Do sweat the small stuff: Why all corruption matters

When one thinks of corruption in the private-sector, grand scenes of executives paying bribes, bidders lying to win contracts, and senior accountants setting up secret bank accounts are likely to come to mind. In reality, though, the most common form of corruption is small-scale bribery involving people at every step of a company ladder.

Small-scale bribery can take many forms, including non-disclosure of conflicts of interest, setting up deals that benefit particular people, or paying a little extra money to speed up a normally slow process. You might not think the everyday payments people make to building inspectors, customs officials, their friends across the street, or to themselves matter, but they can create a culture of corruption and set an expectation for future payments.

This was one of the main points of a panel discussion, “The Role of Integrity Compliance and Collective Action in Making the Private Sector a Partner in the Fight Against Corruption” at theInternational Corruption Hunters Alliance conference held at The World Bank Group December 8-10, 2014. The panelists were Dr. Andreas Pohlmann, Billy Jacobson, and Cecilia Müller Torbrand. Galina Mikhlin-Oliver of the Integrity Vice Presidency of The World Bank was the moderator.

Small-scale bribery generates ripple effects as money is lost and the line between ethical and corrupt behavior is blurred. Communicating on why small-scale bribery is inappropriate is critical to stopping it. Two lines of attack need to be deployed- internal communication with a company’s employees and external communication with a company’s partners.

Internally, a company needs to train, institute due diligence, and express to staff the ethical standards of the company.  Training programs need to maintain fidelity to anti-corruption goals and compliance processes, and, at the same time, they should be translated and adapted to local contexts. It’s relatively easy to issue orders to implement compliance processes, but many transactions take place far from a company’s headquarters in very difficult business environments. This is especially true for large, international companies or those that work in inherently international sectors like transport and shipping. Training, therefore, needs to accommodate cultural diversity and the huge range in literacy and numeracy abilities of employees.

Externally, dialogue and collective action are necessary to cleaning up a sector and its auxiliary partners. Small and mid-size companies often need to join forces as part of business associations, treaties, or working arrangements to leverage resources and spread the costs of compliance processes. While integrity pacts are not always enforceable, they nonetheless change the tone of business and can put pressure on organizations to combat corruption. Multi-stakeholder engagement is also necessary to ensuring that third parties are not engaging in corruptive practices that could undermine an organization’s overall goals.  Staff members need to know who they are dealing with and should only do business with ‘known entities’ because compliance means every unit and constituent of a company, including third parties, must conform to the same standards.  Anti-corruption is only as strong as the weakest link.

This article is published in collaboration with The World Bank’s People, Spaces, Deliberation Blog. Publication does not imply endorsement of views by the World Economic Forum. 

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Author: Roxanne Bauer is a consultant to the World Bank’s External and Corporate Relations, Operational Communications department (ECROC).

Image: A young Iraqi girl holds out her money as she queues for the early morning bread at the bread factory in Baghdad May 20 2003. REUTERS/Kieran Doherty.