How NGOs can help business fight corruption in emerging economies

Despite strong growth rates, the perception of corruption is on the rise in many emerging economies, especially BRICS countries, Transparency International’s annual Corruption Perception Index revealed Wednesday. According to the survey, the perception of corruption in China is up from last year. Its score fell by 4 points to 36 out of a possible 100, marking one of the largest drops of any country in the index. Brazil, with an index score of 43, battles persisting large money laundering schemes to bribe politicians; India’s low score of 38 highlights the entrenched culture of political corruption and use of secret bank accounts. Russia is the lowest ranked of all BRICS nations at 27, while South Africa is the highest ranked at 44. Transparency International’s index is the most consulted by investors looking to expand their businesses in emerging economies, Frank Brown, value chain leader at the Center for International Private Enterprise, told Devex prior to the launch of the ranking. A recent CIPE report highlighted corruption as one of the main stumbling blocks preventing private sector expansion in developing markets. The report gave advice on how companies can protect themselves against corruption. It also encouraged more participation of nongovernmental organizations and civil society to help reduce barriers and facilitate foreign direct investment. Corruption is a widespread problem — from a major oil company using secret companies to bribe politicians in Brazil, according to Transparency International, to small and medium-sized enterprises paying off local officials to expedite business procedures. “ [One] challenge is to spread best practices in anti-corruption compliance to SMEs in emerging markets,” said Anna Nadgrodkiewicz, director of multiregional programs at CIPE. In the case of SMEs with limited resources to invest in compliance programs and train staff, NGOs can help chambers of commerce advocate for reforms such as faster licensing, provide technical assistance on compliance programs, facilitate formal contracts with third-party monitoring as well as transaction-specific integrity pacts or coalitions to bring transparency to projects such as government tenders through public, anti-bribery declarations, she said. Strengthening legal systems is also crucial and NGOs can advocate for clearer anti-corruption laws, according to James Koukios, who prosecutes fraud cases as a senior deputy chief of fraud in the U.S. Department of Justice’s Criminal Division. Richard Stern, CEO of the Partnership for Transparency Fund and a former World Bank economist, noted that while local aid groups have traditionally worked with governments on establishing transparency, and with civil society to raise awareness through public shame campaigns, his organization is now focused on engaging the private sector. “NGOs and civil society do have a major role to play, but we are still in the stages of figuring out how to do that in a business environment,” he said. “Advocacy doesn’t help with private transactions.” Join the Devex community and access more in-depth analysis, breaking news and business advice — and a host of other services — on international development, humanitarian aid and global health.