CORRUPTION A corrosive drain on organizations

Bradwell Mhonderwa BUSINESS ETHICS CENTRE

INTRODUCTION

• Corruption, a global challenge

• International conventions on corruption, UNCAC, UN Global Compact, TI, etc.

• World bank estimate in 2004

DEFINITION of CORRUPTION

“The abuse of power for private gain”-Transparency International

DEFINITION cont’d • Corruption applies to all sectors of

the economy

• Systemic and individually based

• Covers both financial and non financial benefits

• Points to importance of governance systems in curbing corruption

• Highlights costs of corruption

COMPLEXITY OF CORRUPTION

• Corruption has many faces

• Businesses, source and victim

• Rent seeking and state capture

• Systemic and/or individual corruption

SYSTEMIC CORRUPTION • Most difficult to control • Rent seeking, state capture, patronage, impunity • Wining government tenders on the basis of who you

know and paying bribes • Paying expediting fees for public services • Erodes investor confidence thus stifling economic

growth • Results in capital flight • Destroys institutional capacity • Impoverishes whole societies • Weakens rule of law

CORRUPTION AROUND THE WORLD Source: Transparency International, 2013 report

CORRUPTION in SUB-SAHARAN AFRICA

• Somalia, Sudan, Chad, Nigeria and Zimbabwe

• Botswana, Seychelles, Namibia

• Political elites, bureaucrats, and their appendages in private sector

• Rent seeking and state capture

• Corrupt public service institutions

EFFECTS OF CORRUPTION IN AFRICA • Retarded/delayed development • Stifled economic growth • Business collapse • Destruction of institutional capacity • Endless civil wars inspired by greed • Poverty, diseases, social unrest

• Environmental degradation

ILLEGAL WASTE DUMPING IN ABIDJAN, 2006

COSTS OF CORRUPTION

• Resource misallocation

• Lower investment/capital flight

• Reduced competitiveness, efficiency and innovation

• Unresponsive policies and poor administration

• Increased unemployment

• Exacerbated poverty , social unrest and corroded social fabric

• Destroys natural environment

FIGHTING CORRUPTION WHOSE RESPONSIBILITY?

• Government

• Business

• Civil society

• General public

FIGHTING CORRUPTION GLOBAL INITIATIVES

• Global conventions

• Legal frameworks, FPCA in US, Bribery Act, UK, etc.

• OECD Principles

• Transparency International

• Improving governance

FIGHTING CORRUPTION IN ZIMBABWE

• Anti corruption act

• Anti corruption commission

• Transparency International

• Zimcode

FIGHTING CORRUPTION IN ZIMBABWE: WAY FORWARD

• Commitment at highest level

• Improve public governance and corporate governance processes

• Ethics foundation of good governance

• Undo culture of impunity and improve rule of law

• Identify, and punish perpetrators

FIGHTING CORRUPTION CORPORATE MEASURES

• Effective ethics and compliance standards and procedures

• Exercise due diligence in appointing people to key positions

• Effective communication of ethical standards, policies, and procedures to staff

• Effective monitoring, evaluation and auditing of standards and procedures

• Consistent enforcement of standards and policies

• Appropriate response to uncovered misdemeanor in order to prevent repeat.

CONCLUSION

Corruption is the albatross stifling economic growth and development in poor countries. While corruption has become a world challenge, its effects are more pronounced in impoverished societies where resources meant for the poor in most cases end up in the hands of a few mostly ruling elites, bureaucrats, and their appendages in business. Fighting corruption demands commitment at the highest level and involvement of all players in the economy.