Issue Overview

Corruption is the abuse of power for private gain. While levels of corruption vary among regions, countries and political systems, it is one of the greatest obstacles to economic and social development around the world. Corrupt practices distort markets and stifle economic growth and sustainable development. They also rob local populations – particularly in developing countries – of critically needed resources. Estimates show that the cost of corruption amounts to more than 5% of global GDP (US$ 2.6 trillion) with more than US$ 1 trillion paid in bribes each year.

The effects of corruption are not only economic. Corruption undermines the rule of law and affects political stability, while also sustaining inequality and hindering social cohesion. The recent uprisings in North Africa and the Middle East have shown how continuous, widespread corruption can lead to social unrest.

Although governments are at the epicentre of corruption, the role of business, both as part of the problem and the solution, is also central. In many countries, to make commercial deals companies had (and still have) to be involved in corrupt practices. However, in the last decade the international community has managed to create a strong front against corruption, introducing harder laws, regulations and penalties. The UN, the OECD, the World Economic Forum and other international organizations have devoted considerable attention to corruption. In consequence, more companies are demonstrating leadership in fighting corruption by implementing anti-corruption programmes and adhering to initiatives that address the supply side of corruption at the global, regional or industry levels.

As corruption is an extremely complicated and interconnected problem, the most effective solutions to it are often collective. They involve public and/or private sector solutions at country, regional or global levels or at industry, cross-industry or multistakeholder levels.

Did You Know?

• Of the 183 countries in the Corruption Perceptions Index, 134 are ranked as corrupt to a significant degree. Some 72 of them are ranked as very corrupt. New Zealand was deemed the least corrupt, while North Korea and Somalia were among the most corrupt.
• In low-income countries, it is estimated that a one-unit fall in the perceived corruption index could result in an increase of 0.59 percentage points in the growth rate of per capita GDP.
• Corruption increases the cost of doing business globally by up to 10% on average.

Quotes

"Since we shut down the bribery operations, since we introduced a very strong compliance programme that ensures that illegal behaviour is impossible, much less tolerated, we’ve become a better company. We are more profitable than we’ve ever been."
Peter Solmssen, General Counsel, Siemens

“That's one of the very big problems with combating bribery: you're talking about the centre of legitimate power.”
Mark Pieth, Professor of Criminal Law and Criminology, University of Basel

“Without concerted, methodical action and an idea of how to maintain momentum, we are at risk of the anti-corruption movement turning into a trendy movement that peaked all too quickly.”
Leonard Frank McCarthy, Vice-President, Integrity, World Bank

Further resources

PACI
Pieth, Mark. Harmonising Anti-Corruption Compliance. Dike Verlag AG: Zürich St. Gallen, 2011.
Pieth, Mark & Ivory, Radha (Hrsg.). Corporate Criminal Liability, Emergence, Convergence, and Risk, Springer: Heidelberg, London, New York, 2011.
World Bank

Calendar

G20 Summit
5 – 6 September 2013
St. Petersburg

Partnering Against Corruption Initiative (PACI) Task Force
14 – 15 October 2013

Conference of the States Parties to the United Nations Convention against Corruption
25 - 29 November 2013
Panama

Council Insights

The Council includes Members from business, government, academia and civil society. It acts as a high-level policy advocacy body on anti-corruption and advocates collective approaches to corruption challenges. The Council feeds into the World Economic Forum Partnering Against Corruption Initiative (PACI), a global anti-corruption initiative developed by companies for companies. PACI offers a risk mitigation platform to help firms:

• Design and implement effective policies and systems to prevent, detect and address corruption
• Benchmark internal practices against global best practice through peer exchange and learning
• Level the playing field through collective action with other companies, governments and civil society

As part of efforts against corrupt practices, the Council has identified six recommendations or focus areas, based on those presented at the Los Cabos meeting in 2012, that it feels would have the most impact if implemented, including:

• Encourage transparency in government procurement
• Promote, extend and implement sector-based initiatives
• Engage the private sector in the United Nations Convention Against Corruption (UNCAC) peer reviews and consult with the OECD Working Group on Bribery regarding its monitoring mechanism
• Create business programmes, including training, to encourage public-private partnerships focused on capacity building
• Encourage the adoption of business codes of conduct with a specific focus on small and medium-sized enterprises (SMEs)
• Strengthen the anti-corruption legal and regulatory framework

During 2012-2014 the Council will work to:

• Shape innovative anti-corruption policies
• Adopt and implement recommendations made at the G20 Leaders’ Summit
• Ensure its activities are harmonized with PACI objectives
• Focus on the risk management aspect of anti-corruption initiatives
• Continue work on the B20/G20 initiative which facilitates meetings of members of the B20 with G20 government representatives to share and exchange views about their work 

Contact Information

Research Analyst: Rigas Hadzilacos, Global Agenda Councils, rigas.hadzilacos@weforum.org
Council Manager: Joel Fernandes, Senior Project Manager, PACI, joel.fernandes@weforum.org
Forum Lead: Elaine Dezenski, Senior Director, Head of PACI, elaine.dezenski@weforum.org