Tackling graft: How can compliance stop corruption in Asia?
In the UK, ‘graft’ has the colloquial interpretation of an honest, hard day’s work. But graft takes on a different meaning in the world of politics and business, where it typically refers to bribery and other unscrupulous practices that are commonly used to get ahead.
Graft has traditionally been a significant problem in Asia, although many countries across the region have made considerable efforts to reduce corruption and make themselves more attractive to foreign direct investment.
But how are they performing? And how can compliance drive better practices across Asia-Pacific (APAC)?
Is China leading the charge?
The Communist Party of China regularly embarks on anti-corruption campaigns, but these are often quietly shelved once a new leader and government settles in.
However, current general secretary Xi Jinping launched an extensive initiative to combat corruption in 2012 that still seems to be going strong. Last year, the government announced it had punished more than one million Chinese officials for corruption over a three-year period.
This may seem commendable on the surface, but sceptics have claimed the scheme is merely a cover for Mr Xi to purge his political opponents. Moreover, the Central Commission for Discipline Inspection – the body handling corruption investigation – has been forced to look into nearly one-fifth of its own members for graft.
The latest Global Corruption Barometer from Transparency International (TI) showed China also had the highest proportion of citizens who believed shady practices had increased over the last three years (73 per cent). More than one-quarter of people in the country said they had to pay a bribe, give a gift or offer favours to officials in return for access to public services.
The wider Asian landscape
In 2017, 63 per cent of APAC employees said corrupt practices were widespread in their country, according to a recent EY study. This was up from just 32 per cent four years earlier and 60 per cent in 2015.
More than one-third (35 per cent) of respondents said bribery was a common way to win contracts in their sector or industry this year. Some nations in the region are worse than others; TI data showed a staggering 70 per cent of people pay bribes to public officials in India, for example, while just 0.2 per cent of Japanese citizens do so in their country.
“Without proper law enforcement corruption thrives. Bribery is not a small crime, it takes food off the table, it prevents education, it impedes proper healthcare and ultimately it can kill,” said Jose Ugaz, chair of TI.
However, attitudes appear to be changing across Asia, and businesses and governments may need to place more importance on their compliance procedures to ensure anti-corruption measures work.
Increased focus on compliance
China is one of the nations where compliance appears to be climbing up the agenda, especially across businesses.
Zhong Xue, a compliance professional with the Shanghai Pudong Development Bank, said China remains committed to stamping out graft and a step-change in awareness is already underway.
“My personal understanding is that compliance is now no longer considered a costly add-on to business but a vital function in reducing risks,” he told China Daily.
“This is an important part of maintaining a company’s reputation and securing business, as well as retaining talent. For compliance professionals, this means more workload and more resources.”
The data appears to support this view; the EY report showed employees are becoming less accepting of corrupt and unethical practices within their organisations. Young staff are leading the way, with 87 per cent of respondents in this demographic claiming they would start looking for another job if their company was implicated in a bribery, fraud or corruption scandal.
An overwhelming 93 per cent of employees polled across APAC said a business’s compliance culture was a key factor when deciding whether to accept a job offer. Two in five people said they would sacrifice salary to work for an ethical employer.
Strengthening corruption prevention through compliance
Clearly, corruption still poses a number of challenges to organisations across the region, although there are measures that industry leaders can implement to improve compliance.
EY offered a number of tips to Asian firms looking to tackle bribery and corruption across their operations. Here are four key calls to action:
Revisit anti-bribery and anti-corruption (ABAC) policies: Existing ABAC approaches must be simplified and localised across business operations, with leadership buy-in and compliant behaviour modelled from the top down.
Use forensic data analytics (FDA): Many compliance departments are expected to monitor a growing number of transactions without the appropriate technology. FDA can help organisations gain better oversight and analysis of potentially unethical behaviour.
Improve whistleblowing measures: Businesses need to place more focus on benchmarking their whistleblowing services to ensure employees trust them and are aware of how they work. Fair, consistent and transparent follow-ups for those who disclose information are also essential.
Consider multi-jurisdictional issues: Compliance programmes must take into account the disparities between ABAC policies across multiple countries and jurisdictions. Businesses must ensure their policies remain strong even in nations that are still playing catch-up when it comes to corruption regulations.
Asian businesses will require stronger compliance departments to launch ABAC policies that optimise transparency and reduce unethical activity.
Sourcing candidates capable of driving change within organisations can be difficult, which is why many firms turn to specialist recruitment firms to bolster their corporate governance departments.
Please contact a consultant at Barclay Simpson to discuss your APAC recruitment needs.
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