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Case Studies: Advancing Anti-Corruption Efforts in Armenia and Thailand

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Corruption is a systemic problem that plagues many transitional countries across the world, rooted in weak rule of law and lack of private property rights. Not only does corruption erode trust in public institutions, such practices also hinder economic growth and weaken democratic governance.

The corruption challenge can be addressed by building responsive institutions that offer basic assurances of private property rights and ensure law and order. CIPE programs address the root causes of corruption through a multi-pronged approach. CIPE programs mobilize the private sector to raise anti-corruption standards and advocate for reforms; streamline regulations and reduce implementation gaps to limit opportunities for corruption; improve corporate governance to strengthen firm-level integrity; facilitate collective action to level the playing field and coordinate company efforts; and equip small and medium-sized enterprises to resist bribery and meet the requirements of global value chains.

Two recent case studies, described below, show these CIPE approaches in action. Continue reading

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The Challenge of Anti-Corruption Compliance for Emerging and Frontier Market Firms

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Visit cctrends.cipe.org, our new site just for anti-corruption compliance in emerging and frontier markets.

“Among a people generally corrupt, liberty cannot long exist.” – Edmund Burke

Until recently, corruption has been accepted and treated as a cultural norm in countries across the world. Increasingly, thanks to the efforts of organizations like Transparency International (TI) and a range of business groups, nonprofits, and government initiatives, the private sector is now openly talking about corruption. But to make significant progress, not just multinationals but also domestic companies in emerging and frontier markets need to believe in the business case for anti-corruption compliance.

As a community we are at a crossroads, as a wide range of actors have not only come to realize the destructive nature of corruption but are putting their heads together to create the conditions necessary to combat it.

TI-USA’s new report on Verification of Corporate Anti-Corruption Programs, the project of extensive research and consultation, marks an important step towards a unified vision of what successful anti-corruption compliance programs should look like. At a July 24 event presenting TI’s key findings and recommendations on corporate compliance, Andrew Wilson, CIPE’s Deputy Director for Strategic Planning and Programs, shared his views as part of a panel that included speakers from TI, Siemens AG, and Tyco. Continue reading

Without a strong compliance program, many smaller Russian firms could be locked out of lucrative contracts with big multinationals.

Overcoming the Collective Action Problem: How to Encourage Businesses to Fight Against Corruption

Without a strong compliance program, many smaller Russian firms could be locked out of lucrative contracts with big multinationals.

Without a strong compliance program, many smaller Russian firms could be locked out of lucrative contracts with big multinationals.

By Henry Nelson

In countries with weak rule of law, anti-corruption efforts suffer from a collective action problem: because bribery and corruption are endemic and occur frequently, individual small business owners hesitate to reform because they fear that doing so will reduce their competitiveness.

If a small or medium-sized enterpise (SME) begins to eschew bribery, it might be incapable of securing contracts that require paying a bribe, for example. The threat of short-term loss of business is serious for SMEs and can deter companies from pursuing anti-corruption compliance.

Furthermore, the collective action problem effects the general business environment. Without a strong, coordinated voice on the importance of compliance, corruption continues to be seen as “business as usual” and the consensus continues to be that bribery is a necessary component of conducting business.

This collective action problem is pervasive and continues to pose issues for CIPE and its many global partners. It is difficult to implement reforms when SMEs fear that the reforms will hurt their business.

Earlier this month, CIPE’s Washington office hosted a delegation of CIPE Russia officers and regional CIPE partners for a discussion on value-chain anti-corruption efforts in Russia. The discussion yielded plenty of interesting information on CIPE Russia’s plan to work with regional Russian chambers of commerce in order to educate local SMEs about international anti-corruption laws like the U.S. Foreign Corrupt Practices Act (FCPA) and UK Bribery Act. Continue reading

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Approaches to Collective Action: How Businesses Together Can Lead the Fight Against Corruption

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Corruption is a direct threat to a country’s democratic emergence and an obstacle to a country’s democratic development. In Thailand, for example, corruption was the stated justification for the military’s ousting of an elected government in 2006 and the Supreme Court’s sacking of another elected government in 2008. Competing allegations of corruption were the main drivers of nation-crippling unrest in the country.

In Thailand, as in other new and struggling democracies across the globe, if democracy is to mature and fully take root, more is required than just the ability to vote.

In countries including Russia, Thailand, Columbia and Serbia, CIPE is helping the private sector mobilize to take proactive steps to reduce corruption. These programs demonstrate the transformative impact that private sector Collective Action can have on a country’s fight against corruption. Continue reading

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A Collective Action Approach to Combating Bribery in Lebanon

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Eighty-one percent of Lebanese business owners and managers believe the level of corruption in the country has increased over the past two years, and another 11 percent believe it has at least stayed the same. Nearly all (97 percent) recognize that this is a problem. These are among the more eye-opening results of a new nationwide survey conducted by CIPE partner the Lebanese Transparency Association (LTA) which is informing the next chapter in the work of the Lebanese Anti-Bribery Network (LABN).

The LABN was established by LTA in 2008, with CIPE support, as a multi-stakeholder network of professionals dedicated to researching issues related to bribery in Lebanon, raising public awareness, and encouraging public officials to take measures to curb corruption. The LABN has published two works to help the private sector in the fight against corruption – a “Code of Ethics and Whistleblower Procedure for Small and Medium Enterprises” and a “You’re Being Audited” guide to the public audit process. The LABN also released several research papers on bribery and corruption in specific sectors, including electricity, taxation, and construction.

On June 27, 2013, LTA and CIPE held a LABN workshop to explore the latest data on corruption in Lebanon and develop a strategy for collective action. Among the more than 40 participants at the event were company executives, civil society activists, and government officials. CIPE’s Senior Knowledge Manager, Dr. Kim Bettcher, presented a variety of private sector-led collective action models for the group’s consideration.

The survey revealed that corruption is not confined to any one sector in Lebanon, nor can it be fought by any one constituency alone. LABN is unique in Lebanon in that it brings together unlikely partners to advance an anti-corruption agenda – grassroots and high-level stakeholders; government officials and business leaders; civil society groups and the media. Through their collective action, the members of the LABN aim to fundamentally transform the way the private and public sectors and civil society relate to each other in Lebanon. Only together can these diverse constituencies develop a sustainable strategy and effective techniques to curb endemic corruption in the country.

Based on the results of the national survey and the group’s strategic priorities, the LABN will be developing a plan of action in the coming months to take the fight against corruption in Lebanon to the next level. Through a series of focused initiates, LABN will demonstrate the tremendous potential of private sector-led collective action in bringing about a more just and inclusive society.

While the results of the survey may seem discouraging at first blush, the LABN views them in a more optimistic light. In contrast to a previous survey conducted in 2010, private sector leaders are now more aware of corruption at all levels of society and are willing to speak out against it. Simply put, corruption is no longer taboo in Lebanon. LABN is poised to harness the private sector’s frustration in the form of collective action to advance constructive proposals for reform.

Stephen Rosenlund is a Program Officer for the Middle East & North Africa at CIPE.