Anti-Corruption campaigners have a hollow tone

Anti-Corruption campaigners have a hollow tone

Anti-Corruption campaigners have a hollow tone

Nick Kochan

The security and military sectors have reason to pay particular heed to the conclusions of last month’s conference on corruption held in London. These sectors have most often been tarred, fairly or unfairly, with the brush of corruption. Many companies remain so tainted.

This sent out the clarion call for transparency in the terms of trade, for companies to shun paying bribes, for businesses to avoid using middlemen over whom they may have less than absolute control. The message was full of hope and passion. The question for practitioners is the implementation.

This is where the challenge arises. Security companies selling products or services on the international markets have no great desire to add to their overheads – and of course their risks – by hiring middlemen to make undocumented payments. They only make such payments where a chain of conditions exist from which there may be no exit, if the deal is to be done.

The first circumstance is that a purchaser is requiring or demanding an unauthorised payment to facilitate the deal. Foreign companies are at liberty to reject such approaches, citing their adherence to the Foreign Corrupt Practices Act of the United States, or the UK Bribery Act 2010. The issue for the company is whether their refusal to pay an official an unauthorised payment puts their chances of winning the contract at risk.

The outcome of that judgement call determines the ethical company from the unethical. Companies have three possible ways of dealing with the request for a bribe: they can refuse and take the competitive hit; they can accept the request and take the reputational risk; they can seek to negotiate a pragmatic way of making a payment that is transparent and accountable.

Politicians and non-governmental organisations held the stage at the London conference but many came away feeling that the real world was largely lost in the hot air. Questions about corruption are invariably hard to answer definitively, as this is an activity that is rarely documented with any precision. But the questions need still to be asked:
How much corruption actually takes place and what amounts (or percentage of deals) are involved?

To what extent do foreign investors continue to face pressure from government officials in developing countries to make unauthorised payments, when the government official knows that their governments have publicly signed up to transparency initiatives and the like?

Has the exposure of the offshore world of late through the Panama Papers impacted the means whereby bribes are paid or relayed?

Has this exposure and the growing political attacks on corruption had any impact on the preparedness of companies in more secretive countries in Asia to refuse demands from state officials in developing countries for the payment of bribes?

Bribery and corruption are real-world problems. Political and social factors lurk behind the webs of unauthorised payments that go between countries and companies. In the byzantine world of real politique and business, the breast beating of Transparency International and many Western governments has a hollow tone.

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