Effective Programmes to Combat Corruption vs Programmes Intended Primarily to Satisfy SEC, DOJ or SFO

16 Pages Posted: 14 Apr 2016

See all articles by Alan Franklin

Alan Franklin

Global Business Risk Management

Date Written: March 2016


Some of the most effective tools for reducing corruption risks by a corporation are generally unknown or ignored, despite their efficacy: 1. Political risk insurance can reduce the risks of bribe demands by allowing a company to refuse to pay the bribe, allow the host state to take the property or license for which the bribe is being refused, and then collect from insurance policies, thereby reducing the financial risks. 2. Obtaining financing through world bank - they can help to reduce the demand for bribes. Exert pressure on host state to back off bribe demands. 3. Alliances and relationships with NGOs who have influence in the host state. 4. Relationships with powerful personalities who can influence host state. 5. Social license to operate – working with the local communities can entice locals to pressure government to not demand bribes. 6. Working with competitors and others to form a no-bribe policy for the group. The power here is that the competitor is then tempted to bribe to get the contract knows that his competitors are watching and will complain if a contract is awarded in circumstances that seem suspicious.

The research for this article consists of interviews with over 100 companies (primarily Canadian) as part of the course that the author teaches on international legal business risk for the executive MBA program at Athabasca University in Canada. These interviews consisted of discussions with the students (all of whom are middle to senior management in their respective companies) regarding their company views and policies on issues of corruption – developing programs, risk assessment and management in regard to corruption, how seriously they view corruption issues.

One of the results of the research was the realization that companies are completely unaware of tools such as political risk insurance through MIGA, partial risk guarantees from IBRD to reduce risks of foreign investment. Thus, the benefits that these types of tools can bring to corruption reduction were not known. As well, companies do not consider the other tools mentioned above, such as NGOs, working with competitors, obtaining financing from financiers that have power to stop demands for bribes such as the World Bank or international development banks generally. Once the students learned about these products and concepts, they realized their value in corruption reduction, and recommended them to their companies as part of a robust anti-corruption program.

Keywords: corruption, anti-corruption programs

JEL Classification: F21, F23

Suggested Citation

Franklin, Alan, Effective Programmes to Combat Corruption vs Programmes Intended Primarily to Satisfy SEC, DOJ or SFO (March 2016). Available at SSRN: https://ssrn.com/abstract=2761692 or http://dx.doi.org/10.2139/ssrn.2761692

Alan Franklin (Contact Author)

Global Business Risk Management ( email )

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