When a company suspects a competitor is going to pay bribes, the temptation is to do the same thing. Bribe takers encourage a bribery bidding war. They want the biggest bribe to win the business, not the best price, product or service.
The way to stop the bribery arms race is for all of the competitors to refuse to pay the bribes. This collective action is the key to fighting local and global graft.
Acting collectively to resist corruption takes trust and leadership. Where will these ingredients come from? Here are a few sources.
Recently I was lucky enough to learn more about collective action at the International Center for Collective Action at the Basel Institute on Governance. Gemma Aiolfi, head of the ICCA and a facilitator of collective action projects, has said building up trust is often the hard part. But with a lot of patience it works when a neutral mediator guides the competitors toward their common interest.
The founder of the Basel Institute, Professor Mark Pieth, recently released a collection of essays that is the best guide to the achievements and challenges of the collective action movement. To understand this field, start with Collective Actions: Innovative Strategies to Prevent Corruption. Pieth has been at the center of all important collective action initiatives since the beginning.
In the 1990s, a founder of Transparency International, Peter Eigen, convinced major worldwide construction companies to agree to stop paying bribes. Eigen tells his story in this amazing TED video.
New media spreads information and helps build a compliance community. Eigen’s TED video inspired Richard L. Cassin, the founder and editor of the FCPA Blog. Cassin’s work and the passion of the FCPA Blog’s readers have motivated me.
The Siemens Integrity Initiative is an over $100 million fund set up to run for fifteen years to find, nurture and grow collective action initiatives. Run by Sabine Zindera, a former founding member of Siemens Venture Capital Fund, the Siemens Integrity Initiative is in the second round of creating and funding collective action projects. Implementing 30 projects in more than 20 countries, Siemens is “witnessing evidence of impact: the much needed change of rules, policy and behavior to enable clean business. Through impact evaluation, you are capturing the difference a project makes on the fairness of the market conditions, on the business environment and ultimately also in people’s lives.”
The B20 (a working group under the G20) is recommending collective action by business and government in new partnerships to incentivize and reward anti-corruption actions. Brook Horowitz, a leader of the B20 anti-corruption working group, runs the NGO IBLF Global, that works to “create the necessary consensus for action — collective action.”
A big test for collective action will be Walmart’s settlement of pending bribery investigations. Will the world’s largest retailer embrace collective action to protect its new commitment to bribe-free business?
Finally, education is a core element of collective action. The International Anti-Corruption Academy (IACA) in Vienna, Austria, brings all kinds of professionals together, including compliance officers, prosecutors, government regulators, the media and auditors.
The IACA’s founder and dean, Martin Kreutner, told the participants at the collective action conference in Basel that when the IACA brings all kinds of professionals around the table and lets them talk, good things will happen.
When Benjamin Franklin was about to add his signature to the Declaration of Independence of 1776, he said “We must all hang together, or assuredly, we shall all hang separately.”
Franklin was warning the quarrelling Americans that unless they united, they would be hanged by the British, one by one, for treason. We know what happened. They acted collectively and created a new republic that still stands.
There’s a lesson in this for the compliance and ethics profession. We can all hang together by acting collectively or we can lose, one by one, to the bribers and corrupters.
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This post is adapted from an essay I contributed to the IACA alumni newsletter.
Michael Scher is a senior editor of the FCPA Blog. He has over three decades of experience as a senior compliance officer and attorney for international transactions. He can be contacted here.