Ethical Standards Matter

12.14.2005

There is an interesting article on BBC News that talks about issues of underemployment, informal sector, and corruption in Brazil. Words of Kroll Brasil (Brazilian risk consulting company) managing director Eduardo de Freitas Gomide are particularly interesting:

“The companies that pay bribes to government officials, the companies that avoid paying taxes, the companies that are not complying with Brazilian law are the ones that suffer internal fraud. When the management lacks ethical standards, people inside the company will be much more willing to commit fraud.”

This quote goes a long way to show that internal governance standards, codes of conduct, and ethical procedures do matter in combating corruption. The other aspect of this to consider, of course, is that having all these tools in place can only go so far if there are no mechanisms for monitoring compliance and implementation.