News 17th Dec 2020

Corruption, Covid-19 and Inequality

Daniela Cepeda Cuadrado

Research Officer, Health Initiative

Daniela is the Research Officer for the Transparency International Health Initiative. She develops funding research proposals, supports its communication plans and engagement with WHO and the private sector. She also represents the Health Initiative at the Action for Global Health Network.

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Related Publication

Corruption, Covid-19 and Inequality: the vital role of companies in preventing this deadly mixture

So far, there are almost 40 million cases of COVID-19 globally and more than one million deaths.[i] Despite these staggering numbers, we now know the virus does not affect us all equally. Failing to address corruption risks in this environment can make that inequality so much worse. And alongside policymakers, businesses arguably have the biggest role to play in tackling the corruption ingredient of this deadly cocktail.

Recent studies have shown that social determinants of health—that is, the conditions in which people are born, grow, live, work and age, have a considerable impact on COVID-19 outcomes.[ii] Issues such as poverty, physical environment (such as overcrowding or homelessness), and race or ethnicity play a key role in determining whether certain groups of people will survive or die from the virus.[iii]

In New York City, COVID-related deaths amongst black and Latino residents are double those amongst white residents.[iv] In the UK, COVID-19 deaths of ethnic minorities are much larger than those of white Britons.[v] Meanwhile, tens of thousands of migrant workers in Singapore, who have been secluded in crowded dormitories, have become infected at a much faster rate than Singaporean citizens.[vi],[vii]  This pandemic has highlighted the profound inequality that exists in the world, between -and within – countries.

Marginalised groups are the most reliant on health and other public services. If these services are blighted by corruption, it is unlikely that they can cater effectively to the needs of all vulnerable groups. During health emergencies like the current pandemic, when large amounts of funding are allocated rapidly without normal scrutiny, there is ample opportunity for corruption to go unchecked.

And when health public services cannot deliver, many people in positions of vulnerability need to turn to private practices where inflated prices either further impoverish them or prevent them from accessing lifesaving healthcare services altogether. In Peru, for example, a person in a minimum wage job would need to work for nine years to cover the cost of just one week of intensive care at a private clinic.[viii]

But in addition to its devastating impact on health, corruption also holds business from all sectors back. It distorts the free market, erodes public trust, and creates an uneven playing field. Despite increased regulation and rising corporate standards, corruption remains a significant challenge for companies, and, for those living and working in many countries around the world, an escalating problem.

For example, the market for COVID-19 medical supplies provides an excellent business opportunity for organised crime to engage in new markets. The result: more substandard and falsified medicines, illicit online sales of medical products and supplies, and fraud linked to legitimate trade in medicines. [ix] In March 2020 alone, during Interpol’s week of action, authorities seized 4.4 million units of illicit pharmaceuticals worldwide.[x]  All of these contribute to damaging public trust in the private sector whilst putting people’s heath, especially the most vulnerable, at risk.

Challenges like these will only increase in coming years as the global economy begins its recovery from the pandemic and emerging markets assume a greater share of world trade.

There is, therefore, a win-win here for companies: tackling corruption levels the playing field so is good for business and, at the same time, this will also limit its pervasive and unequal impact on people’s health. But how best to achieve that during a time of global crisis? Here are just a few practical tips for companies to ensure they are running with integrity and ensuring anti-bribery and corruption (ABAC) best practice.

 

  1. Tone from the top on responsible corporate behaviour has never been more important

Businesses should ensure their C-Suites are living and breathing integrity. Now more than ever, it is critical that business leaders act with integrity and ensure that their employees are doing the same. They can do this through regular communication with employees – perhaps a short video reminding staff of the company’s values and ethics priorities.

COVID-19 has certainly tested companies’ commitment to ethical business conduct and corporate social responsibility (CSR). Whilst it is possible that the mounting pressure for survival and limited resources could lead businesses to focus on short-term gains and bypass CSR, there are a few cases showing industries’ willingness to engage proactively in these activities. For example, the Jack Ma foundation and Alibaba foundation donated coronavirus test kits and other medical supplies to many countries around the world, and Twitter’s boss Jack Dorsey pledged to donate US$1billion to tackle the pandemic.[xi]

Transparency International UK’s recent Open Business report sets out the business case as to why conducting business ethically and reporting openly, particularly about anti-bribery and corruption issues, is critical to building trust with customers, investors, employees and the general public. All eyes are on businesses right now – and reputations are at stake.

 

  1. Review your lobbying practices

Most, if not all, businesses lobby government and this is a perfectly legitimate business activity – when done responsibly. During this time of crisis, where government policy is being created and implemented at pace and where markets and sectors are facing huge amounts of disruption, we have already seen in many markets a huge upsurge in lobbying activity. In Europe alone, companies and trade and business associations account for two-thirds (64%) of all the participating actors in COVID-related lobbying.[xii]

At this time where lives and livelihoods are dependent on the decisions made, it is all the more important that businesses have ethical policies and procedures in place, ensure they are open about who and what they are lobbying for/against, and ultimately ensure they do not exert undue influence over political decision-making.

The public notices when lobbying is done opportunistically to pursue private interests over societal benefits. This year, business organisations and companies have been accused of exploiting the COVID-19 pandemic to weaken international, European and national climate and carbon pricing laws. Cases in point are large polluters pushing for delays in implementing the EU Green Deal and airlines trying to weaken the future aviation carbon market.[xiii] Needless to say, more flexible environmental regulations will have a detrimental impact on people’s health and well-being, and lobbying for these measures contributes to eroding public trust in the private sector.

You can evaluate your lobbying practice against our best practice using our 2018 Corporate Political Engagement Index.

 

  1. Ensure you have a good risk-assessment framework – and that it is actively being used as your business changes

This is particularly important for organisations whose business models have changed dramatically, such as those who have pivoted to support efforts to produce healthcare products or whose supply chains have shifted dramatically from one region to another. New geographies and new sectors bring new bribery and corruption risks and, in many cases, additional regulations. These risks must be assessed, understood and mitigated – even in these challenging times and even by those businesses who genuinely want to support the effort to combat COVID-19.

Our Diagnosing Bribery Risk is a detailed guide for business on how to conduct a risk assessment and how to use it effectively to protect your business and reduce risks of corruption. Our free-to-use Global Anti-Bribery Guidance Portal has also recently undergone a major revamp to ensure it continues to offer up-to-date summaries of anti-bribery legislation. This includes information from jurisdictions across the globe, including China, Brazil and Ukraine, to help businesses as they navigate new markets and their differing legislative landscapes.

 

  1. Seize this opportunity to conduct training on ethics and compliance

Once the COVID-19 crisis is over, sales and frontline staff will be back out there in the market. Scheduling training – even short refreshers – is a good way to demonstrate your company’s commitment to ethics at this time. Even if you don’t have training materials ready, we have some free-to-use online training which you can use. It is also customisable for a small cost. If you feel that you really want to seize this opportunity, we are still offering virtual face-to-face training to support businesses.

In the face of a global pandemic, businesses have an outstanding opportunity to rise to the challenge and ensure COVID-19 responses leave no one behind. The alternative—that is, putting private interests before the common good—is not only unethical, but in the long run, it will be detrimental to businesses’ credibility. Today, businesses are being judged by how they respond to the pandemic and how they, like all of us, tread the difficult line between economic and other (health or social) interests. Tackling corruption now is the best way forward.

 

A shorter version of this article originally appeared in Business Fights Poverty

 

[i] https://coronavirus.jhu.edu/map.html

[ii] https://www.thelancet.com/action/showPdf?pii=S2213-2600%2820%2930234-4

[iii] https://www.thelancet.com/action/showPdf?pii=S2213-2600%2820%2930234-4

[iv] https://hitconsultant.net/2020/04/20/covid-19-social-determinants-of-health-importance/#.Xvn2PihKjIU

[vi] https://edition.cnn.com/2020/05/14/asia/singapore-migrant-worker-coronavirus-intl-hnk/index.html

[vii] https://soundcloud.com/megontheinternet/right-on-4-who-will-be-left-uncounted-in-data-on-covid-19

[viii] https://elbuho.pe/2020/06/peru-coronavirus-y-la-pobreza-los-imposibles-costos-en-una-clinica-privada/

[ix] https://globalinitiative.net/corruption-coronavirus/

[x] https://www.interpol.int/en/News-and-Events/News/2020/Global-operation-sees-a-rise-in-fake-medical-products-related-to-COVID-19

[xi] https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7241379/#b0035

[xii] https://blogs.lse.ac.uk/europpblog/2020/06/17/how-has-covid-19-changed-l...

[xiii] https://carbonmarketwatch.org/wp-content/uploads/2020/05/Never-wasting-a...