In a world where capital, goods and services flow globally but most laws still stop at national borders, coordinated cross-border government action is required to hold companies accountable. This lack of accountability puts multinational companies, including global service and supply networks in a powerful position, which can lead to undue influence on political decision-making and policies. Such influence may result in tailored legislation and create unfair advantages for certain companies or particular industries as a whole.
How does it affect you?
Business corruption has a negative impact on societies and economies. When doing business takes place outside the rule of law it erodes confidence in public institutions, harms prosperity, equal access to resources, freedom and safety. Business corruption takes many forms, with profound effects for the lives and wellbeing of people everywhere. Companies pay bribes or exercise undue influence through their corporate political engagement in order to win public or private procurement contracts and obtain business licenses, avoid contractual terms and conditions, ignore legal requirements and avoid enforcement. The negative impacts of business corruption are manifold and devastating which may include:
- Inflated prices on public and private contracts, and ultimately consumer goods, reducing wealth and prosperity;
- Breach of health, safety and environmental laws leading to environmental damage, and even human rights abuses;
- Tax avoidance and illicit financial flows through establishing subsidiaries in tax havens, and laundering the proceeds of illicit activities through opaque corporate ownership structures, which eventually undermine investment in and access to critical services such as healthcare and education.
Tax-dodging corporations cost states hundreds of billions of dollars every year, while overpriced public contracts further drain state treasuries of vital funds. Private sector corruption affects all countries, even those that have a strong rule of law and effective institutions. Integrity at home does not always translate into integrity abroad. Companies based in countries that score high on the Corruption Perception Index have been implicated in multiple large- scale corruption and money-laundering scandals - evidence that a relatively clean public sector is not enough to effectively tackle corruption in all its forms.
What needs to be done?
A global problem requires a global solution. While national governments need to constantly improve and enforce existing anti-corruption legislation and international anti-bribery and anti-corruption conventions designed to hold companies accountable for their actions, international organisations need to insist on the seamless and consistent implementation of consistent global anti-corruption standards, e.g. through the inclusion of anti-bribery and anti-corruption safeguards in international trade agreements, economic stimulus and loan packages among others.
Companies must adhere to these laws and take internal steps to prevent corruption. As a minimum first step, a zero-tolerance policy towards bribery and corruption is needed and should be enforced. Furthermore, companies need to embed an anti-corruption and purpose-driven business culture within their organisations. As role models, multinational corporations need to aspire to change the business environment in a positive manner. To demonstrate progress, these companies should report their actions and respective key performance indicators to show all of their stakeholders, including their employees, investors, communities and consumers that they are committed to integrity in an open and transparent manner. With a properly regulated and honest operating environment that increases transparency, we can work towards a business sector free of corruption.
What are we doing?
Efforts to tackle private sector corruption require the engagement of multiple stakeholders. Transparency International fosters coalitions of governments, public institutions, businesses and civil society to advocate for a stronger and more effective anti-corruption environment.
To create a level playing field and the highest standards of ethics and good practice, we cooperate with companies and business associations.
Our research on private sector corruption and reports on the transparency of businesses provide the evidence base for action. This assists in the development of standards and tools for combatting corruption, and enables citizens, investors, employees and other stakeholders to hold businesses accountable for their activity.
Our research standards assist companies in the development and implementation of anti-corruption programmes:
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