One of the things the World Economic Forum (WEF) is good at is the “big issue”. It identifies one specific topic, usually with implications across a number of disciplines, like business, politics and trade, and brings the full scrutiny of its members’ intellectual capabilities to bear on that issue.
For the past few years, the issue of corruption in business has been getting the WEF treatment, but at Davos this year the process was stepped up a gear with the launch of what they call Paci Vanguard. Once the WEF gives it an acronym, you know it’s serious.
The “partnering against corruption initiative” (Paci) has been in place since 2004, but its activities have been enhanced by the recruitment of 24 chief executives from global companies – the vanguard – to push forward the drive against corruption in business.
Some big corporations from the business world are represented in the vanguard, including Crescent Group via its chief executive, Badr Jafar.
More broadly, what was noticeable about the attendance list at the opening event in Davos last week was the big number of representatives from GCC countries, and the UAE in particular. Perhaps the biggest company was that of Mohamed Al Mady, chief executive of the Saudi conglomerate Sabic. The UAE was also very well represented by the leaders of the energy groups Taqa and Emirates Nuclear Energy Corporation, as well as Al Nowais Investments from Abu Dhabi; the Jumeirah hotels and leisure group from Dubai; and Sharjah’s Crescent Group and Dana Gas, among others.
It was heartening to see regional business leaders throwing their full weight behind the initiative, because there has been a suspicion in the past that the Middle East faces big challenges over the issue of corruption in business.
That was not necessarily the conclusion of most people at the event, however. Most thought that corruption in all its forms – bribery, counterfeit trading, intellectual property theft, money laundering – was most sharply on the rise in Asia, with Russia notably included as an Asian country in this instance. It is also a problem for Africa, Paci believes.
Even that broad picture is misleading, however, because as the Paci executives made clear, the business of corruption is subject to the laws of supply and demand, just like “normal” business. Many of the western executives taking part acknowledged that most of the supply side came from their countries, while the demand was more likely to be found in emerging markets.
Put bluntly, that means broadly that Americans and Europeans pay the bribes, and the rest of the world takes them.
But there have been some radical developments in this broad pattern. The American, British and European authorities have legislated and implemented some pretty rigorous sanctions to try to prevent bribery and corruption. The reason, according to one of the Paci participants, “is not that everyone has got religion: it’s because corruption has become recognised as a key operational risk”.
They reeled out the numbers to support the financial, rather than moral, argument against corruption: the value of cross-border illicit trade and criminal activities is estimated at up to 15 per cent of global GDP; corruption is a barrier to economic growth, individual prosperity and corporate profitability; it sabotages global supply chains, depletes natural resources and endangers market security.
Beyond that, corruption undermines social cohesion and weakens trust in governments. It is totally anti-social, Paci believes.
Some 100 global corporations have followed the “vanguard” 20 in signing up to Paci’s principles for countering corruption, which involves formal adherence to a code of conduct in global business dealings. In brief, they promise to put in place management systems and procedures that would make bribery and corruption impossible.
Special focus is being put on the aviation and travel sector, which, because of the size of orders, government involvement in the procurement business and extensive need for licensing, is regarded as vulnerable to corrupt practices.