Anti-corruption practices and strong commercial relationships

May 2021  |  SPECIAL REPORT: BUSINESS STRATEGY & OPERATIONS

Financier Worldwide Magazine

May 2021 Issue

Around the world, corruption is a serious obstacle to doing fair and reliable business. It happens not only in the public sector, but also in the private. Its social and economic impact is very significant to the extent that the adoption of compliance programmes is a common response around the world.

Those programmes, at least in theory, aim to reduce corruption and increase competitiveness and investment. The traditional, unsatisfactory approach of governments was to punish, and ignore prevention. Clearly, it is better to prevent than to punish, especially when public interest and business confidence are at stake.

It is important to consider aspects such as consumers of goods and services, regulatory frameworks, anti-corruption plans, and communication of the plan.

Firstly, when choosing goods and services, consumers look beyond price and product quality. In this sense, companies sell more than just their products. In fact, companies make significant efforts and investments to build their reputation, as consumers want to establish relationships with companies that respect the law, the environment, human rights and other factors. This explains why developing a robust compliance programme is a key task for any organisation.

Nonetheless, consumers cannot be overlooked when analysing the effectiveness of an anti-corruption programme. Moreover, their role as determining agents in the market gives them a leading role in the fight against corruption. At the end of the day, consumers ‘reward’ or ‘punish’ a company’s commitment and transparency by either purchasing or not purchasing their goods and services. Additionally, due to the prevalence of social media, a consumer’s opinion is not limited to their immediate social circle. Social media can be used to foster positive or negative perceptions of certain company’s practices or services. Thus, having a strong reputation with consumers is a key component of anti-corruption compliance.

Secondly, anti-corruption practices are not limited to complying with regulations and meeting international standards, but must also be creative enough to impact people’s attitudes and behaviours. From a sociological point of view, anti-corruption practices have a significant impact on the trust and credibility of a country and its institutions. The simpler and more concrete and effective anti-corruption plans are, the better companies will be perceived by consumers. Hence, a company must have a concrete, efficient and effective anti-corruption plan in place – a plan based on transparency and ethics, and which regulates specific risk areas.

Most anti-corruption regulation is enacted to tackle new corruption scenarios. However, regulation is not necessarily useful when faced with corruption. The best option for companies is to have their own specific anti-corruption strategies, with clear actions and measures. Moreover, third parties prefer to deal with a company that has appropriate anti-corruption practices in place.

Given that a poor reputation for dealing with corruption is undesirable, companies need to understand that potential reputational harm caused by the actions of others – collateral or residual risk – must also be mitigated with clear and effective third-party anti-corruption practices. A reliable, responsible and effective anti-corruption plan can shape a strong perception of business practices.

Thirdly, given the financial and reputational impact of corruption, an anti-corruption plan is a core part of a compliance programme and needs to be communicated to all stakeholders. This not only increases trust in a company but is also a sign of good faith in its partners.

In conclusion, compliance programmes and anti-corruption plans depend on a sound knowledge of an industry, not the expectations or demands of customers, but also of society, which expects companies to deal with corruption. It should also be noted that such plans cannot be fully implemented without a broader regulatory framework, which both considers ongoing or past cases, while also having the insight to anticipate such cases and prevent the illegal use of resources. Additionally, properly integrating and communicating anti-corruption plans and projects ensures their effectiveness and compliance. With the necessary partnerships and resources, it is possible for anti-corruption programmes to be implemented swiftly.

 

Carlos Fernando Guerrero Osorio is a partner and Jefferson Coronado Nieto is an associate at Guerrero C&L. Mr Osorio can be contacted by email: carlosfernando@guerrero-cl.com.

© Financier Worldwide

BY

Carlos Fernando Guerrero Osorio and Jefferson Coronado Nieto

Guerrero C&L

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