By Shanker Man Singh
The role of the private sector in controlling corruption is increasingly emphasized nowadays. For example, in 2004, the then UN Secretary-General Kofi Annan had focused on one more principle outlining the private sector’s role in combating corruption in his Global Compact principles proposed at World Economic Forum, Davos in 1999. The tenth principle speaks that the private sector is “to work against all forms of corruption including bribery and extortions”.
In 2003, Transparency International working along with Social Accountability International (SAI) had developed Business Principles for Countering Bribery and this principle has been endorsed by the International Chamber of Commerce (ICC). The principles have three major aims, namely, (1) eliminate bribery (2) demonstrate the commitment of the private sector business to counter bribery, and (3) make a positive contribution to improve business standards of integrity, transparency, and accountability wherever they operate. Having developed the Bribe Payers Index (BPI) in 1999 that seeks to measure the bribe paying potentiality of major exporting countries, Transparency International is now developing an index called CACTI (Corporate Anti-Corruption and Transparency Index) that purports to measure anti-corruption efforts of the major companies listed in the stock exchange.
In the recent past, in Nepal, the business community had developed a code of conduct to combat corruption and corporate good governance practices such as accounting and auditing standards. However, it is believed that the role of the private sector in combating corruption should move beyond the publication of the code of conduct to its effective implementation. There is a need for an agency either inside or outside to monitor and evaluate the adherence to this code of conduct.
Besides the issues related to bribery in the business sector and code of conduct, there are many other issues related to private sector corruption in Nepal. Some examples are money laundering, insider trading practices, conflict of interests, corporate debarment, rights of shareholders, and corporate good governance.
Nepal is also a signatory to the UN Convention against Corruption (UNCAC). Article 12 of UNCAC spells out the roles and responsibilities of the private sector to prevent corruption in the private sector. A sub-section of Article 12 spells that “each state party shall take measures following the fundamental principles of its domestic law to prevent corruption involving the private sector, enhance accounting and auditing standards in the private sector and where appropriate provide effective, proportionate and dissuasive civil administrative or criminal penalties for failure to comply such measures.” Lots of effort needs to be done to prevent corruption involving the private sector in Nepal.
CIAA itself has long demanded that it be allowed to look into corruption in the private sector and non-governmental organizations, citing the UNCAC to which Nepal is a party. The legally binding convention was endorsed in 2011 and all necessary laws should have been drafted within five years.
As many existing regulatory bodies do not have the authority to investigate corruption in the private sector, the CIAA’s jurisdiction must be expanded in line with the UN convention, experts opine.
Corruption impedes the development of markets, drives away investment, increases the cost of doing business, and stalls democracy-building efforts. The private sector, being the supply side of the corrupt transaction, is often left out in an anti-corruption drive. Bribe payers are often projected as innocent people or victims of a corrupt deal while public servants are portrayed as the major source or villains of corruption. In reality, this may not always hold. The private sector is equally responsible for corrupt transactions. If this is the general conception about the corruption problem, anti-corruption agencies, on the other hand, also ignore private sector corruption; giving logic that the private sector is beyond their jurisdiction. The corruption problem can be mitigated through actions on the supply side.
Private sector anti-corruption activities are directly linked to the promotion of human rights and good governance. It is linked to human rights, particularly, in promoting economic rights in terms of free, fair, and competitive private sector business activities. Corruption goes against the principle of economic freedom and welfare. It is against a competitive free market system. Through the use of bribes, businessmen enter into shady deals and honest and efficient entrepreneurs are driven out of the market. Because of corruption, consumers are either supplied with low-quality goods, higher prices, or both. Corruption sustains the inefficient market system, distorts market prices, and investment. Corruption curtails people’s economic rights and narrows down economic choices.
NGOs and civil society organizations alone cannot reduce corruption – business participation is the key to success. Unless there is collective action on the part of the private sector business community, individually, no businessman will risk fighting against corruption.
The corruption situation in the private sector is akin to prisoners’ dilemma calling for collective actions on the part of the actors involved. Corruption is still a taboo amongst the business community in Nepal. This has to be broken with joint and collective efforts on the part of the business community themselves. This can be done by educating the business community on the negative consequences of corruption on business activities. The time has come to move beyond the drafting of a code of conduct to their effective implementation, monitoring, and evaluation. Having an ethical and socially responsible business is the only survival mantra in the age of global competition.
The National Vigilance Center has advised the government to bring corruption of the private sector under the purview of the law. It may be noted that the private sector corruption is also the concern of the Commission for the Investigation of Abuse of Authority (CIAA) which in its reports recommended the government to look into the matter.
To sum up, the representative private sector organisations should and must be vigilant over the activities of their member’s as this is a membership-based organization (MBO) and the lobbying should not be confined to the government for their benefit rather they must work for the benefit of the people as well. They must have the guts to take action against the office bearers and the members if they are found guilty, no matter how much they have contributed to the organisation.
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