Chapter 7. Additional measures and initiatives

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This section briefly surveys additional measures that States may use to reduce corruption involving the private sector as an adjunct to enforcement sanctions and good practice incentives. A number of these additional measures respond to resource and other practical challenges that can undermine a more traditional law enforcement approach.

Civil service and regulatory reforms that reduce the opportunities for corruption are another potential area for cooperation between States and the private sector. Like integrity pacts and code-based initiatives, this alternative form of engagement can be especially valuable where there are obstacles to more traditional State enforcement.

Businesses can lead, promote and support the enactment and enforcement of robust national and international legal frameworks that seek to eliminate corrupt practices and stress the advantages for corruption-free business environments that attract foreign direct investment. They can also lend expertise and resources to build the capacity of local governments to develop, implement and enforce laws and regulations to combat corruption in all its forms.¹⁰⁴

Civil service and regulatory reforms serve the broader purpose of making government more transparent, efficient and accountable, but can also significantly advance private sector objectives through sanctions and incentives.¹⁰⁵ Civil servants who understand the importance of integrity, operate in a clear and transparent environment and are properly compensated are less likely to demand or accept bribes from private actors. Companies can conduct their operations with more certainty and confidence that they will be treated reasonably and fairly. Measures that encourage the reporting of illicit conduct, that regulate the “revolving door” between employment in government service and business, and that address potential conflicts of interest from gifts and political contributions can be especially helpful in raising business integrity standards.

Box 7.1. Mongolia preventing conflicts of interest in the public sector

Box 7.2. Malaysian Anti-Corruption Commission

Civil service and procurement reforms are primarily a State responsibility, but local business communities can make a valuable contribution to these efforts. Private enterprises are on the corruption frontlines, whether as a source or victim of corruption. Thus, they can often help to identify priority risks and effective response options. Private sector practices for identifying and mitigating corruption risks, training employees and monitoring for compliance can also benefit parallel initiatives in State agencies to combat corruption.

Box 7.3. Argentina: Maritime Anti-Corruption Network (MACN)

Laws and regulations that are poorly designed, duplicative, or unnecessary make it harder for companies to do business. They also create opportunities for corruption, whether by businesses willing to pay to expedite or circumvent a burdensome regulation or by public officials who condition action on ‘facilitating’ payments or other improper arrangements.

Government procurement is particularly susceptible to corruption due to its magnitude. According to an advocacy group, one in every three dollars in government spending is, on average, spent through a contract with a private company. This collectively makes public contracting the world’s largest marketplace, covering $ 13 trillion of spending every year.¹⁰⁶ Public corruption can be a risk wherever there is required State action, discretionary authority and a tendency towards opacity and lack of accountability. Examples commonly cited by the private sector include business licenses and construction permits, securing basic public services, customs processing, and the administration of environmental, health and safety regulations.

Whether a particular form of regulation is overly burdensome or only unwelcome by regulated parties will not always be clear, but engagement with the private sector to identify consensus areas for reform can be beneficial to both sectors. This form of civic action has a long history in many States, through open and transparent participation by business associations and individual companies in public policy debates over the proper role and content of business regulation. A number of the private sector collective action initiatives described in the preceding section have also focused on this involvement.

Activities that raise public awareness about the harms of corruption can also be an effective tool for strengthening business integrity and reducing corruption involving the private sector. Education can be targeted at various audiences.

7.2.1. Educating professionals

Educational approaches have more recently involved educating professional bodies who are often on the front lines of either facilitating corruption as ‘enablers’ or guarding against corruption as ‘gatekeepers’, such as lawyers, accountants, auditors, real estate agents, insurance agents and art dealers. Rather than stigmatizing gatekeepers, governments and the private sector could work together to ensure that professional industries do not function as intermediaries in hiding and laundering stolen assets in safe havens.

Some regulators and industry associations have invested in educating professionals about integrity standards and aligning them with the goals of the State to counter corruption.

Box 7.4. Kazakhstan Bar Association (Kazbar) And Legal Policy Research Centre (Lprc)

Box 7.5. International Bar Association and International Federation of Accountants AntiCorruption Mandate

7.2.2. Educating children and youth

Raising awareness of the harmful impacts of corruption can be widened to include the general population. UNODC’s Global Resource for Anti-Corruption Education and Youth Empowerment (GRACE) initiative¹⁰⁷, for example, seeks to create a culture of rejection of corruption among children and youth by “harnessing the transformational power of education and partnerships.”

A range of options for raising awareness is available, from small educational workshops to general public awareness campaigns and reform initiatives that target specific actions such as petty corruption among traffic police or customs inspectors. A common approach is to educate young people, whether through university level programmes or other awareness-raising campaigns. The private sector can be also a key partner in anti-corruption education by sharing with young graduates real case studies on ethical issues in companies and preparing them to become a driving force for ethical business.

Box 7.6. Côte D’ivoire: Réseau Ivoirien Des Jeunes Leaders Pour L’intégrité (RIJLI)

Box 7.7. Kuwait: Anti-Corruption Courses

Efforts to enhance inclusion and diversity through, for example, increased gender equality in the workplace, have been found to improve business integrity in various ways, including fewer instances of misconduct and stronger governance structures.¹⁰⁸ The reverse is true as well – greater integrity, transparency and accountability in the private sector frequently boosts inclusion, diversity and gender equality in the workplace. There are various ways that the mutually reinforcing relationship between gender equality and business integrity can be strategically integrated into corruption-fighting State incentives and sanctions directed at the private sector.

For example, various States have implemented gender quotas to improve diversity within corporate boards of publicly listed companies, thereby ensuring that the tone at the top reflects, and benefits from, a variety of perspectives.¹⁰⁹ Some States have also begun to use gender-responsive procurement practices to promote diversity and fair competition among public contractors, such as using gender equality criteria as a tiebreaker when evaluating equal bids.¹¹⁰ In other States, procurement laws include gender equality clauses, for example, prohibiting anyone with a conviction for discrimination or harassment from participating in public contracts, or requiring large companies to adopt gender equality plans or implement pay parity.¹¹¹ Such measures not only strengthen the integrity of procurement processes, but also leverage State spending power to promote the economic empowerment of women and men alike. Other relevant good practices include adopting gender-related certification processes, quotas, selection criteria and reporting requirements.

Under the umbrella of the Women’s Empowerment Principles (WEPs), UN Global Compact and UN Women have published guidance notes on Building Inclusive Boards to Achieve Gender Equality and Gender-Responsive Procurement.¹¹²

Another tool that States have been employing is requiring due diligence throughout a company’s supply chain to assess compliance with anti-corruption obligations.¹¹³ This can involve specific reporting on environmental, social, and governance (ESG) requirements; adherence to laws that enforce labour standards; conducting risk assessments throughout the supply chain; evaluations of suppliers including small- and medium-sized enterprise (SME) suppliers and third-party intermediaries based on anti- corruption criteria; imposing contractual obligations that explicitly require suppliers to comply with anti- corruption laws and regulations; ongoing monitoring of supplier’s compliance with these obligations by establishing reporting mechanisms to report suspected cases of non-compliance along with remediation and putting enforcement plans in place in case of discovery of corrupt activity.

To adhere to these various obligations, organizations are faced with implementing robust due diligence measures that promote transparency and integrity throughout their supply chains. By creating these requirements, States may force companies to proactively address corruption risks. Companies themselves have an opportunity to “push down” integrity standards in ways that can surpass State action in impact. Supply-chain training, technical assistance and preferential selection processes are just some examples of this. For smaller and medium-sized businesses, they can also influence integrity through their integration in the supply chain. As suppliers of larger companies, they can gain a business advantage by implementing good practices and provide assurances to multinationals about their integrity protocols. This also forces competitor SMEs to instill good practices to remain competitive.

Preferences that reward supplier integrity give a practical market value to these good practices.

As an important step forward to strengthen supply chain transparency, the Corporate Sustainability Due Diligence Directive (CSDDD) of the European Parliament and of the Council requires European and non-European companies to conduct environmental and human rights due diligence across their operations, subsidiaries, and value chain. In particular, the CSDDD recognizes that human rights and environmental impacts can be intertwined with or underpinned by factors such as corruption and bribery. Therefore, companies should take into account these factors when carrying out human rights and environmental due diligence, consistently with UNCAC.¹¹⁴

Box 7.8. German Supply Chain Due Diligence Act

Box 7.9. The United Kingdom Modern Slavery Act

Governments can reduce corruption by integrating transparency and accountability into digitalization processes. For example, the use of electronic procurement (e-procurement) systems can increase transparency, facilitate access to public tenders, reduce direct interaction between procurement officials and companies, increase outreach and competition, and allow for easier detection of corruption within the procurement cycle. Leveraging similar technology as a condition of contracting or transacting in other high- volume transaction areas such as ports or customs can help reduce the opportunities for corruption to take root and encourage business integrity.

Box 7.10. Ukraine: Prozorro

Whistle-blowers play a crucial role in business integrity. They allow companies and entities to detect wrongdoing early. By reporting information that reveals a criminal offence was possibly committed, whistle- blowers enable business entities to take the necessary action to prevent and stop these wrongdoings, punish those responsible and cooperate with the competent authorities. Reports also help companies improve their risk assessment and associated mitigation plan. However, whistle-blowers are often afraid to report for fear of dismissal or other professional retaliation. To remedy this, it is essential for companies and States to put in place mechanisms to recognize, promote and protect whistle-blowers so that they feel supported and appreciated, and know that they have done the right thing.

Whistle-blower rewards should be packaged with protections for reporting persons. Financial incentives may not be sufficient for whistle-blowers to gain comfort in exposing corruption. Assisting the authorities may come at great personal risk, and therefore States should implement robust whistle-blower protections to guard against reprisals. Recognizing the challenges faced by reporting persons, the 2021 OECD Anti- Bribery Recommendation requires countries to establish “strong and effective legal and institutional frameworks to protect and/or to provide remedy against any retaliatory action” for qualified whistle-blowers. This includes shifting the burden of proof so that the whistle-blower does not have to establish that the allegedly adverse action was not in retaliation for the report.¹¹⁶

Companies play an important role in providing a safe environment to report corruption abuses. Internal systems are essential to well-functioning whistle-blower protections.

Box 7.11. South Africa: Safeline by The Ethics Institute

While preventive incentives are primarily aimed at encouraging corporate investments in good practice in anti-corruption programmes, some incentives are being used to encourage reporting of potential violations by individuals.

While this is not the only way to provide recognition to whistle-blowers, it worth noting that incentives have been used for many years in the United States to encourage and compensate reporting on procurement fraud and other violations in government contracting, resulting in the government recovering over $ 72 billion between 1987-2022.¹¹⁷ This has been extended to securities law violations by public companies, including the failure to properly record and report instances of bribery. In the United States, under the Dodd-Frank Act, the Securities and Exchange Commission (SEC) is authorized to award a whistle-blower from 10 to 30% of any amount recovered in an enforcement action as an incentive to encourage those with information to come forward.¹¹⁸

Box 7.12. US Securities and Exchange Commission (SEC) Whistle-Blower Programme

States may also encourage companies to maintain their own whistle-blower recognition and compensation programmes by providing certain benefits to companies who do so. The existence of these programmes signals that a company is committed to discovering any wrongdoing in its ranks and dealing with it appropriately, include rewarding the person who provided the information. The ‘reward’ for companies who have such programmes in place may range from being included on a government whitelist and gaining access to procurement portals to obtaining government-issued certification as a supplier with integrity.

United Nations

UNODC Business Integrity Portal

Chapter 7. Additional measures and initiatives

7.1. Public sector reforms