Fri, Feb 23, 2024
The purpose of this article is to address the phenomenon of corruption in the business world by asking three key questions. The possibility of building and promoting effective anti-corruption plans and programs depends, to a large extent, on the understanding of the following questions: 1) In what situations does corruption occur? 2) How does corruption actually occur? and 3) Who is usually involved in acts of corruption? This article attempts to answer these questions from the perspective of anti-corruption compliance. Our opinions are based on multiple lessons learned from corruption investigations and prosecuted cases of bribery payments in both local businesses and transnational operations. These include cases that had allowed us to participate and understand strategic efforts to fight corruption in Central America.
Particularly, the analysis of these three questions takes on greater importance in the countries of El Salvador, Guatemala and Honduras, also grouped together as the Northern Triangle of Central America. These countries have historically presented important corruption figures in the region, according to indices such as the World Justice Program Rule of Law Index and Transparency International's Corruption Perceptions Index. According to CSIS (2021), "since the mid-2000s, Central American countries have taken various approaches to combating corruption." Guatemala accepted the presence of the Comisión Internacional Contra la Impunidad en Guatemala (CICIG; International Commission Against Impunity in Guatemala), and Honduras accepted the Misión de Apoyo Contra la Corrupción y la Impunidad en Honduras (MACCIH: Mission to Support the Fight Against Corruption and Impunity in Honduras).1 In sync with these development and anti-corruption efforts, the U.S. government has also pushed for several strategic actions, including the passage of the "United States-Northern Triangle Enhanced Engagement Act," USAID's Northern Triangle Task Force, and the Strategy to Address the Root Causes of Migration in Central America. Considering the importance given to the fight against corruption, these multilateral efforts should be taken into account, both, when participating in an investigation in the region for a possible corrupt act as well as when designing a compliance and anti-corruption program in accordance with the realities of the region.
One of the main issues to understand corruption is why, at any given moment, a company decides to engage in a corrupt act. From a corporate analysis, our own experience and existing empirical evidence indicate that, in general, organizations have strong incentives for corruption in five types of scenarios:
From an organizational point of view, some authors have analyzed how corruption can become a process accepted and justified by entire industries and sectors. But an important question remains that has not been fully analyzed: how does corruption happen in practice? Experience tells us that the corrupt act usually presents itself in six different ways, in a non-limiting way, although often in a combination.
Corruption doesn't happen in a vacuum. If there is corruption, it is because there are people, specific individuals, who reach some kind of agreement and carry out the illegal exchange: some receiving the bribe and others delivering the money, gift or favor required. And in that sense, it is important to clarify who are the people who, from the side of corrupt companies, tend to get involved in these bad practices. Existing empirical evidence points to three groups of corruptors:
In the process of identifying who is involved in possible acts of corruption, the United States-Northern Triangle Enhanced Engagement Act created the Corrupt and Anti-Democratic Actors List, also called the Engel List. Officials of any branch of the Northern Triangle countries or any individual identified as corrupt or implicated in crimes have been identified in this list. Since its creation, this list has positioned itself as a source of inquiries to identify with whom in the region business should not be done; in addition, it acts as a wake-up call to possible actors involved in acts of corruption and who could lose their entry visa to the U.S.
Designing and promoting anti-corruption programs in companies is not an easy task. It requires a thorough understanding of the corruption risks that each company faces in its different processes and functions. Designing an anti-corruption program also requires a rigorous analysis of the international standards along with the regional context that will influence the possible risks and operations. These three questions explore lessons learned and empirical practices based on corruption investigations and prosecuted bribery cases that may be useful to designers of anti-corruption programs. When it comes to corruption prevention and detection programs, there are no magic recipes, but any effort will be insufficient if it is not based on a thorough knowledge of the actual corruption situation that is effectively faced, the context from which it develops and the previous efforts that serve as a starting point to create controls, policies and procedures adjusted to reality.
1CSIS (2021). Navigating the United States-Northern Triangle Enhanced Engagement Act. Commentary by Daniel F. RundeLinnea Sandinand Amy Doring. https://www.csis.org/analysis/navigating-united-states-northern-triangle-enhanced-engagement-act
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