Business competition office: Corruption costs global economy $2.5 trillion


An anti-corruption office yesterday warned business leaders at a United Nations summit to urgently tackle corruption costing the global economy some $2.5 trillion to help lift millions out of poverty.

Huguette Labelle, chairwoman of Transparency International and board member of the UN Global Compact, said the amount that the World Bank estimated was lost by corruption would be “quite enough to help us remove those that are at the edge of survival around the world to a much different level.”
More than 600 senior executives are attending a two-day meeting, which began Thursday, of the Global Compact, a seven-year-old partnership between the UN and companies set up by the previous UN chief, Kofi Annan. The core concerns of the Compact, such as corruption, transparency and corporate and social responsibility, are “matters of life and death for today and tomorrow,” Labelle said at a press conference. The Compact “provides the stimulus for businesses to act with social responsibility, with environmental sustainability, and with transparency and integrity,” she added. UN Secretary General Ban Ki-moon stressed the same point and urged the 4,000-odd businesses who have signed up to the Compact to implement its 10 principles at all levels of their operations. “While significant strides are being made we must not be complacent.... Companies need to deepen their integration of the Global Compact principles, especially with respect to subsidiaries and supply chains,” Ban said. Apart from anti-corruption measures, the Compact's 10 principles cover labor relations, human rights and the environment.

The UN's first ever survey on the Compact published this week revealed major shortcomings in a sample of about 400 participants, especially in human rights and anti-corruption, despite overall progress. At least one of the companies with participants registered for the meeting, electric engineering giant Siemens, is embroiled in corruption investigations in Germany, including allegations of setting up a slush-fund to obtain foreign contracts. French Foreign Minister Bernard Kouchner, addressing the opening session of the Compact, said there were limits to what it can achieve given its voluntary nature and hinted that legally-binding resolutions might be necessary. “Given that countries are increasing the number of constraints in the aim of making environmental responsibility a legal imperative, can corporate and social responsibility be limited to a self-defined code of good conduct?” he asked.

Compact director Georg Kell acknowledged this voluntary aspect limited its capacity to influence corporate behavior. “The Compact is only a complementary tool, it can never substitute for effective regulation at country level, that goes without saying,” he said. However, Transparency International's chief expressed the hope that companies who have signed up to the Compact will not want to see their “brand” – and their own reputations – tarnished by other members who do not live up to their commitments. “I think that companies between themselves hopefully will also, in wanting to protect their own reputation and the brand, help us in ensuring that we don’t have companies in the Global Compact that aren’t living by the principles,” Labelle said.

Coca-Cola CEO Neville Isdell underlined this point by telling the same press conference that “we don't want anyone to be a freerider on the Global Compact.” About 3,000 companies from 116 countries are members of the Global Compact, created in 2000 as a counterweight to discontent over the effects of globalization. It requires firms to follow 10 principles, including pledges to abolish child labor and to work against corruption, extortion and bribery.
Human rights and environmental activists say the initiative has brought little change in company practices because of the United Nations' failure to monitor adherence to the principles, some of which are vague. (

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