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When the public gets to hear of a brown envelope having been handed
over, it is usually the recipient of the bribe who attracts the most
opprobrium, as the beneficiary from ill-gotten gains. But in the recent
and unconnected corruption allegations surrounding BAE Systems and
Siemens – two of Europe’s biggest companies – the spotlight has focused
not on bribe-takers, but on bribe-payers and their accessories.
In neither case are the executives involved accused of personal enrichment. Those running Siemens’ alleged €420million ($553m, £284m) slush fund for its telecoms division, or BAE Systems’ £40billion ($78bn) Saudi arms contract, sought only to benefit their companies. Of course, rational and ambitious managers will assist in corruption if they think it will help them to advance in the organization, and there will always be individual rogues. But such behaviour has to be accepted company practice in order to persist and reach major dimensions. In other words, it has to be part of the corporate culture. To that extent, corporate social responsibility – coming from the very top and enforced throughout the company – plays a vital role in determining how people behave.
But these cases transcend corporate culture. Germany has form in company corruption – Volkswagen and DaimlerChrysler are also under scrutiny – and before the OECD’s anti-bribery convention was incorporated into national law, businesses were even allowed to take tax deductions for bribes paid to foreign officials.
The UK government, on the other hand, has prided itself on being in the vanguard of promoting responsible business practice. The Extractive Industries Transparency Initiative it helped to establish has indeed shed light on corruption in the oil, gas and mining sectors, particularly in developing countries. Now, by halting the Serious Fraud Office probe into allegations of bribery in connection with Saudi Arabian arms contracts, on the ground that the wider public interest outweighed ‘the need to maintain the rule of law’, the government has abandoned all pretence of moral probity, because commercial corruption can never be in the public interest. Thoughtful investors, such as F&C Asset Management, Hermes and Morley Fund Management, have pointed out the damage done to the UK’s business reputation.
To re-establish a level playing field – for what goes for BAE Systems must surely go for all UK companies – the government would need to declare bribery legal. In view of its proposals to neuter, for all practical purposes, the 2005 Freedom of Information Act in order to save on the cost of answering inquiries, the idea is not too far-fetched. In effect, it has already done so. These are alarming developments that call for protest from everybody concerned for the integrity of the market.
In neither case are the executives involved accused of personal enrichment. Those running Siemens’ alleged €420million ($553m, £284m) slush fund for its telecoms division, or BAE Systems’ £40billion ($78bn) Saudi arms contract, sought only to benefit their companies. Of course, rational and ambitious managers will assist in corruption if they think it will help them to advance in the organization, and there will always be individual rogues. But such behaviour has to be accepted company practice in order to persist and reach major dimensions. In other words, it has to be part of the corporate culture. To that extent, corporate social responsibility – coming from the very top and enforced throughout the company – plays a vital role in determining how people behave.
But these cases transcend corporate culture. Germany has form in company corruption – Volkswagen and DaimlerChrysler are also under scrutiny – and before the OECD’s anti-bribery convention was incorporated into national law, businesses were even allowed to take tax deductions for bribes paid to foreign officials.
The UK government, on the other hand, has prided itself on being in the vanguard of promoting responsible business practice. The Extractive Industries Transparency Initiative it helped to establish has indeed shed light on corruption in the oil, gas and mining sectors, particularly in developing countries. Now, by halting the Serious Fraud Office probe into allegations of bribery in connection with Saudi Arabian arms contracts, on the ground that the wider public interest outweighed ‘the need to maintain the rule of law’, the government has abandoned all pretence of moral probity, because commercial corruption can never be in the public interest. Thoughtful investors, such as F&C Asset Management, Hermes and Morley Fund Management, have pointed out the damage done to the UK’s business reputation.
To re-establish a level playing field – for what goes for BAE Systems must surely go for all UK companies – the government would need to declare bribery legal. In view of its proposals to neuter, for all practical purposes, the 2005 Freedom of Information Act in order to save on the cost of answering inquiries, the idea is not too far-fetched. In effect, it has already done so. These are alarming developments that call for protest from everybody concerned for the integrity of the market.
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