In the crowded field of corporate citizenship, an opportunity waits

Asked in a survey what the major obstacle was to finding a job in Kenya, citizens’ overwhelming answer was corruption. Graphic: Gabriel Demombynes / World Bank

When nonprofit TechSoup Global initiated a series of technology challenges in 2011 with help from Microsoft, the U.S. embassy in Bucharest and other partners in Romania, they didn’t know which issues the citizen entrepreneurs would tackle. As it turned out, corruption was on people’s minds.

A winner of one of the challenges was an online mapping tool that that allowed citizens to not only report when and where they had to pay bribes, but what kind of service they received after paying the bribe. “It’s a very clever idea, treating bribery as a market where you want to get the best value for your money,” said Chris Worman, Warsaw-based director of program development at TechSoup Global.

The public-private partnership that brought the idea to life reveals a largely unexplored frontier for corporate social action: seeking to reduce the demand side of corruption by working directly with civil society. Yet these types of partnerships are few and far between.

Multinationals are primarily focused on corruption as an internal issue of compliance in order not to run afoul of and national and international laws, including the U.S. Foreign Corrupt Practices Act and the U.K.‘s 2010 Bribery Act, according to experts in the field. Through corporate coalitions like the International Business Leaders Forum, the U.N. Global Compact and the World Economic Forum’s Partnering Against Corruption Initiative, companies are working directly with governments to reduce corruption.

Yet corruption remains an enormous problem for companies operating globally. The World Economic Forum has estimated that corruption increases the cost of doing business around the world by 10 percent on average; in its 2012-13 Global Competitiveness Report, executives reported that corruption was the number one impediment to doing business in 22 of 144 countries, which included important emerging economies like Colombia, Russia, Kenya, Mexico and the Philippines.

Corruption is also a serious development issue. In addition to hindering economic growth, corruption “reinforces inequality, distorts public expenditure allocation and is an obstacle to poverty alleviation,” according to the World Bank. For example, a World Bank study in Cambodia found that poor citizens lost a higher percentage of their income to bribery than the rich.

In the meantime, recent developments including the Arab Spring have shown how citizens self-organizing via online social networks can express discontent with government corruption and enact real-world change.

This confluence of business and social drivers, with technology as the accelerator, is exactly the stuff of public-private partnerships. So why aren’t there more business-driven initiatives?

In its 2009 report, ”Anti-Corruption as Strategic CSR: A Call to Action for Companies,” the nonprofit consultancy FSG described civil-society focused anti-corruption work as a “frontier field” and a “neglected social issue” for corporate citizenship.

The report noted that companies have focused instead on environmental issues and particular social issues, such as child labor, and called on companies to move “beyond risk mitigation” in their anti-corruption work.

“Our research suggests that the demand side of corruption is a significant blind spot for corporations as they fight corruption,” the document added.

ReStart Romania

The ReStart challenges, which have run three times in Romania, spread to Slovakia and the Czech Republic and are currently underway in Bosnia-Herzegovina, Kosovo and Serbia, demonstrate how social media and data-driven online tools have opened up new pathways in the fight against corruption – and how business can multiply the effect.

“Traditionally anti-corruption efforts have used two strategies,” said TechSoup’s Worman. “You either legislate morality, or you name and shame the perpetrators. Neither strategy has worked out well.”

According to Worman, legislation that is “not fundamentally supported by citizen intent and behavior change” can be ineffective. And in societies where corruption is the norm, citizens may react with a shrug when a corrupt official is publicly shamed.

The missing piece in the equation has been grassroots civil society engagement, said Worman. “Technology can help people see on very personal levels how corruption affects them.”

Internet-based activism also opens new pathways for those who might otherwise do nothing, according to Ambassador Mark Gitenstein, who actively supported the ReStart Romania challenges while serving as the U.S. ambassador to Romania from 2009 to 2012.

“There are a lot of Romanians who are interested in changing things, who don’t want to do it through traditional institutions like media or political parties, they want to do it through the Internet,” Mark Gitenstein, told a Romanian reporter.

The ReStart program allows citizens to submit technology-based ideas for creating “a more open society.” Winners receive business, programming and political support to develop their ideas into viable community platforms. In Romania, those contributing ideas included journalists, programmers and stay-at-home moms, said Worman.

Over the course of three challenges, hundreds submitted ideas and many more visited the Restart Romania website. Worman said approximately 12,000 Romanians registered as users on the site – a significant number in a part of the world where publicly taking a stand against corruption can still be risky.

One of the winning ideas from the 2011 competition, called “Piata de Spaga,” or “Bribe Market” in English, formally launched in 2012 and already has data on hundreds of bribes, uploaded by individual citizens.

One user in the Romanian city of Arad recently noted that he or she paid a bribe of €100 (about $130) in cash for surgery at the county hospital. According to the emoticon selected to represent the level of satisfaction with the resulting service, the user was somewhat unhappy with the result.

Bribe Market is similar to other sites, including I Paid a Bribe, based in Bangalore, India, which has amassed more than 22,000 bribery reports in two years of operation, according to a new report from the International Anti-Corruption Conference and the engine room, a nonprofit group that seeks to improve coordination between advocacy initiatives and technical expertise.

These type of platforms, wrote the report authors, “are able to transform data into meaningful information that can serve to engage new audiences.”

The business case

Businesses have been on the losing end of corruption, said Worman, “so anything that goes against the culture of normative corruption is good for them.”

Microsoft and Cisco have supported the ReStart Challenges. While both contributed financially, Microsoft also involved local members of its BizSpark network, a service that connects and supports technology entrepreneurs around the world. Microsoft helped recruit several Romanian companies who were certified Microsoft partners to provide pro bono coding and other technology services to bring the winning ideas to life.

According to Melissa Pailthorp, Microsoft’s senior manager for citizenship and public affairs in Central and Eastern Europe, the focus on anti-corruption and transparency was a by-product of seeking to strengthen civil society. She said Microsoft had a long relationship already established with TechSoup to provide Microsoft products and other support for local NGOs “to increase effectiveness exponentially.”

“The ReStart work represents a dynamic way to meet that goal by working to connect developer energy to civic causes,” she said. Microsoft donated $300,000 in cash and in-kind, a total that included contributions of local Microsoft partner companies in development support, hosting and other assistance.

For one local company that has contributed time and labor to ReStart, the anti-corruption focus has a dual business and social mission.

Alex Lapusan, CEO and co-founder of Zitec, a software, web design and IT consulting company, said “it is hard to build an honest business” based on government contracts in Romania. Founded in 2003, Zitec’s clients are primarily American and European; the company does not rely on the Romanian government for business, as other local technology companies do.

Seeing the need to strengthen civil society, Lapusan said his company has worked in the past with small NGOs and even created a website with information on candidates running for office. “People are looking for that information, so you feel like someone has to do it.”

Zitec, formerly a member of Microsoft’s BizSpark program and now a silver-level member of Microsoft’s partner network, has provided support to ReStart Romania over the past two years.

“We loved the idea” of supporting new online platforms to promote government transparency, Lapusan said. “It’s easy to say our beloved government should take care of that, but the truth is they aren’t doing such a good job.”

While there is a return-on-investment to Zitec for this pro bono work, in terms of staff recruitment and retention, the commitment is an end in itself, he said.

“Internal vibe is important, and if that attracts other good people, that’s fine,” he said. “But [this work] is not fully business oriented. You need heart, even if you are a business.”

Lapusan said he does not expect the new online platforms created through ReStart Romania to change the country overnight, but he said when companies like his get involved, it sends a message to other Romanian businesses and organizations. “People start seeing it’s not that crazy to support a project like this. That’s how you make change.”

But Lapusan said Zitec, as a small business, can only contribute so much. “We’re not a multi-billion dollar company,” he said. “Companies bigger than us could do 1,000 times the stuff we do.”

Connecting business and civil society

While it’s clear that companies can add value to civil society-driven initiatives, it is often hard for the two to connect, said Alix Dunn and Susannah Vila, both principals and co-founders of the engine room.

Dunn gave the example of the February 2011 shutdown of the Internet by Egypt’s then-president Hosni Mubarak when activists turned to private companies for back-door Internet access. “It depended on personal connections inside companies,” said Dunn. “There was a sense that the coordination must be better next time.”

Dunn and Vila said that many corporate employees are willing to provide technical help to transparency and anti-corruption platforms, but that it’s “way too hard” for those people to find the organization where they can “make the most impact.”

Anti-corruption platforms like BribeMarket and IPaidaBribe not only need help with coding and other site development tasks, but also marketing and communications. “That’s a gaping hole in their capacity,” said Vila. “You see ideas with lots of potential not enough impact because it’s hard to get the word out.”

By mapping corporate support for civil society initiatives, Dunn and Vila said the engine room hopes improve coordination for better pro bono support from businesses.

Beyond compliance

While individual employees may be willing to support civil society initiatives, large corporations still perceive anti-corruption work almost entirely through a legal lens, said Brook Horowitz, director of business standards and regions for the International Business Leaders Forum, a global membership organization focused on leadership and corporate responsibility issues.

“Corruption is not just a reputational issue, it’s a legal issue, and fundamentally, [multinationals] can lose big bucks if they get it wrong,” said Horowitz, who previously oversaw IBLF’s Russia and India regional offices.

But compliance efforts can quickly reach a limit in societies where corruption is the norm, said Horowitz.

“Companies are completely focused on what they can control, which is the behavior of their own employees. But even that can be extremely difficult,” said Horowitz. “You can create a culture of compliance and transparency inside your company, but the moment that person goes out the door, they are confronted by all sorts of challenges.”

Horowitz described the everyday pressures a Russian employee of a multinational might face after he leaves the office: a traffic cop who demands a bribe in exchange for returning a driver’s license; the need to pay a professor in order to ensure a daughter gains university admission.

“There is a great big gap between the reality of everyday life in these countries and what is almost an artificial corruption-free zone within certain companies operating there,” said Horowitz.

So will companies cross that line to address the societies outside their own walls?

A few companies have made the move, according to the FSG report. Pharmaceutical giant Merck has funded anti-corruption nonprofits in a number of countries where it works. Construction company Fluor underwrote a documentary about corruption in its own industry. And General Electric was a key founder of Transparency International, a leading nonprofit in this space.

Milena Marin, Transparency International’s data and technology coordinator, argued that technology provides new and exciting pathways for corporate engagement in anti-corruption work.

“Our previous work with engaging governments, passing laws and working with anti-corruption agencies is extremely valuable. But what was missing was strong public engagement,” she said. “Technology is a core tool to reach more people, not only to let them know what corruption is, but to give them tools to take action.”

A number of multinational and local companies, including Spanish telecom Telefo￳nica and Microsoft, have contributed both financially and in kind to Transparency Internationals’ Hacks Against Corruption events, which, like the ReStart Romania challenges, cultivate local ideas for online platforms.

“This is a great way for us to work together with private sector companies,” said Marin.

Greg Hills, managing director of nonprofit consultancy FSG, said that companies are only beginning to think of anti-corruption work beyond compliance.

“It’s a very nascent idea for companies to think about corruption as a social issue they should proactively address, aside from focusing on keeping their own nose clean,” said Hills, a co-author of the “Anti-Corruption as Strategic CSR” report. “So much more could be done.”

Companies’ hesitation to address the issue is understandable, he said. “In many cases the primary culprits of corruption are government officials,” he said. “Shining a bright light on that is a lot of risk for a company looking for a local license to operate.”

In contrast, other issues popular among corporate social responsibility programs, such as workforce development and environmental sustainability, can appear less risky.

The key to engaging more companies in socially focused anti-corruption work, said Hills, may lie in “spreading around the risk” through collective corporate action. He praised the work of the Extractive Industries Transparency Initiative, which brings together corporate, government and advocacy entities in the oil and gas industry to regulate company-to-government payments.

Ultimately corporations may be pushed into more anti-corruption focused civil society engagement by rising expectations of corporate responsibility.

“I am expecting much from the private sector,” said Heidi Mendoza, head of the Philippines top anti-corruption commission, at the Arangkada Philippines Forum in Manila this year. “If we dream of good governance, we can’t rely on government to do it alone. We as citizens, as members of the private sector, as people inside government, should contribute as best we can.”

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    Andrea Useem

    As Associate Editor and Content Director for Devex Impact, Andrea creates and manages cutting-edge content on the intersection of business and international development. An experienced multimedia journalist, Andrea served as leadership editor at the Washington Post and spent three years as a foreign correspondent in Eastern Africa reporting for publications including the Boston Globe, Dallas Morning News, and San Francisco Chronicle.