Earlier this year, the Governance and Anti-Corruption wing of the World Bank, held a two week e-discussion on private sector approaches to combating corruption. About 40 private sector and development experts, including CIPE, participated in the discussion. Findings of the discussion were published in a report – Towards a More Systematic Fight Against Corruption.
One of the more interesting debates that I witnessed over the two weeks, was on the topic of facilitation payments. Here is the summary from the report:
For example, it came clear over the course of the e-discussion that there remains no consensus across sectors on facilitation payments, which are unofficial payments made to procure or speed up the provision of goods or services. Facilitation payments, thus, fall into an ethically gray area as they are a normal (and legal) part of doing business in some countries but are outlawed in others. This creates a dilemma for multinational companies who are prohibited from making facilitation payments in their home countries, but may face a need to make these payments in the countries in which they operate.
My take on facilitation payments, of course, is “no facilitation payments home or abroad.” Rather than solving the short-term problems with monetary payments, companies could invest their resources in cleaning up the business environment so that the need for facilitation payments disappears. While such payments may seem like a perfect idea to ‘grease the wheels of commerce’, more often than not they lead to a whole host of other problems, like making companies more vulnerable to corruption/extortion and undermining their ethical standards.
The discussion on private enforcement of anti-corruption measures was also quite interesting:
One newer mechanism, highlighted in the ediscussion, is the use of private enforcement actions, which are utilized more to level the playing field than to eliminate corruption for a broader ethical purpose. Private enforcement actions involve companies initiating investigations of their competitors in order to procure evidence on whether or not they are engaging in corrupt activities. Such actions, in and of themselves, bring up issues of ethics and transparency, particularly in regards to how the information uncovered by private enforcement actions is used. As in the case of private enforcement actions, new strategies and practices ensure that the range of stakeholders continually needs to monitor and evaluate their appropriate stance, and, if necessary, their appropriate response.
Check out the report for other ideas on how the private sector can (and already does) combat corruption.
Published Date: October 30, 2006