Economists generally agree that bribery and corruption are costs that are ultimately borne by society as a whole rather than by the institutions that engage in these. These so-called ‘externalities’ add to the cost of an enterprise and are taken up by governments where the corruption occurs. They interfere with the efficient allocation of resources in a free market.
In order to maximise economic efficiency, regulations are needed to reduce market failures and imperfections, like internalising externalities. When market imperfections exist, the efficiency of the market declines.
All of the efforts to entrench corporate social responsibility such as the Norms and the Guidelines seek to create rules to abolish the externalities of corruption.
We are all familiar with high-profile prosecutions of companies and individuals for their corrupt practices. These generate scandalous accounts in the media and sometimes (all too rarely) result in severe penalties including imprisonment for the CEOs of the companies. Unfortunately, corruption and shady dealings, especially when they involve senior Government officials, are notoriously hard to prove. When they do see the light of day, the revelations are the product of meticulous and persistent research by concerned individuals, NGOs, the media and on occasion by governments.
The reality is that most of the suspect dealings between companies and decisions makers are rarely exposed and, all too often, when they are exposed, they do not lead to sanctions for either parties. This does not mean that the efforts to expose corruption are worthless. A parallel is the International Human Rights Framework.
International human rights standards are said to be binding but, short of pursuit by international tribunals that may condemn individuals, they can rarely be enforced.
Yet the practice of exposing does have an impact. No government likes to stand accused in the court of international public opinion and governments go to extreme lengths to deny that they violate rights.
This is also the case with corporate social responsibility, where exposure may not bring immediate results, but where the reputational damage can lead to eventual changes in practice. The oil company Shell faced boycotts and a global campaign by human rights activists and NGOs following the death of Ken Saro-Wiwa in Nigeria:
Corporate human rights policies are of recent origin –Shell was the first major company to adopt an explicit human rights policy in 1998 after global criticism of its failure to intervene with the Nigerian Government to prevent the execution of the activist Ken Saro-Wiwa after an unreliable terrorism trial. Saro-Wiwa had been active in protest activity of the Ogoni people against Shell’s Niger Delta operations.
- Professor Paul Redmond
For it to have an effect, research into corporate behaviour and collusion with government officials needs to be thorough and credible – just like research into human rights abuses.
The International State Crime Initiative is one of many institutions that conduct research into suggestions of corporate malfeasance. Its researchers inquired into the main players involved in the Paga Hill Estate, compiled available biographical information and corporate histories of the proponents of the development on the links between the various companies involved as principals and as associates, on the degree of shareholdings of the decision makers, and on the relationships between the developers and government officials.
One challenge in mounting a case for collusion between government officials and companies is the organisation of information. This can be a difficult process for nonexpert individuals and NGOs. One useful tool for arranging materials in a simply understandable format is the one available from Visual Investigative Scenarios.
THE OPPOSITION CLIP 07: GOVERNMENT IS INVOLVED
(VIS) is a data visualisation platform designed to assist investigative journalists, activists and others in mapping complex business or crime networks. Our aim is to help investigators understand and explain corruption, organised crime and other wrongdoings and to translate complex narratives into simple, universal visual language.
- VIS website
There are also a range of software packages. One powerful package that is available freely to not-for-profit users is Maltego Casefile.