Thursday, July 12, 2007

Tools: New Web site encourages firms to report corruption

New Web site encourages firms to report corruption

By Reuters

Story last modified Wed Jul 11 16:50:53 PDT 2007

Multinational firms like Wal-Mart, Target and Tyco International on Wednesday endorsed a new Web site where companies and individuals can report bribery and corruption in countries where they do business., launched by Trace, a Maryland-based nonprofit group that represents multinational companies, lets anyone volunteer information about incidents of corruption or bribery in the United States or abroad.

The information compiled from Bribeline will help companies determine where corruption is most prevalent and will help governments strengthen their ability to tackle corruption.

"Bribeline will further Wal-Mart's efforts to ensure we are allocating the necessary resources to combat corruption in those countries where we do business," said Alberto Mora, vice president and general counsel for the international department at Wal-Mart.

Businesses looking into ventures in certain countries will be forewarned about what kinds of bribery they can expect.

"If you know the terrain, it's easier to map out a business solution for survival," said Michelle Gavin, a board member of Trace.

The Web site does not require participants to identify themselves, which some critics say would encourage malicious or false reporting.

"We had to make a decision early on between anonymity or verification," said Trace President Alexandra Wrage, "You can't have both."

The World Bank, which has a similar disclosure program that encourages firms to admit when they paid bribes while doing work for the bank, has estimated that bribery around the world amounts to about $1 trillion, and affects the poorest citizens the most.

"The World Bank knows from experience that nobody wants their names mentioned," said Suzanne Rich Folsom, director of the Department of Institutional Integrity at the World Bank. Fear is often a deterrent in reporting corruption, she added.

"Bribeline will be real-time information to all of us who are trying to fight corruption," said Folsom. "This may begin to level the playing field...and lower the cost of doing business."

She said that cracking down on bribery and corruption helped ensure that development aid benefited the poorest citizens who needed it the most.

Maura Abeln Smith, senior vice president at International Paper, a global paper and packaging company, said many companies already had internal mechanisms for reporting bribery and corruption, but said Bribeline would help.

"Without this, we will not really know what we're up against," she added

Posted by Christine Bowers on November 6, 2006
Corruption correlated to Doing Business

The 2006 Corruption Perceptions Index, out today, "reinforces [the] link between poverty and corruption [and] shows the machinery of corruption remains well-oiled, despite improved legislation." Transparency International finds that corruption is "rampant" in almost half the countries on the list. Brazil and the US are among those with an increase in perceived corruption, while India and Turkey are perceived as less corrupt this year. Press release, data, and map.

Corruption is also strongly correlated with a country's position on our Doing Business rankings. Each procedure a business must follow represents an opportunity for a bribe. Fewer interactions with government bureaucrats, less opportunity for corruption. I took a quick look and plotted all countries that are ranked in both indices - my graph is after the jump.

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