ETHICS : Tackling bribery and corruption

With recent government-backed moves to encourage Kiwi manufacturers to pitch for US defence equipment contracts and consider free trade deal with Russia, New Zealand companies should be re-thinking attitudes toward their anti-bribery and corruption policies.
New Zealand boards and executives, particularly those listed in the NZX50, may be taking comfort in the fact that New Zealand is seen as the least corrupt nation in the world by Transparency International’s (TI) annual Corruption Perceptions Index. The complacency this ranking evokes was revealed recently when report conducted by the local arm of TI met with collective corporate shrug, stony silence from the Government and indifference from our stock exchange regulators.
The study, review of the approach to bribery and corruption by New Zealand businesses, was carried out by the Canberra-based Australian Corporate Analysis, Enhanced Responsibility (CAER) research group. Its findings suggest we may not be as good as we are perceived.
The study, done earlier this year, shows that only 44 percent of companies on the NZX50 have policies prohibiting bribery and only 18 percent have policies on regulating “facilitation” payments. This does not, says the report, “compare favourably with the percentage of companies prohibiting bribery in comparable markets overseas”. For example, of the top 100 companies by market capitalisation in the United Kingdom, 72 percent have explicitly prohibited giving and receiving bribes. In Europe the figure is 57 percent and in the US it is 69 percent.
And it seems few Kiwi companies boost their policy with an adequate system to encourage compliance with anti-corruption policies which, quite frankly, may be putting many New Zealand executives working in off-shore markets at serious personal risk – witness the Chinese treatment of Rio Tinto executives.
Out of the NZX50, only 16 percent of companies have code of ethics system that CAER rated as “advanced”. Only five percent had code of ethics that prohibited facilitation payments. The report suggests the NZX should try to increase the number of companies that address the issue directly. But no one from NZX has shown any interest so far in lifting their game by asking companies to smarten up their act. Companies are more likely to include ethics elements suggested by the NZX than policies that are not NZX-endorsed.
Corporates seem to think either that we are not corrupt or that we must go along with underhand practices in markets to secure business. But working with known corrupt countries and companies – such as Russia, which is considered one of the most corrupt markets in the world – may not wash much longer. Many countries are now cranking up their anti-corruption regulations and laws.
Besides, New Zealand enterprise should be voluntarily embracing best anti-corruption and bribery practices as an overall market differentiator, along with sustainable management practices, according to TI members in New Zealand.
The bottom line of the CAER research appears to be that many of New Zealand’s largest listed businesses don’t pass some fundamental best-practice ethics tests.
Transparency International’s message is: “Laggards need to take action and get the ethical dimensions of their businesses sorted out if they are to justify the confidence of their stakeholders, including shareholders and the public.
“As the global financial crisis highlighted, there is lot of risk – including shareholder wealth, employees’ jobs and New Zealand’s reputation. We need more ethical leadership from New Zealand business in relation to these issues.”