Press Conference on Anti-Corruption Efforts by Global Compact Participants

26 February 2009

Press Conference on Anti-Corruption Efforts by Global Compact Participants

26 February 2009
Press Conference
Department of Public Information • News and Media Division • New York


Decisive action intended to yield long-term results on non-financial issues like corporate corruption was one key way to restore public trust in the private sector as the severe global economic downtown continued to unravel many of the gains made in the past decade, Georg Kell, Executive Director of the United Nations Global Compact, said today.

It was more important than ever to restore public confidence, he emphasized at a Headquarters press conference, adding that, while it was difficult to put a price tag on global corruption, the World Bank had estimated that roughly $1 trillion in bribes alone was lost every year.  That was a staggering sum by any standard, but an especially disturbing one when measured against flagging official development assistance (ODA) flows.

“This is a huge amount of resources wasted and abused,” he continued, noting that, along with the certain promise of even more grim economic forecasts ahead, it was vital that businesses regain trust and confidence through a credible commitment to accountability and long-term sustainability.

With that call to action, he said, the United Nations Global Compact -- the Organization’s 10-point initiative to encourage businesses worldwide to adopt sustainable and socially responsible policies, and report on their implementation –- was meeting in New York to review the progress made by its working group on anti-corruption.  At the meeting, taking place on 26 and 27 February, some 50 experts from business, civil society and the United Nations, were expected to tackle such issues as anti-corruption efforts in supply-chain management, collective action and innovative new tools to fight graft.

Joining Mr. Kell were Ntombifuthi Mtoba, Chair of the Board of Deloitte, South Africa; Eckart Sünner, Chief Compliance Officer of BASF AG; and Jermyn Brooks, Director of Global Private Sector Programmes for Transparency International, who described the non-governmental organization -- founded in 1993 to curb corruption in international transactions -- as “fairly critical” of business, seeing it as the “supply side” of the bribery and corruption problem.

Responding to questions, Mr. Kell said that, while the current financial crisis could certainly be a breeding ground for greater corruption, it also provided opportunities for restoring confidence.  Governments could use the leverage they now had to accelerate good corporate practices and push for a realignment of business and trade practices.  At the same time, it was important to avoid interventions that undermined rule-based multilateral structures, and the use of catch words like “nationalization”, which could undermine traditional performance-based systems.

Nevertheless, businesses could also be a major part of the fight against corruption, he continued, agreeing with his Global Compact partners that the economic crisis provided businesses with an opportunity to identify “good responses”, including a rediscovery of business values, and to promote a wider understanding of what was meant by “corporate responsibility”.

On the “big issue” of the credibility of business, Mr. Brooks said one of the ways in which the corporate sector had been able to demonstrate its commitment to good values was by signing up with the Global Compact.  More than 5,000 companies had done so since the initiative’s launch five years ago.  Yet, merely signing up was not enough, as many companies could regard that as a mere “PR exercise”.  Signatories were therefore required to provide an annual notification of progress made towards aligning their policies and programmes with the Compact’s 10 principles, particularly in the areas of human rights, labour, the environment and anti-corruption.

That process was really at the heart of the working group meeting this week, he said.  The gathering of such diverse stakeholders might also use the opportunity to lobby Member States to take implementation of the United Nations Convention against Corruption more seriously, including by considering the creation of a monitoring system that could not only follow-up on national-level implementation, but also provide countries with technical and financial assistance to that end, if needed.

As for speculation about the role that corruption and corporate misconduct might have played in sparking or deepening the current financial turmoil, Mr. Brooks told one questioner it was worth noting that Bernard Madoff’s massive “Ponzi scheme” and the financial scams allegedly perpetrated by the likes of banker R. Allen Stanford and others were coming to light only after so many major banks had collapsed and were now in the process of being rescued.  It was obvious that those types of schemes had been around for years and may not have had a direct connection to the current situation.  At the same time, however, those and other schemes had in fact relied on the cheap credit that had been flooding the world.  Now that “bonanza” was collapsing, and those particular schemes were unravelling.

He went on to say that the situation was sparking many important debates about the role of corruption.  That said, using the agreed definition of corruption -– “the use of entrusted power for personal gain” -– there was an argument that executive remuneration, especially the insistence of bankers on huge payouts and payment schedules, regardless of company performance, fit that definition.  “I think we’re all aware that some things can be unethical […] while not being strictly illegal.”  A healthy debate was now raging about levels of guilt and responsibility “in that grey zone” of identified criminal behaviour and behaviour recognized as merely socially unacceptable.

Agreeing that the private sector shared responsibility for eliminating corruption, Ms. Mtoba provided some specifics on the two-day meeting, saying the working group and sub-working groups aimed to advance implementation of the anti-corruption principle through advocacy and awareness-raising, while promoting broad collective action.  The groups planned to present the preliminary results of their consultations, which covered such issues as supply-chain management, anti-corruption education and ways to ease reporting on anti-corruption measures and efforts.

On that matter, BASF, a leading international chemical company, believed such reporting was important, Mr. Sünner said.  It forced drafters to consider ways to improve reporting mechanisms and to define the parameters of exactly what types of information should be included.  The relevant sub-working group had come up with a “rather comprehensive” survey that should provide a good starting point for all future reporting under the anti-corruption principle.

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For information media • not an official record
For information media. Not an official record.