Corruption - Global Compact Nordic Network

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Corruption - Global Compact Nordic Network

Corruption – A Human Rights and Business

Dilemma

Katharina Hermann, Alyson Warhurst, May 2011

Winner: “Risk Management Product of the Year” - StrategicRISK, 2010 European Risk Management Awards

Winner: “Best ESG Research House UK” - 2010 World Finance Awards

Winner: GRI / ING “Big Five” 2010 - Global Reporting Initiative / ING

© Maplecroft 2010

Alyson.Warhurst@maplecroft.com


What is corruption?

The UN Global Compact notes that the UN Convention against

Corruption has taken the approach that a comprehensive definition of

corruption was neither necessary nor feasible. It instead treats corruption

as an evolving concept. As a result, it covers various forms of corruption

that existed at the time of drafting, but also enables states to deal with other

forms that may emerge.

OECD Convention: the offer, promise of provision of any undue

pecuniary or other advantage, whether directly or through intermediaries, to

a foreign public official, for that official or for a third party, in order that the

official act or refrain from acting in relation to the performance of official

duties, in order to obtain or retain business or other improper advantage in

the conduct of international business.

© Maplecroft 2010

Alyson.Warhurst@maplecroft.com

Page 2


What is corruption?

According to the International Chamber of Commerce corruption

involves:

• Bribery ("an offer or the receipt of any gift, loan, fee, reward or

other advantage to or from any person as an inducement to do

something which is dishonest or illegal")

• Bribe solicitation ("the act of asking or enticing another to

commit bribery")

• Extortion ("when bribe solicitation is accompanied by threats it

becomes extortion")

© Maplecroft 2010

Alyson.Warhurst@maplecroft.com


The price of corruption

According to the Corruption Data section of Transparency International UK's website:

"25% of African states' GDP is lost to corruption each year" (U4 Anti-corruption Resource

Centre, 2007)

"Corruption costs US$1 trillion in bribes": This is considered to be a conservative estimate of

actual bribes paid worldwide in both developed and developing countries (The World Bank

Institute)

There is a "50% loss in health funds": This is the estimated percentage of allocated funds that

do not reach clinics and hospitals in Ghana (Transparency International, 2006 Global Corruption

Report)

"An estimated US$50 is paid in bribes for every cubic metre of timber felled in

Cambodia"(Global Witness)

"400% GDP gain from fighting corruption": Countries that seriously tackle corruption can

expect, in the medium-term, up to a four-fold increase in income per capita (World Bank)

© Maplecroft 2010

Alyson.Warhurst@maplecroft.com


Corruption – International framework

UNGC 10 th principle: "Businesses should work against corruption in all

its forms, including extortion and bribery.“

UN Convention against Corruption

OECD Convention on Combating Bribery of Foreign Public

Officials in International Business Transactions

Regional conventions

Domestic laws – extraterritorial reach

• US Foreign Corrupt Practices Act

• UK Bribery Act

© Maplecroft 2010

Alyson.Warhurst@maplecroft.com


Corruption and human rights

© Maplecroft 2010

Alyson.Warhurst@maplecroft.com


Corruption and human rights

UN Development Fund:

"A corrupt state creates a vicious circle in which the state quickly

loses its authority and ability to govern for the common good.

Corruption makes it possible for critics to be silenced, for justice to

be subverted and for human rights abuses to go unpunished. When

corruption reigns, basic human rights and liberties come under threat

and social and economic contracts become unpredictable."

© Maplecroft 2010

Alyson.Warhurst@maplecroft.com


Corruption and human rights

Transparency International/International Council on Human Rights Policy

Corruption and human rights: Making the connection

Direct violations:

• A corrupt act is deliberately used as a means to violate a right

• e.g. the bribing of a judge to ensure an individual is unable to enjoy his right to a fair trial

• e.g. situations where a citizen must bribe a doctor to access medical treatment, undermining

the right to health

Indirect violations:

Corruption can be an essential factor contributing to a chain of events that eventually leads to

the violation of a right

• e.g. bribery of public officials to secure permission for a project that subsequently gives rise to

human rights violations (e.g. forced relocation of community members without prior consultation)

Remote violations:

Corruption can be one of several factors that result in the violation of human rights

• e.g. Violent political protests that result in a loss of life may take place where an election is

considered to be unfair

© Maplecroft 2010

Alyson.Warhurst@maplecroft.com

Page 8


Corruption: Dilemma analysis

© Maplecroft 2010

Alyson.Warhurst@maplecroft.com


Corruption: Good practice case studies

© Maplecroft 2010

Alyson.Warhurst@maplecroft.com

Page 11


Corruption: Example of case study

© Maplecroft 2010

Alyson.Warhurst@maplecroft.com


Corruption: Example resources

© Maplecroft 2010

Alyson.Warhurst@maplecroft.com

Page 13


Corruption: Forum online discussions

Live conversations

Multiple threads

© Maplecroft 2010

Alyson.Warhurst@maplecroft.com

Page 14


Corruption: Suggestions for business due diligence

1. Establish an anti-corruption policy and program

2. Conduct risk assessments

• External environment (country/sector)

• Internal environment (review of mechanisms/past performance)

• Business relationships (partners/suppliers/agents/officials/government bodies)

3. Promote Integrity Pacts in public contracting

4. Provide employees with guidance and training (code of conduct/RESIST II)

5. Establish confidential advice and whistle-blowing mechanisms

6. Participate in multi-stakeholder anti-corruption and transparency initiatives

© Maplecroft 2010

Alyson.Warhurst@maplecroft.com

Page 15


Q&A session – your experiences with those mechanisms

Risk assessment, particularly of business partners

Integrity pacts

Whistle-blowing mechanisms

© Maplecroft 2010

Alyson.Warhurst@maplecroft.com


Publish company good practice on the HRBDF

The UNGC and Maplecroft would like to invite UNGC Nordic Network

participants to introduce the HRBDF audience to:

Case studies

Good company practice

Pitfalls

Success stories

Resources

Further dilemmas businesses may face

You may use the Forum to pose questions as to how to deal with (perceived) dilemmas

© Maplecroft 2010

Alyson.Warhurst@maplecroft.com


Registration

Go to http://human-rights.unglobalcompact.org/ to explore the

different dilemma themes

Register at http://human-rights-forum.maplecroft.com/ to participate in

the discussion Forum

Provide email address

May remain anonymous to all users

© Maplecroft 2010

Alyson.Warhurst@maplecroft.com


Thank you!

Thank you for your time. Please don’t hesitate to contact

us with any questions, comments or suggestions you

may have:

Katharina Hermann

katharina.hermann@maplecroft.com

Alyson Warhurst

alyson.warhurst@maplecroft.com

© Maplecroft 2010

Alyson.Warhurst@maplecroft.com

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