Governments are already contemplating life after lockdown and are keen to permit as many businesses as possible to resume operations and ramp up global trade once more – even as forecasts about global recession get bleaker by the day.
As economic activity resumes, what will be the effects of the pandemic on the health and well-being of corporate integrity standards and anti-corruption compliance? What support will companies need or want in the post-Covid economic reality? Here are five scenarios of corporate standards on ethics and integrity that compliance professionals may need to keep in mind.
First, the law will remain the law. If an organization engages in improper practices allegedly as a result of hardships caused by the pandemic, Covid-19 will not be a justification. So no company should neglect its anti-corruption efforts.
Second, we will see how integrity works as a competitive advantage. Companies that can adapt, encourage “speaking up” and are known to have ethical and sustainable approaches to business, including strong anti-corruption compliance principles, are probably better placed to weather the economic downturn – though some companies will still go under despite their standards. Companies with well-designed and mature compliance programs can take the lead in helping others to meet the same standards through anti-corruption Collective Action, contributing to leveling the playing field.
Third, a surge in state support and bailouts of some industries will lead to an increase in government influence in company ownership. The corruption risks of state owned enterprises are well documented, so robust due diligence and a critical eye on governance will be crucial in any new or even existing business partnerships.
Fourth, we will likely see increased vertical integration as CEOs seek to mitigate the risks of weak supply chains, with implications for integrity and anti-corruption compliance. Compliance officers dreaming of a comprehensive anti-corruption compliance management system in an integrated chain of companies will find that alas, streamlining of ownership won’t remove all the factors that determine bribery risks. The immense economic power of these vertical structures may even raise risks, making good governance, anti-corruption, and antitrust laws plus effectively implemented compliance standards even more essential.
Fifth – but not last and certainly not least – political considerations about what is a strategic industry might change in response to lessons learned from weaknesses in public health systems, supply chains, and procuring essential goods. Strategic industries often enjoy an unhealthy proximity to governments, including through the use of lobbyists. Due diligence and clear procedures will help mitigate risks related to transparency, bribery, and competition.
The Covid-19 pandemic has destroyed lives and livelihoods around the world and will continue to do so in the future. Yet companies can also take the post-Covid-19 world as an opportunity not just to start operating at full power once more but to reconsider how they do business and how their anti-corruption and compliance programs fit into this new world order. Establishing a strong, ethically based culture to develop business and enter new markets will be an investment worth making.
A longer version of this blog post can be found on the Basel Institute’s website here.