Business Ethics
This supplement is an independent publication from Raconteur Media
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May 18, 2010
BUSINESS ETHICS
ECONOMY Lack of
corporate integrity was
an underlying cause of
the global financial crisis.
Peter Archer looks at
how cleaning up business
practices can pay
widespread dividends
well-being of people and, not least, the
planet are put at risk.
If leading figures within the financial
B
system, notably ratings agencies accused
of turning a blind eye to malpractice,
had displayed greater corporate integrity,
the worst of the worldwide downturn
may have been avoided.
According to Transparency Interna-
tional (TI), which investigates levels
of business sleaze across the globe,
bribery and corruption were partly to
blame for the global economic crisis.
Ratings agencies were especially culpable
because they condoned unacceptably
high risks.
“Fundamentally, it is up to companies
themselves to stamp out malpractice
and corruption,” says Dr Robert Barrington,
TI UK’s director of external affairs.
“Boards and senior executives need
to make sure this has a high priority and
there is a zero-tolerance approach.”
Sadly there is a lengthy list of culprits
and suspects. Growth markets in particular,
like the emerging economies of
China, India and Russia, present companies
with a high risk of corruption.
Brook Horowitz, head of global
anti-corruption programmes and executive
director for Russia at the International
Business Leaders Forum
(IBLF), cites companies whose employees
have been caught up in corruption
probes in emerging markets,
including Hewlett Packard, Daimler,
Rio Tinto, BAE Systems and Siemens.
usiness ethics is not simply
a nice idea. It matters because,
without proper business
propriety, profits, the
In the UK, the 2010 Bribery Act,
which became law last month and
comes into force later this year, is expected
to make prosecutions more
straightforward and thus prove a
powerful deterrent against dirty deals.
However, Hugh Mathew-Jones, head
of forensic services and corporate finance
teams at accountants and business advisers
PKF, believes there will always be individuals
or companies willing to risk malpractice
and corruption for big money.
But he says: “With the correct or-
ganisational tone, well-thought-out
policies and rigorous controls, the
possibility of bribery or corruption
can be reduced enormously.”
Leo Martin, director of GoodCor-
poration, independent assessors of
company standards and business
principles, says: “The worldwide recession
has put the focus strongly on
businesses and ensuring that they behave
responsibly. As the global economy
recovers, we will see a significantly
stronger emphasis on ensuring ethical
business conduct.”
Philippa Foster Back, director of
the Institute of Business Ethics (IBE),
thinks the best form of enforcement is
often the “court of public opinion”.
“In a 24/7 world there is nowhere for
Combat corruption
to boost recovery
Of course, it is impossible to consider
business ethics outside the context of a
largely unregulated, free-market economy
which, in its failings, has cast a depressing
shadow over the world economic map,
with consequent financial turmoil, political
fallout and social hardship.
Indeed, could business ethics be an
early casualty of economic downturn?
When times are hard and competition
for contracts is cut-throat, is there still
room for squeaky-clean deals? Can
companies be trusted to comply with
their declared codes of ethical conduct
when business survival may be at stake?
Mr Horowitz is optimistic that the
financial crisis will, in fact, have helped
to clean up corporate behaviour.
He says: “The perception now is
that self-regulation seems not to have
worked, so governments will be legislating
to enforce more responsible
behaviour of companies towards a
whole range of stakeholders, including
employees, local communities, the
environment and the public at large.
“Whether it was the absence of ad-
equate corporate governance among
the banks, which were at the heart of
the financial collapse, or the ethical issues
around bonus payments, companies
are clearly under greater legal and
public scrutiny.”
Institute of Business Ethics
The IBE was established in 1986 by business for business to encourage
high standards of business behaviour based on ethical values.
•
•
We offer practical advice in developing and strengthening an ethical culture,
deliver training in business ethics and undertake research into good practice
in business behaviour.
24 Greencoat Place London SW1P 1BE
Tel: 020 7798 6040
We also provide a neutral forum for sharing current business ethics challenges.
Fax: 020 7798 6044
‘‘
a company to hide its bad practice,” she
says. “Many are going to greater lengths
to ensure there is no bad practice.”
TI UK’s Dr Barrington adds: “Com-
panies, and individuals within them,
always have a choice how they want to
behave and who they want to deal with.
For some companies, this will mean
turning down dodgy contracts from
time to time. But it is questionable,
from a purely commercial perspective,
whether those deals are worth having
as, under many countries’ laws, they are
effectively illegal and invalid.”
The government advice and support
service Business Link sums up: “Bribery
and corruption create a disincentive to
trade as well as uneven trading conditions
that can damage economic systems
and the individuals within them.”
By ditching dirty deals and declining a
quick buck, ethical businesses can actually
prosper along with their stakeholders.
Please contact us for more
information or visit our website:
www.ibe.org.uk
…doing business ethically
…makes for better business
Email: info@ibe.org.uk
Registered charity no. 1084014
www.ibe.org.uk
‘‘
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