This Toolkit is design to introduce BAM practitioners to resources, stories and tools that will help them fight corruption.
Corruption is defined as the misuse of power by someone to whom it has been entrusted, for their own private gain. The most common form of corruption is bribery, which is defined as the giving or receiving of money, a gift or other advantage as an inducement to do something that is dishonest, illegal or a breach of trust in the course of doing business.1
Corruption is one of the biggest issues that business people face globally today, and is a highly relevant topic for business as mission practitioners – Joseph Vijayam, Director of Olive Tech, a BAM company in India and the USA.
Bribery and corruption not only represent a significant risk for your company, but keep millions in poverty.
“[Corruption] constitutes a major obstacle to reducing poverty, inequality and infant mortality in emerging economies” according to Daniel Kaufmann, the World Bank Institute’s director for Governance.2 According to World Bank Institute (WBI) research, more than $1 trillion dollars (US$1,000 billion) is paid in bribes each year. This US$1 trillion figure is an estimate of actual bribes paid worldwide in both rich and developing countries and does not include embezzlement of public funds or theft of public assets. WBI research also shows that countries that tackle corruption and improve their rule of law can increase their national incomes by as much as four times in the long term, and child mortality can fall as much as 75 percent.2
Christian Aid predicted in 2008 that illegal, trade-related tax evasion alone will be responsible for some 5.6 million deaths of young children in the developing world between 2000 and 2015. That is almost 1,000 a day.3 However, corruption is not just happening in the developing world.
It is important to emphasize that this is not simply a developing country problem. Fighting corruption is a global challenge – Daniel Kaufmann
BAM companies will be motivated to take a stand against corruption for many different reasons, not least their commitment to ethical, Biblically-based business practice. Operating with integrity in business will have a wide-ranging impact, on employees, suppliers, clients and even government officials. Integrity in business practice will give BAM companies a voice of influence. In the past BAMers have found themselves giving input on the tax code for a central Government or helping to write an anti-corruption policy for a local government office! Fighting corruption is often part of an intentional plan for transformational impact, but can also be a daunting prospect.
Much of the world’s business is carried out by small and medium enterprises (SMEs), especially in emerging economies… [and that] SMEs in many societies are frequently confronted with the problem of bribery. As smaller companies with limited resources SMEs face challenges in resisting and countering such pressures. Also, there are growing requirements made by large international companies for their suppliers to show evidence they have appropriate anti-bribery policies and systems in place. Countering bribery is good business practice. It can help build reputation, especially with customers, and it can reduce risks. By building strong anti-bribery cultures SMEs can successfully challenge and resist bribery.1
There are many tools to help BAM practitioners overcome corruption and bribery and this Toolkit will show you some good places to start.
Guidelines for Cross-Cultural Business Ethics
This article is designed to help with decision making for business owners working cross-culturally in developing countries. It recognises that there are few absolute standards which apply to all contexts all the time and thus hopefully these guidelines will assist business owners in making tough decisions on matters related to ethics, corruption, morality, bribery and similar themes.
Some would like to believe that the Bible gives a single definitive perspective for all situations. While this is not true, the Bible does give us principles for decision making, thus in preparing for decisions it is important to understand Biblical absolutes in the light of:
- Biblical culture
- Our own culture of socialization
- Our host culture of doing business
Ethics may be defined as the moral philosophy of knowing the difference between what is right and wrong and acting accordingly. It includes a moral duty and obligation to do good, a statement which seems straightforward but which is complex in light of diverse cultures. Ethics has its root in the Greek word “ethos” which means character; therefore an ethical framework is a systematic set of concepts which provides guidelines for correct behaviour that demonstrates ideal individual and corporate character.
It is important that we treat these guidelines as just that – “guidelines” that are a means to guide our customization in the application of God’s principles to contextual situations in our modern world.
by Larry Sharp, 2013
Excerpt from BAM Think Tank Issue Report: BAM in Hostile Environments
Doing Business in Kazakhstan: Economic Implications of Worldview
Kazakhstan is one of the top ten fastest growing economies in the world. This multicultural developing nation is home to 140 various ethnicities and 17 religious groups. The capital city Astana is slated to host the Expo 2017. Kazakhstan’s ambitious 2050 plan is to become one of the top thirty most developed economies in the world. Yet in spite of these sincere efforts, corruption behind the scenes is still all too prevalent. A spokesman for the Dutch embassy, who wished to remain anonymous, stated that recently a Dutch company took Kazakhstan up on its attractive offer. However, shortly after completion of their new facility, Kazakhstan “inspectors” found a piece of machinery in violation to some obscure code. As a result the Dutch company had their investment subsidy rescinded and were fined 40% of their investment for a penalty. For Kazakhstan citizens, the atmosphere is no better. One businessman lamented that he typically is required to pay about five bribes per month to do business.
In spite of these examples, Kazakhstan is definitely improving. In 2014, Transparency International ranked Kazakhstan 126 out of 175 in corruption (175 being the most corrupt). In his 2012 state address introducing the 2050 strategy, President Nursultan Nazarbayev stated his commitment to combating corruption: “Corruption is not just an infringement, it undermines the belief in effectiveness of the State and represents a direct threat to the national security. We should strengthen our fight against the corruption, including improving the anti-corruption legislation in order to achieve our ultimate goal – to eradicate corruption within Kazakhstan.”
President Nazarbayev has routinely iterated that one of the greatest needs in Kazakhstan is the development of moral character in the lives of people, especially the young people. He is absolutely right. Many of the hindrances to economic development within Kazakhstan as well as other former Soviet states can be traced back to moral problems such as selfishness, greed and dishonesty. This lack of ethics has resulted in a “survival of the fittest” mentality which pervades society and shackles the nation from its true economic potential. Kazakhstan, like many former Soviet states, is plagued by a culture of corruption. In a 2012 address, Nazarbayev stated: “We are entering a period in the development of our state, when spiritual issues will be of no less important than the economic, material order.”
by Kevin White, 2015
Like many small business stories, the story of Turbocam India involves the spark of opportunity, mixed in with a great deal of perseverance and one or two major breakthroughs that have set the course of the company. But perhaps the most important ingredient of all has been a firmly held belief from its inception that Turbocam was to be a ‘Kingdom company’, existing as a business for the purpose of honouring God.
Turbocam International was founded by Indian Marian Noronha in New Hampshire, USA in 1985. Turbocam’s core business revolves around manufacturing specialised machine parts for turbines and turbochargers, using sophisticated software to machine very high-precision, delicately balanced parts. Right from its earliest days Marian envisioned the company would be used in the service of God. The ideas of creating jobs and generating wealth, supporting Christian service and manufacturing high quality turbo machinery products have all been integral to the mission of the company from the beginning.
Marian’s stance on corruption has always been firm and this has radically shaped the values and practices of the company. Marian was clear at the time of launching, ‘We can start Turbocam in India only if we never pay a bribe’. As a result of this stand, the company has on many occasions lost a great deal of time, and sometimes money and business too. The early years of the company were particularly frustrating as it took four years to acquire the necessary permits to import their first milling machine.
After nearly 25 years of never paying a bribe, Turbocam is becoming a catalyst for others in the fight against corruption. Many people have said it is impossible to do what they have done and yet they are still doing it. Just a few years ago they had to wait for 16 different permits to set up a new factory on land in Goa and despite the extra costs incurred they stood firm in their convictions to never pay a bribe. Now they are having a ripple effect as they share their story. Their company history has earned them a voice in the public square and they are beginning to use it.
Interview with Dwight Nordstrom: Tackling Corruption in China
Dwight, you have been in business for 25 years in China, and not just any business, you’ve been involved in manufacturing in big industries, like chemicals and telecommunications, regularly importing supplies and exporting products. How big has the issue of corruption been?
Well let me just start by saying: This is real! This is not hypothetical stuff, it’s a big issue for us. I would say I have to deal with about 25 cases a year of substantial corruption-related situations. To put that in perspective with other common issues faced by businesses, in last 20 years, across our operations of about 5000 people in Asia, I have had zero illegal drug issues, a couple of alcohol related issues, I have had two sexual harassment issues of a serious nature to deal with, but the major issue by a long way is corruption which I have had to deal with at least twice a month. Corruption is a big issue.
Can you give us an example where you’ve had to deal with someone trying to bribe you?
We’ve had situations where we’ve lost business over refusing to pay a bribe. We had a speciality chemical and the representative in a wholly-owned German company asked for a 5% kickback, with 1% going into a personal account. That was a million dollar plus account per year and I don’t even know now six years later if we’ve ever recovered the value of the account.
Another situation we faced was in 2012, when the Chinese government were trying to corner the market by controlling global prices for rare earth metals. They came up with a regulation that you had to have a license to export rare earth products extracted from China. We had a factory that was importing the rare earth from outside of China, so it should have had nothing to do with the regulation. But when it came to exporting it again, the customs people basically said, ‘We know this is nothing to do with the regulation, but we are going to apply it anyway, however, if you pay us a “facilitation fee” we’ll let it through.’ We had a shut down factory for 14 weeks and that cost us a lot of money.
In many contexts it’s not against the law to pay a bribe, so I know that others have come to different conclusions on what to do in these kinds of situations. They weren’t asking for an outrageous amount, but for us in that situation, we just knew that not paying was the right thing to do.
I know you have developed some tools and frameworks in PRI to help you deal with corruption, can you tell us about that?
If I get 25 corruption cases a year, each one has a little different flavor to it, so it’s difficult to generalize. However, there are some things that you can ask yourselves, a few diagnostic questions, that very quickly help you identify what is going on. We’ve developed these key questions, that we ask in a four-step process, in every case of corruption that comes up.
Anti-Corruption Best Practices – for dealing with incidents of bribery
Corruption Prevention Practices – 4 Step Process
This is a 4 step process that can be used when someone in a company believes they may have an issue dealing with bribery, corruption and/or a kickback.
If there is a “yes” answer for questions 1. or 4. and/or a “no” answer for questions 2. or 3. then the proposed action (business transaction) should not be done. It is recommended that this process is trained regularly among company staff.
1. LAW – Does the proposed action violate the law?
- What are the anti-corruption laws in the legal jurisdictions that your company is required to answer to? See for example the Federal Corrupt Practices Act for the USA.
- Does the proposed action break any known law that applies to your company?
- Consider requiring employees to gain approval from the company leader (and legal department) for any gift given over a small limit (e.g. $50), if that gift is necessary to gain business or get something done.
2. TRANSPARENCY – Is the proposed action transparent to all directly-related parties?
- Do all parties involved (including different management levels) know about the proposed action or is something being hidden from some of the members of the different parties?
- Have you told all relevant managers within your own company about the proposed action?
3. GOLDEN RULE – Does the proposed action reflect Jesus’ teaching on ‘the golden rule’ i.e. do unto others as you want them to do to you?
- To understand this more clearly, practice ‘reverse role-playing’: put yourself in the role of each party involved in the deal. If you are the potential “Seller” in the proposed action, reverse the roles and become the “Buyer”. If there are 3 or more parties involved (e.g. Seller, End User, Buyer’s agent, etc.), play the roles of each of the other parties involved.
- When you play the roles, put yourself in the place of the top manager of the other party and ask yourself if you like what the proposed action will do to your company.
- Do you have any negative feelings now concerning the proposed action?
4. GUT FEELING – Does anyone in your team have any uncomfortable feeling concerning the proposed action?
- Whenever you encounter a proposed action which you think might be considered a bribe and/or kick-back, bring this to another person (or team) in your company who is at your level of work responsibility or at a higher-level of management.
- The two or more of you should discuss this situation. If either you or they have any uncomfortable feeling about the situation after discussion, don’t do the proposed action. Document your discussions in writing giving the date and very brief description.
- Do not go to an alternative person for another perspective if the first person had a negative feeling about the action!
Anti-Corruption Best Practices – for setting up an anti-corruption framework in your company
A summary of anti-corruption recommendations for businesses from United Nations Global Compact
|Commitment and Policy||Implementation||Monitoring|
|Publicly stated commitment to work against corruption in all its forms, including bribery and extortion||Translation of the anti-corruption commitment into actions||Leadership review of monitoring and improvement results|
|Commitment to be in compliance with all relevant laws, including anti-corruption laws||Support by the organization’s leadership for anti-corruption||Dealing with incidents|
|Carrying out risk assessment of potential areas of corruption||Communication and training on the anti-corruption commitment for all employees||Use of independent external assurance of anti-corruption programmes|
|Detailed policies for high-risk areas of corruption||Internal checks and balances to ensure consistency with the anti-corruption commitment|
|Policy on anti-corruption regarding business partners||Human Resources procedures supporting the anti-corruption commitment or policy|
|Communications (whistleblowing) channels and follow-up mechanisms for reporting concerns or seeking advice|
Business Integrity Toolkit
Transparency International’s Business Integrity Toolkit is a user-friendly six step process for building an effective anti-corruption programme. Click to visit the interactive Toolkit online.
Corruption Cheat Sheet for BAM Businesses
A basic ‘starter kit’ of questions to consider when facing ethical decisions:
Click Cheat Sheet image to download or print.
Download this excellent resource for Christian business leaders on corruption and developing biblically-based ethical business practices.