Archive for July, 2008|Monthly archive page

Global Business Corruption: Biggest Impediment to Sustainable Living

In Uncategorized on July 1, 2008 at 4:31 am

Corruption is not only the biggest obstacle to development and economic growth, but also a major risk to companies as recent stories have demonstrated. Many corporate leaders today have assumed responsibility and implemented effective programmes to address the issue within their own context and in collaboration with others. The joint publication of the four major global anti-corruption initiatives working with the private sector to effectively address the issue provides a “first-of its” kind summary on why companies must take a stance, and how they can do so.

This is an important and timely piece, because the implications are far reaching.  For example, in the United States, despite our laws, corruption tends to preclude young upstarts from winning government contracts because qualified firms often do not know the “right” people.  This is problematic because often times the firms winning are in fact unqualified and/or do not have the capacity to delivery.  This Global Business Corruption report, which is the first of it’s kind provides a helpful and relevant blue print for U.S. companies and government officials to review. 

Here is what honest, hard working business people are up against:

  • Estimates show that the cost of corruption equals more than 5% of global GDP (US $2.6 trillion), with
    over US $1 trillion paid in bribes each year.
  • Corruption adds up to 10% to the total cost of doing business globally, and up to 25% to the cost of
    procurement contracts in developing countries.
  • Moving business from a country with a low level of corruption to a country with medium or high levels of corruption is found to be equivalent to a 20% tax on foreign business.

This is often what happens to small business owners in the United States because so-called community leaders want a cut of your deal or in the case of national figures like Al Sharpton and Jesse Jackson, it is called the “shake down“.  So, while the global business corruption report is out, it would be interesting to calculate the impact and ultimate damage to business owners who have to pay for “access”.  This is why it is important to keep special interest money.