The UK Bribery Act 2011 that has come into operation on July 1, 2011 after a difficult birth has introduced several provisions that provide meaningful insights for tackling corruption from the supply side. For the first time the corporations will face prosecution if they fail to prevent its staff or agents based anywhere in the world from offering bribery. Giving bribery is thus a corporate offence according to this new piece of legislation. Even the commonplace payments (called speed money in our country) made by companies or their agents to foreign officials as lubricant to speed up business decisions is a cognisable offence and persons involved are liable to prosecution. According to Section 7 of the act all those persons who could be connected to an organisation and are capable of committing bribery on behalf of the organisation, can be held accountable under the law.
The UK Bribery Act has certain important lessons to offer. First of all, we need to examine all the legislation relating to corruption with a view that overlapping and outmoded laws that have become dysfunctional and promote corruption are weeded out/scraped. There should be only one comprehensive anti-bribery law as the UK has done by promulgating the Bribery Act. It will go a long way in sharpening our focus on the corruption issue. Second, corporate organisations should be required by law to put in place a comprehensive and consistent anti-bribery policy. Third, anti-bribery legislation should also cover the private sector, middlemen and agents who are instrumental in perpetuating corruption.
Corruption is generally perceived to be associated with the public sector only as we mainly focus on the recipients and not the givers of bribes. Whenever our discussion turns to corruption, a flurry of images of public sector functionaries conjures up in our minds. On the other hand, the caricature of a bribe-giver, even if he is a big business tycoon, that enters into our imagination is that of an innocent guy who indulges in the act of bribery perforce to get his job done. Such a perception is not always well founded as some businesses/firms may use corruption or bribery as a business strategy. Basically, tolerance for the supply side of corruption emanates from the fact that almost all the discourse on corruption including anti-corruption strategies and legislation relating thereto, has primarily focused on the demand side of the corruption phenomenon.
Supply side of the corruption equation is not given due importance in our narrative on corruption. Corruption is an economic phenomenon and needs to be confronted as such. A well-integrated anti-corruption strategy should incorporate tools and measures that are essential to contain corruption from demand (i.e. public sector) as well as supply side (i.e. private sector) as both the recipient and the giver of bribe are beneficiary in the dirty deal that eventually defrauds the public.
A majority of countries, including Pakistan, have placed their reliance on demand side approach of tackling corruption. The demand side anti-corruption measures that have generally been adopted as anti-corruption strategies include establishing anti-corruption agencies, reduction of discretionary powers of the public sector officials, audit of public expenditures, simplification of laws and procedures and even outright privatisation of public sector service delivery departments. However, we should be bold enough to admit that we have failed to successfully implement even the demand side measures of containing corruption as procedures and laws are still cumbersome, anti-corruption watchdogs lack credibility, discretionary powers are enormous, and accountability mechanisms are weak.
But the point is that magnitude of the problem is such that private sector should not be left out of any anti-corruption strategy. Rather, private sector needs to be fully engaged in the drive against corruption as tolerance towards the corruption of the private sector amounts to tacit approval to the act of bribery on our part as a nation.
Corruption has damaging impact on the overall business environment in the country. For example, bribing public officials for winning contracts, lobbying for tax exemption or favourable tax treatment for a particular sector of the economy, or bribing for bending the rules/procedures, create distortions in the economy and reduce its overall efficiency. If a competitor pays bribes, other businesses operating in the same sector may find it difficult to continue doing their business honestly. Corruption/bribery may be used as a business strategy by the shoddy businesses to the detriment of clean businesses. Corrupt businesses are always bent upon perpetuating corruption to get a competitive advantage over their competitors as they can earn enormous fortunes by investing in bribery.
Reducing corruption is more relevant in our case. The burden of corruption is always skewed as it heavily falls on the small and medium enterprises and therefore effective tackling of corruption is highly significant to let the small businesses grow. Further, majority of the firms and businesses want clean dealings and it is only the unscrupulous or shoddy businesses that thrive on corruption. A comprehensive anti-corruption strategy must take care of the supply side of corruption as well.
In addition to criminalising the offence of bribery by the corporations and businesses, improving corporate governance through better standards of accountability and transparency, encouraging the engagement of civil society, encouraging a coalition of honest businesses against corruption, facilitating adoption of voluntary standards/practices of clean business by the firms, and above all revisiting anti-corruption legislation and strategies to include supply side measures to tackling corruption, may be some of the important ingredients of a supply side anti-corruption strategy.
The writer is a graduate from the Columbia University, USA, in Economic Policy Management and studied economic governance in the UK. He can be reached at [email protected]