“Corruption is an insidious plague that has a wide range of coercive effects on societies. It undermines democracy and the rule of law, leads to violations of human rights, distorts markets, erodes the quality of life, and allows organized crime, terrorism and other threats to human security to flourish”
– Kofi Annan, Former UN Secretary General
Sunday, December 9th, marks International Anti-Corruption Day, an annual celebration hosted by the United Nations to commemorate the 2003 opening of the United Nations Convention against Corruption, the first global anti-corruption treaty.
Nearly a decade later, while progress has been made, corruption continues to flourish in too many places across the globe. According to Transparency International’s latest Corruption Perceptions Index, released on December 5th, 70% of 176 countries score below a 50 on a 100 point scale, where 0 = highly corrupt and 100=very clean. For companies seeking to do businesses in these markets, corruption is a daily reality, raising significant legal, financial and reputational risks. In fact, the results of a Conference Board survey on Protecting IP and Preventing Corrupt Activities in the Global Supply Chain showed that 70% of executives believed there was extensive risk of corrupt activities when working with agents and business partners in emerging markets, while 46% saw major risk when engaging suppliers in these locations. The top three challenges identified to prevent corruption risk when working with third parties in emerging markets included: ensuring appropriate behavior of Tier 2 third parties (46%), developing metrics (42%), and conducting effective training of third party employees (39%).
In this environment, companies must work to ensure that they are part of the solution, not part of the problem. Implementing effective policies and procedures to detect, deter, and remediate corruption, and working with supply chains to ensure they do the same, is only the first step. To be truly effective, compliance must become part of a company’s culture though high-level commitment, communication, training, and continual improvement. By working with suppliers to improve business practices designed to prevent corruption, companies can drive jobs, growth, and innovation—benefiting their own businesses, the economy, and the communities where they operate.
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Transparency International Corruption Perceptions Index
Conference Board Survey Results