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What do companies have to hide?

Written by Peter Van Veen on Tuesday, 4 November 2014

What do Google and the Industrial and Commercial Bank of China have in common? What about Amazon, NTT and China Shenua Energy Company?  Give up? They all scored near the bottom (around a 20% score), in our 2014 Transparency in Corporate Reporting (TRAC) study, which we released today. 

What do Google and the Industrial and Commercial Bank of China have in common?  No?  What about Amazon, NTT and China Shenua Energy Company?  Give up?

Let me help you out: they all scored near the bottom (around a 20% score), in our 2014 Transparency in Corporate Reporting (TRAC) study which we released today. 

This study measures how transparent the top 124 global companies are in reporting in relation to three categories: their Anti-Corruption Programmes, how transparent they are in listing subsidiaries and holdings and in reporting basic financial data in all the countries they operate.

We at Transparency International believe that companies have a responsibility to report publicly in these areas to demonstrate their commitment in doing resources-resources-business honestly. Public reporting allows for increased monitoring by civil society and the public at large, making companies more accountable and putting pressure on the laggards to raise their game.

Reporting on anti-corruption programmes is key in publicly outlining the company’s commitment to preventing corruption in their operations.  Although it is very encouraging to see UK companies do particularly well in the TRAC study in this area, but with the UK Bribery Act (UKBA) now over 3 years old, we would expect no less.  After all, having an anti-corruption programme in place is critical in a corporate defence in case of a bribery incident – why would a company not want to publicise its efforts in this regard?

So it is disappointing to report that in a supplementary TRAC study run by Transparency International UK (also launched today) which looks at the top 60 UK companies that a number of those covered still publish very little in relation to their anti-corruption programme.  Of course there are also many non-UK companies that have operations in the UK, often very significant ones.  They too should be benchmarking themselves against the top FTSE performers in terms of anti-corruption programmes. Unfortunately many of them score very poorly indeed.

Although the average score in the international study for anti-corruption programmes was 70%, the scores in the other two areas are very disappointing overall. 

When looking at organisational transparency (average score of 39%) we must conclude that there is still a reluctance by too many companies to report on the full extent of their holdings.  Even more worrying, many companies are disclosing less than they did several years ago.  Oracle reported 400 subsidiaries in 2010 but only 8 in 2012.  Google reported 100 in 2009 but surprisingly only seems to have two subsidiaries left to report on in 2012.

The story is even worse for the final category, country by country reporting (average score of 6%).  Only a few companies are willing to report basic financial data on a country-by-country basis.  Besides a few outliers such as Statoil, Telefonica and Vodafone, no one scores above 50% and over 50 companies scored 0%. Nothing. Nada.

So, to come back to our initial question: What do Google and the Industrial and Commercial Bank of China have in common, or Amazon, NTT and China Shenua Energy Company?  Let’s hope we will not need to ask the same question again in another year or two.


Read 4762 times Last modified on Tuesday, 24 November 2015 11:47

Peter Van Veen

Peter is the Director of TI-UK's Business Integrity Programme. You can follow him on Twitter @pvanveen

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