CIPE Regional Director for Asia and the Pacific John Morrell 

• Clean governance is always good for everybody

The US-based Centre for International Private Enterprise (CIPE) recently warned of the dangers of corruption not only in the public sector but also businesses.

CIPE Regional Director for Asia and the Pacific John Morrell and the Managing Director Programs Abdulwahab Alkebsi shared the following insights.

In countries where the Government isn’t necessarily a reliable partner, businesses still want to grow.

They want to succeed. And so what are steps that the company can take? What can it do to reduce the exposure to bribery risk? Do companies have an anonymous whistleblower mechanism, and a whistleblower protection policy? These are simple steps that a company can take to reduce the probability that employees engage in bribery. If we can have a critical mass of companies all doing the same thing, it can have an aggregate impact on the level of corruption in the country.

There is also a compelling need to have a public-private dialogue on corruption. For example, the Collective Action Project in Thailand where the private sector works collectively. The Thai Institute of Directors is also a key activist to minimise corruption.

Corruption has supply and demand. There’s also private sector corruption. We’ve done projects around the world on compliance for companies, and we take advantage of international laws and examples include the British bribery law and America’s Foreign Corrupt Practices Act (FCPA).

 These laws require that if any company is engaged in and competes for business in Sri Lanka or any other country, the supply chain for these companies have to follow the CPA and the British bribery laws. So, for an example, if you want to bribe officials in Sri Lanka to win a contract, that’s a very short sighted view, because by doing that, you’re subjecting yourself to the jurisdiction of the CPA. CIPE helps companies to comply with these international anti-bribery laws so as to ensure the local environment becomes less corrupt. So we have to focus on both sides fighting corruption at the government level and in the private sector. 

Fighting corruption in the private sector is to improve the environment. This is one of the challenges for more genuine private sector engagement in some of the initiatives. Some companies don’t want to get into these initiatives because they rely on these kickbacks for their businesses.

Many countries have managed to work around this argument and still ensure growth in the private sector. Clean governance is always good for everybody, but in vulnerable, tough situations, companies tend to go the other way around. 



When it comes to infrastructure projects apart from the finances the issue is who does the contract. 

There is a misconception that the private sector cannot be a genuine force to ensure governance and transparency. This is unfortunately a common view, especially in civil society work on anti-corruption, very few of whom have any sort of corporate background. The view is that it’s businesses that benefit from bribery, it lets them avoid paying taxes and win contracts. In reality and a broader sense, businesses do not benefit from bribery. Some companies might, but the business community in general does not. 

What corruption ultimately is, from an economic point of view, is a tax, a regressive form of taxation. It’s an unenforceable tax. It also increases risk and uncertainty. So, there are individual companies that might benefit in the short term, but in terms of the health of the business community, the health of the marketplace, corruption is antithetical to a healthy economy, which is why CIPE doesn’t work with individual businesses in Sri Lanka or anywhere but support organisations or collective initiatives. So it’s not a matter of how do we dissuade individual companies from paying bribes, it’s more a matter of how do we set business standards? Businesses benefit from bribery is a myth. Bribery is a tax, bribery is a cost. Bribery increases risks. All of these things are not helpful to business. 

Another misconception is that bribery is a morality issue. People pay bribes no matter what their religion is. People pay bribes no matter where they come from. The way we see it, it’s about an incentive structure. Is the local environment for doing business creating incentives for you to be unethical or is it more conducive to doing business in an ethical way? So it’s the infrastructure, the environment and the incentives structure of the specific country that incentivises corruption and unethical behaviour.

People also say corruption is a necessary evil sometimes. For example, a restaurant owner has to import hydroponic vegetables, tomatoes, lettuce, cucumbers, and if the perishable cargo is being held up for a bribe by a customs official, the mindset is that’s not a time to take a moral stance.

It is about keeping the restaurant running. So in that respect, on a transactional level, sometimes it’s unavoidable. But again, if the restaurant owner is being hit up for a bribe, that’s a cost, it’s tax. For companies which want to expand globally, they need to be mindful of laws that criminalise bribery.

So paying a bribe may at times be an unavoidable transaction. It’s an evil that firms and individuals need to avoid at all costs because it’s a bad incentive.

Centre for International Private Enterprise champions delivery of ‘democracy dividend’  for people of Sri Lanka