6 ideas to how you can actively work with corruption in Procurement

By Jim Yong Kim, World Bank Chief, January 20, 2014, Responsibleprocurement.com

“Every dollar that a corrupt official or a corrupt business person puts in their pocket is a dollar stolen from a pregnant woman who needs health care; or from a girl or a boy who deserves an education.”

“Corruption is the top problem faced by developing countries and it is cancer for poor countries. The private sector should be ”part of the solution.”Cancer can be cured”

Bribery is a two-way street; it involves a giver not just a taker. What can you do in Procurement to work with corruption?

Bribery map_0

In many markets, corruption including bribery is rampant. As the map shows, this is true especially in many emerging markets including China which is ranked around 80th most corrupt by Transparency International.

Companies have a choice when it comes to paying bribes. In most circumstances it is possible to operate without giving bribes but there is a cost to being ethical, you may lose some business, approvals could take longer. If the senior management  is very clear that they understand and accept this cost, a company can avoid bribing and over time it develops a reputation for honest practices and people stop asking.

#1: Work with a Code of Conduct Almost every global company has a clear Code of Business Conduct that prohibits employees from engaging in various forms of fraudulent behavior. Many companies go to great lengths to train employees on their Code of Conduct, they require employees to certify annually that they understand the company’s policies with regard to compliance and have strong internal processes including audits and investigations.

#2: Set the tone: Leadership and culture Yet, inspite of all this, problems occur. They occur because of greed or fear amongst one or a few employees. They either break the Code of Conduct and the policies and laws in order to meet sales targets or they succumb to greed. If there is collusion amongst employees, this type of fraudulent behavior may take time to discover.

This is why companies must pay attention to leadership and culture. The tone must be set at the very top. There must be zero tolerance in practice. The culture must be very open so that whistleblowers who sense something is amiss do come forward early and sound the alarm.

#3: Enforce standards such as the UK Bribery Act and US Foreign Corrupt Practices Act According to Procurement Leaders: “Laws such as the US Foreign Corrupt Practices Act and the UK’s Bribery Act 2010 are in place to put a stop to these situations making it “unlawful for certain classes of persons and entities to make payments to foreign government officials to assist in obtaining or retaining business.”Departments need to take a tougher stance as a result of these laws to further enforce these standards. But simply complying with the law doesn’t seem to be enough.”

#4: Use a “Due Diligence Tool” The tool contains flowcharts illustrating the particular points where companies should be alert to corruption in a series of specific and common situations. A systemised strategy towards standard business procedures may significantly reduce the risk of being subject to corrupt practices. Check out the tools here.

#5: Report your “bribe” If your company encounter a bribe you can (at least in India) report your bribe on this crowdsourcing site – “I paid a bribe” . Great idea to fight corruption. I wish that could be established in other countries as well.

#6: Join Transparency International One global movement sharing one vision: a world in which government, business, civil society and the daily lives of people are free of corruption. Learn more about them here.

Would you like to learn more about corruption? True stories of corruption Anti Corruption E-learning

Who am I? I am Alis Hemmingsen. I am a (Responsible) Procurement thought leader and company owner of Responsible Procurement Excellence. In practice this means, that I am a professional business blogger within Procurement and Expert Consultant, Facilitator and Speaker.

My mission is to help you achieve Responsible Procurement and Supplier Innovation Excellence inside your own organization by making resources and best practices accessible for the greater good. Learn more about me here and sign up for the newsletter here.