CORRUPTION

Corruption is dishonest behavior by those in positions of power, such as managers or government officials. Corruption can include giving or accepting bribes or inappropriate gifts, double-dealing, under-the-table transactions, manipulating elections, diverting funds, laundering money, and defrauding investors

• Corruption is dishonest behavior by those in positions of power, such as business managers or government officials.
• In the financial services industry, chartered financial analysts and other financial professionals are required to adhere to a code of ethics and avoid situations that could create a conflict of interest.
• Preventing corruption includes the reinforcement of best business practices, education in the form of mandatory anti-money laundering (AML) courses, and increased accountability.

Corruption can take many forms, and can include behaviors like:

• public servants demanding or taking money or favors in exchange for services,
• politicians misusing public money or granting public jobs or contracts to their sponsors, friends, and families,
• corporations bribing officials to get lucrative deals

Corruption can happen anywhere: in business, government, the courts, the media, and civil society, as well as across all sectors from health and education to infrastructure and sports.

Corruption can involve anyone: politicians, government officials, public servants, business people, or members of the public.

Corruption happens in the shadows, often with the help of professional enablers such as bankers, lawyers, accountants, and real estate agents, opaque financial systems, and anonymous shell companies that allow corruption schemes to flourish and the corrupt to launder and hide their illicit wealth.

Corruption adapts to different contexts and changing circumstances. It can evolve in response to changes in rules, legislation, and even technology.

The costs of corruption

    

Political costs

Your freedom and rule of law.

 

Social costs

Your participation and even your trust in government.

 

 

Environmental costs

Your chance for a healthy environment and a sustainable future.

 

Economic costs

Your opportunity to build and grow wealth.

 

 

To Fight Corruption, We Must Embrace Transparency

Transparency is all about knowing who, why, what, how, and how much. It means shedding light on formal and informal rules, plans, processes, and actions. Transparency helps us, the public, hold all power to account for the common good.

Seeking and receiving information is a human right that can act as a safeguard against corruption, and increase trust in decision-makers and public institutions. However, transparency is not only about making information available but ensuring it can be easily accessed, understood, and used by citizens.

 

 

But transparency is only the first step to curbing corruption

We have learned from over twenty-five years of experience that corruption can only be kept in check if representatives from government, business, and civil society work together for the common good.

Corruption Prevention

Corruption unchecked can increase criminal activity and organized crime in the community. Several steps can, however, help to manage corruption. There must be a strong focus on education, which must reinforce best business practices and alert managers and employees on where to look for corruption. This can be achieved by introducing mandatory education such as anti-money laundering (AML) courses. Senior executives and managers must set a strong culture of honesty and integrity by leading by example.

Corruption is likely to be reduced with accountability mechanisms in place; this in turn is likely to reinforce a culture that fosters strong ethical behavior while holding those to account who violate the norms. Corruption can further be reduced by making it easy to report, whether by managers, employees, suppliers, and customers. A robust control environment also reduces the risk of corruption as do thorough background checks before hiring or promoting employees.

Real-World Example

In 2016, the Securities and Exchange Commission (SEC) ordered software company PTC Inc. to pay a combined $28 million in fines for attempting to bribe Chinese officials by providing approximately $1.5 million in recreational travel through two PTC China-based subsidiaries.

As the case became increasingly public, PTC Inc. needed to strike a delicate public relations effort to restore its reputation. Organizations that have been known to engage in corruption find business development difficult. Investors and shareholders are reluctant to commit if an organization has a history of corruption, or bribes and favors are part of normal business conduct.