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Using Corporate Collaboration to Improve Anticorruption Compliance
More than 1,400 representatives from over 130 countries are meeting in Brasilia this week to brainstorm and exchange ideas on how best to promote transparency and accountability. The goal for this 15th International Anti-Corruption Conference is to support and connect people who want to change the rules of the international business game. Most participants represent civil society in all its colorful forms. This includes authorities and experts from governments, the private sector, international organizations, academia, and civil society. The event, however, is unlikely to be well-attended by the business community, because civil society is often thought to be the opposing team.
Fortunately, this view is changing, and civil society and the private sector are working together more often to achieve greater transparency and develop new tools and standards. Commercial transparency requires access to information, whether that information reflects the reputation of business partners, the well-disguised connections of government officials, or the shell games played by some companies to obscure ownership. Transparencyor sunlight, as they sayis a great disinfectant.
One of the best but also most controversial ways to achieve greater transparency is to make information available through collective-action efforts. Companies have long been wary of collaboration on any front, even when an issuelike compliancelends itself to cooperation so neatly. Antitrust is one of the first issues invariably raised. But collective compliance action need not involve collusive price-fixing, price discrimination, or other anticompetitive practices. Collective action to increase transparency involves a pooling of resources for the purpose of inclusive, not exclusive, dissemination of information. Information analysis, risk assessment, and how to act upon information collectively obtained and disseminated remains an individual corporate decision.
Most companies work with third parties that also represent other companies. Companies invest a great deal in building these crucial networks, and they fear the loss of competitive, proprietary information. When approached rationally, however, collective action can help companies share a baseline of information without sacrificing their proprietary information. A well-designed system allows entities to distribute key information, building confidence and trust between business partners, while keeping strategic information safely within the four walls of the corporation.
The concerns expressed by the business community are legitimate, but the benefits of overcoming their reluctance are significant. These benefits include:
Collective action relies on the combined efforts of entities and individuals with similarbut not necessarily identicalinterests. Information is not an exhaustible resource. In the field of anticorruption compliance, collective action is one of the most promising tools for reducing costs and increasing efficiency. By sharing the cost of compiling and disseminating information and corruption flashpoints within a given government, companies can increase profitability while reducing risk. They can also formulate an informed response to bribe demands, present a unified front against such demands, and thus place themsleves in a position of strength vis-a-vis corrupt officials.
At this weeks IACC in Brazil, collective action will be one of the ideas on the table. It will be discussed by civil society organizations meeting to increase transparency and simplify compliance. The business community should take this opportunity to examine their concerns about this approach and consider this an opportunity to reduce the time, effort, and expense of antibribery compliance. Separate companies working together to quell corruption is really the only feasible way forward.
Alexandra Wrage is the president of TRACE, an antibribery compliance organization offering practical tools and services to multinational companies. TRACE offers several free collective action resources including BRIBEline, a site where companies can report bribe demands anonymously, the TRACE Compendium, a database of international enforcement actions, and TRAC, a publicly accessible compliance platform that shares baseline due diligence with companies at no cost. Ms. Wrage is also the author of a chapter in Collective Action: Innovative Strategies to Prevent Corruption, edited by Dr. Mark Pieth and available this month.