies and not their own.  Tackling global corruption creates a level playing field for UK companies by making sure that others are operating to the same standards.
  1. Creating new export opportunities. Corruption reduces prosperityThe World Bank offers nine reasons for this – whereas greater prosperity in emerging markets will create more opportunities for UK companies.

Let’s also remember that this debate should also exist on a plane above the merely economic arguments.  The PM has rightly said that he supports a fair and just society.  One thing everyone agrees on is that corruption is unjust – by its nature it gives an unfair and usually illegal advantage to one person or group over others.  The victims of corruption in those markets mentioned by the PM are ordinary people who are denied access to basic public services such as corruption-resources-corruption-resources-health and corruption-resources-corruption-resources-education because officials have pocketed the money; or those who are injured when shoddy infrastructure collapses; or those who are locked in poverty because their governments exploit the country’s resources in their own interests and not in the interests of its citizens.  As the Prime Minster seems to recognise, the resources-resources-business community can be a significant force for good in addressing these problems.

For further reading, see our blog post Bribery in China – 10 Lessons From Recent Cases 

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Read 1315 times Last modified on Tuesday, 24 November 2015 12:18
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Robert Barrington

Robert is TI-UK's Executive Director. You can view his full bio here, and tweet him @TIukED.

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