So the G20 leaders meeting in Brisbane is over, and despite the usual distractions in the media from the world of high politics, they managed to stick to their agenda of economic and financial reform for growth.
Aptly, given the record fines imposed on banks for illegal forex dealing last week, the G20 agenda included the issue of corruption, seen by the leaders in their communique, as “a key barrier to growth, discouraging foreign investment, increasing the cost and risk of doing business, distorting the allocation of government resources and reducing public confidence in government institutions.”
This year there were a number of concrete decisions which will be welcomed by companies investing in the G20 markets. Given the diversity of the countries’ economies, legal systems, and business traditions, getting consensus was no mean achievement. Certainly the companies of the B20, the business advocacy group which has been advising the G20 governments throughout the year will be pleased that many of their recommendations have been heeded.
What impact will these decisions have on business in the months and years to come?
Firstly fears that China would block the proposals on Beneficial Ownership did not materialize. The leaders committed to implementing the G20 High-Level Principles on Beneficial Ownership Transparency which is closely linked to previously approved G8 standards. There remain many questions about how this will work in practice, and how countries and companies will manage the data in a consistent and transparent way. Here companies from the different G20 countries could usefully exchange best practices on how to achieve this.
The G20 leaders committed to more harmonisation, more cooperation and more coordination on enforcement. Certainly the impact of this has already been tangible in recent months (not least in the case of the forex case). For companies, there will be more pressure to tighten up their compliance systems, but also there will be a better of chance of seeing a level playing-field, and more clarity when it comes to self-reporting. The fact that the pressure will equally be on corrupt officials who solicit bribes will also be welcomed by companies who might have been forgiven for thinking that the emphasis on the bribe-giver rather than the bribe-taker was rather one-sided.
The G20’s focus on high-risk areas will also be welcomed by business. The governments singled out extractives, fisheries and primary forestry, construction sectors for particular attention.
For companies in any of these industries, it is the areas of interaction between private and public sectors which are most likely to generate opportunities for corruption, for example public procurement and customs.
After all, companies around the world know these risks from the inside and should be contributing their experience and insights to the governments who are formulating anticorruption policies. The governments should be more actively involving business in the process of regulatory development and enforcement.
The idea that it’s not just about adequate laws and efficient enforcement came through clearly in the G20’s final documents. In the G20 Anticorruption Working Group’s 2015-2016 Action Plan which was endorsed by the leaders, there was a special section on the role of the private sector which they recognised as “an essential partner in helping us to achieve our anti-corruption goals.”
Most encouraging was the G20 governments’ commitment “to taking practical action in these sectors by…promoting collective action initiatives.” There at last seems to be consensus that what is needed is a new approach to combating corruption – one where government and business move from an adversarial relationship to working together. Areas highlighted by the G20 for further cooperation include anti-corruption education and training in the supply chain, and encouraging businesses to implement “robust compliance programs and self-reporting.”
For business, this is a welcome development, and one which promises to help these decisions, taken in the rarefied atmosphere of multilateral negotiations, become reality on the ground in each G20 country, and beyond. With G20 governments’ policies directed at incentivising companies to take a more active role in promoting responsible business practices, companies will move from being part of the problem, to being a critical part of the solution.
Brook Horowitz is a contributing editor of the FCPA Blog. He’s the CEO of IBLF Global, a not-for-profit promoting responsible business practices worldwide. He is also the Chairman of Expert Group of the B20 Anticorruption Working Group (B20 ACWG) in 2014. His comments are made in a private capacity and do not necessarily reflect the views of the B20.