Combating Corruption Through Private Sector Collective Action

Leslie A. Benton, Djordjija Petkoski, Peter Brew, Jermyn Brooks, John D. Sullivan, 13th IACC, Workshop report, Private Sector

Final Workshop report

Title of Workshop: 

Combating Corruption Through Private Sector Collective Action

Moderator:  

Michael Fine, Director of Private Sector Initiatives, Transparency International-USA

Rapporteur: 

Leslie A. Benton, Senior Policy Director, Transparency International-USA

Panellists: 

N.Jermyn Brooks, Director Private Sector Programmes, Transparency International

John Sullivan, Executive Director, Center for International Private Enterprise (CIPE)

Peter Brew, Director-Asia Pacific, International Business Leaders Forum 

Djordjija Petkoski, Program Leader, Business, Competitiveness and Development, World Bank Institute

Summary (300 words)

This workshop addressed private sector “collective action” – engaging with other companies, business associations and other private sector actors – to fight corruption and strengthen relationships with NGOs, governments, and other interested stakeholders.  The broader purpose of the workshop is to raise awareness of the role that the private sector can play in combating corruption and explore innovative programs that TI chapters and others can integrate into their own work.

The speakers defined “collective action” and addressed when it makes sense as a tool to fight corruption and how it relates to other anti-corruption activities.  Several examples of collective action were discussed, such as Transparency International’s Integrity Pacts and Business Principles for Countering Bribery, the World Economic Forum’s Partnering Against Corruption Initiative and the Extractive Industry Transparency Initiative.  

The speakers also addressed the “business case” for fighting corruption and engaging in collective action, including to avoid loss of reputation, mitigate risk, level the business playing field, create environment for economic development, and ensure protection for property and contract rights. While there are common practical obstacles to overcome, including lack of an enabling political environment in some countries, sometimes weak commitment on the part of the actors, and the practical difficulty of working with diverse groups, collective action is an important tool for the private sector.

Summary of presentations (300 words per panellist)

Jermyn Brooks introduced the concept of private sector collective action to fight corruption, noting that it is not a new phenomenon.  Common examples include Integrity Pacts among contracting parties who pledge not to engage in corruption and agree to independent monitoring of the project; voluntary business codes of conduct such as the Transparency International Business Principles for Countering Bribery and the World Economic Forum’s Partnering Against Corruption Initiative principles; and the Wolfsberg Principles to fight money laundering, a set of principles that came out of the collective work of private banks, the Basel Institute and Transparency International.

John Sullivan described the business case for collective action to fight corruption, noting that corruption cases loss of business reputation, increases the cost of doing business, and undermines innovation.  He noted that fighting corruption is often easier if it is a collective effort.  The benefits to doing so include mitigating risk; creating a level playing field for ethical companies; insuring the protection of property and contract rights; and helping to build markets and market institutions. 

Peter Brew describes some of the practical issues that business must think through to form successful collective action networks.  It is not always easy to get businesses to come together because of competition and anti-trust concerns, but third party intermediaries can often help business develop the confidence necessary to work together.  The political environment is also critical in that the private sector must have ability to work together without threat.  He also noted that collective action efforts must grow organically “in country.”  It is not enough for the international community to urge reform. 

Djordijija Petkoski described a new multistakeholder initative launched by the World Bank Institute to raise awareness about tools and strategies for private sector collective action to combat corruption.  The initiative has developed an information guide and an open source web portal to connect interested groups to expert resources.  Information on the site will be continually updated.    

MainOutputs (200 words, narrative form)

There is tremendous interest in collective action in the private sector and a strong business case for it.  It is not always easy to bring businesses together, but the gains can be significant.  Responsible business action is becoming a competitive issue. 

To be most effective, collective action efforts must be inclusive – all interested stakeholders must be engaged.  Coaltions must also set objectives and measure their outcomes. 

There are significant challenges, including a need for awareness raising, clearer articulation of the business case, commitment from all actors and greater expertise.  There is also a need to create a safe political space that enables collective action.

Recommendations, Follow-up Actions (200 words narrative form)

Efforts must be made to globalize the dialogue on collective action.  Proponents must share knowledge with other interested stakeholders.  Efforts must be made to create a positive incentive framework to enable collective action including sharing public examples of change created by collective action.  Lawyers, accountants and other professionals must be engaged in the dialogue.

Highlights (200 words please include interesting quotes)

“Responsible business practice is becoming a competitiveness issue.”

“A wave of change has occurred with business beginning to take anti-corruption seriously.” 

Signed

Leslie Benton

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