On October 26 in New York City, the FCPA Blog held its inaugural conference. Exceptional speakers and participants discussed current and emerging challenges in the implementation and enforcement of the FCPA. A curious thread of discussion flowed throughout the day, though it was not the focus of a particular session: the impact corruption has on emerging economies, and its impact on human rights in particular.
FCPA Blog Editor Dick Cassin noted that when the FCPA came into effect in 1977, corruption’s impact wasn’t a key focus. Rather, regulators’ main concern was on protecting the image of U.S. companies abroad in the face of exposure to scandal. Cassin does believe this mentality is changing.
With the huge increase in attention to corruption’s impact from civil society and the public, companies have become more focused on the human rights, security, and environmental impacts of corruption. This has been enhanced by the 2011 UN Guiding Principles, which lays out in detail the corporate responsibility to respect human rights, as well as its expected obligations to “know and show” this respect.
However, there remains a notable gap between acknowledging that corruption has a negative impact on human rights and integrating that knowledge into corporate practices. Anti-corruption compliance is still heavily focused on risk to the company. Perhaps the question, “will this action have a consequential impact on people’s lives,” may come up as a way to frame the importance of corruption, but it is certainly not front and center.
Human rights approaches, by contrast, measure the impact of a company’s operations on employees, communities, and other “rights holders.” The fundamentally different focus and mindset in these two fields means that they continue to talk past each other and miss opportunities for a more strategic, integrated, and socially responsible approach.
The truth is that both corruption and human rights have much to learn from each other, and consideration of both elements can be illuminating.
There is a challenge in stressing the dangers of corruption: You can avoid seeing it immediately. If a company gets caught with slave labor or dumping chemicals into local drinking water, this causes immediate outrage. Such events create viral images that spread across the globe. With corruption, it is not always clear-cut that bribery allowed for shoddy construction of schools in China that couldn’t withstand earthquakes and collapsed, killing people. While many people acknowledge that many emerging markets face challenges of corruption, they turn a blind eye to the fact that paying a bribe may enable a regime to perpetuate a kleptocratic and repressive system.
Human rights approaches have limitations, too. Focusing on the impacts of rights holders can be a good way to direct attention toward the most egregious violations, but it can focus on proximate causes rather than underlying drivers. If a country’s citizens lack access to education, healthcare, and freedom of expression, this clearly violates their human rights. But considering these violations piecemeal may mean that practitioners don’t make the connection to the abuses of power that enable them. A corruption lens brings an understanding of these abuses.
The disconnect between corruption and human rights isn’t just in the business community. Civil society is still struggling to align the two issues in a meaningful sense, and there remains a debate over whether corruption should itself be considered a human rights violation.
Companies can undertake a number of steps to address the corruption-human rights link, and there is an upcoming UN Global Compact paper discussing current practice. For example, companies conduct corruption-risk assessments as part of anti-corruption programs. The assessments could be extended to the human rights impact, with the overall process taking the perspective of effects on stakeholders and communities. The impact perspective should be extended across additional areas of a company’s anti-corruption program, including training, as it makes the problem much more vivid and engaging.
Finally, there is a need for far greater systems analysis of business and political networks at the state level in order to enhance understanding of links between corruption, terrorism, and environmental and social abuses.
James Cohen as an expert on anti-corruption, international development, and security sector reform. He is based in Washington DC, and can be followed on Twitter at @JamesCohen82.
Alison Taylor is director of advisory services at BSR, a non-profit consultancy and company network focused on sustainability and CSR.
At a recent ASIL conference in Seattle, it was suggested that corruption investigations by SEC, DOJ and others should focus on those corruption events that mot seriously affect human rights. That should be the priority.
I agree that there is a human rights aspect to corruption even in the event that corruption does not lead to purchasing an inferior product. But, I think one has to be careful with placing human rights front and center when dealing with corruption. This would "allow" companies to justify corruption by saying that they were corrupt but there was no violation of human rights because there product was the best and the only reason they had to be corrupt was to "block" other corrupt lesser products from entering the market. In these situation the human rights aspect exists (the money wasted that could have gone to a better cause, uses of the corrupt payment by the public official), but these are very far away and could act as an excuse for a company to justify corruption rather then the intended use that you stated in your well written article.
Corruption at the global scale seems to have reached unprecedented levels, making it the worst cancer in today's society. Anything that addresses corruption from any perspective must not only be welcomed but embraced.
Well done FCPA!
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