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Did you know that corruption costs approximately US$1 trillion to developing countries and $1.5 trillion is paid in bribes every year globally? In Europe and Central Asia one in three citizens think that corruption is a major problem facing their societies. Across Asia and the Pacific, up to 40 percent of citizens think the level of corruption has increased in their countries. As the world marks the International Anti-Corruption Day on 9 December we should all remember the costs of corruption on societies and how corruption delays progress toward the Sustainable Development Goals.

While traditionally the onus to combat corruption has been placed upon government by its people, we need concerted efforts from not only the public sector, but also from private companies, civil society, media and the people.

The private sector has the potential to be a game changer. Globally, private sector accounts for 60 percent of gross domestic product, 90 percent of jobs and 80 percent of capital flows on average in developing countries. Besides creating decent jobs and contributing to the economy, the private sector can adopt business models that promote good governance, integrity and diversity to drive sustainable development.

 

What can the private sector do?

There are a number of ways through which private companies can tackle corruption individually or through collective action, to raise corporate governance standards and adopt more sustainable business practices.

Businesses can ensure their compliance with laws and relevant standards, and strengthen their internal control mechanisms by carrying out corruption-risk assessments. Companies can promote transparency and accountability through disclosure and regular audits, whistleblower protection, safe channels for feedback and complaints as well as clear rules on conflicts of interest. For example, companies should establish guidelines regarding gifts, hospitality, travel and entertainment, political and charitable contributions.

 

The role of the government

Globally, the most corruption-prone areas in public-private sector interface are: procurements (57 percent), licenses and permits, judiciary, politicians and tax collection.

Governments have a crucial role in establishing a level playing field for private companies and ensure a corruption-free business ecosystem. This has been acknowledged by 186 States Parties to the United Nations Convention against Corruption (UNCAC), as of June 2018.

Firstly, the state shall establish transparent processes and systems, such as for licensing, tendering for public contracts, etc. For instance, governments may legally require third-party monitoring for high-volume public contracts to ensure not only transparency but also verification and accountability.

In addition, governments should ensure that its anti-corruption laws include clear provisions for private sector. Since governments act as formal owners of State-Owned Enterprises (SOEs), they should proactively introduce compliance programs in those businesses.

In some countries, national governments have established Business Ombudsman institutions, mandated to act in the best interests of private sectors and as a medium between them and the state.

 

How UNDP supports partnerships for business integrity

Multi-stakeholder engagement is needed to comprehensively address corruption. From creating islands of integrity and developing interactive learning platforms to one-stop-shopsasset declaration portals, public procurement visualization and open data platforms, UNDP has been partnering with governments to combat corruption. Toward this end, UNDP helps to develop transparent systems in both public and private sectors, and also fosters collaboration between them.

In Europe, UNDP has been partnering with OECD and EBRD to promote business integrity. For example, in 2017 in Ukraine, UNDP in cooperation with the OECD and the Business Ombudsman of Ukraine, facilitated the establishment of the Ukrainian Network of Integrity and Compliance (UNIC). As a prerequisite to the network membership, companies must first have in place effective compliance standards. To date, over 59 companies in 46 cities have joined the network. Together with UNIC, we organized a Business Integrity Week and several local seminars for SOEs. At the same time, UNDP has supported the National Agency on Corruption Prevention of Ukraine to develop a Model Anti-Corruption Programme for legal entities and step-by-step Guidelines and an online course on how to avoid conflicts of interest. Now with more than 250 SOEs already using the model anti-corruption programme, its adoption was made legally mandatory for all companies participating in public procurement tenders.

In Kosovo[1], UNDP partnered with the American Chamber of Commerce to organize a series of meetings in the municipalities with companies to discuss how they can report corruption and the role of the Anti-Corruption Agency. Together we have also conducted Corruption Perception Study of businesses, which identified corruption as the most serious problem for businesses after inefficient court system.

In Asia and the Pacific, there is a momentum for business integrity with initiatives that have already yielded significant results.  For example, Thailand’s public procurement law, developed with UNDP’s technical inputs and effective since 2017, provides a model for multi-stakeholder engagement. It requires civil society monitoring through ‘Integrity Pacts’ for public contracts over $30.5 million. As of August 2018, this measure already helped the country save $761 million.

In Viet Nam, the anti-corruption law revised with UNDP’s support was passed in November 2018 and for the first time has clear provisions for private sector. In addition to the revised law, Viet Nam also launched its first collective action platform, the Government-Business Integrity Initiative with the support of the Deputy Prime Minister.

Going forward, UNDP is accelerating its engagement through a major regional initiative to Promote a Fair Business Environment in ASEAN (2018-2021) in partnership with the UK government to foster transparent and predictable business environments by working with both governments and the private sector in Indonesia, Malaysia, Myanmar, the Philippines, Thailand and Viet Nam.

In Europe and Central Asia, UNDP, in cooperation with its partners, plans to continue a series of seminars for private and state-owned companies in order to introduce and strengthen compliance standards. Together with the OECD’s Anti-Corruption Network, we also plan to conduct progress assessment of implementation of business integrity standards in several countries in 2019.

 

For more information on the ‘Promoting a Fair Business Environment in ASEAN’ project, please visit the website or view the flyer below.

 

For more information about UNDP's work on business integrity and anti-corruption in Europe and Central Asia, click here to see the project page.

Written by:

Irakli Kotetishvili, Policy Specialist, Anti-Corruption and Public Administration, UNDP Istanbul Regional Hub

Elodie Beth, Programme Advisor, Transparency, Accountability and Anti-Corruption and Kamolwan Panyasevanamit, Knowledge Management and Event Coordination Assistant, UNDP Bangkok Regional Hub

 

Related article: The perfect recipe for ending corruption

[1] References to Kosovo shall be understood to be in the context of UN Security Council resolution 1244 (1999)

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