15. April 2015

Unity makes strength

As the problems created by corruption affect society as a whole, everyone would benefit from its eradication. Unfortunately, however, perceptions of corruption may not always align with this view which is why it is of utmost importance to raise awareness of corruption by way of education and training, and greater knowledge of the consequences of corruption may enable its elimination. That being said, corruption cannot be tackled alone, and the concept of Collective Action could ensure that businesses have the opportunity to use the power of unity to make a difference.

What is Collective Action?

As its name suggests, Collective Action is the idea that everyone should join forces and act together in the fight against corruption. Within this concept lies the belief that not only the government should be responsible for anti-corruption matters, but that everyone should come together to take initiatives. Moreover, this method for fighting corruption is founded on the principle that vulnerable stakeholders might not be capable of fighting corruption on their own, but once they unite with a common goal, they may get one step closer to eliminating corruption. All in all, Collective Action gives businesses the opportunity to come closer to demonstrate their compliance and commitment to fighting corruption.

The implementation of Collective Action is especially important in regions deemed to be exposed to high-risk of corruption. This is because emerging markets seem to suffer from generally inadequate or unenforced anti-corruption legislation and consequently, engaging in Collective Action would be more effective to overcome corruption risks. In the case of Turkey, existing legislation is quite extensive and thus provides adequate tools to combat corruption in theory. However, the issue lies more with their enforcement, an aspect that deserves more attention when fighting against corruption. The World Bank illustrates four types of Collective Action: (i) anti-corruption declaration, (ii) principle based initiatives, (iii) integrity packs and (iv) certifying business coalitions. That being said, any collaboration to fight corruption shall amount to Collective Action.

Perception and awareness of corruption

TUSIAD, the Turkish Industry and Business Association, an independent, non-governmental organisation aiming to promote public welfare, undertook a project to find out what the business perception of corruption is, with the aim to create awareness on corruption and discuss policy recommendations. In the framework of this project, TUSIAD interviewed many businesses, of which about half were directly integrated with global business, and conducted a survey, enabling a closer understanding of the perception of corruption.

Based on the outcome of the TUSIAD project, one may conclude that perception and awareness of corruption in Turkey is still problematic. Worryingly, 26% of the 801 respondents of the study conducted perceive corruption as quite frequent and 10% as extremely frequent and 27% of the 801 respondents perceive corruption in quite large scale and 10% as extremely large.

The surveyed companies were also divided into small, medium and large enterprises, showing the differences in perception between them. According to the results, small companies perceive corruption to be extremely frequent by 15% and quite frequent by 30%. The perception of frequency on part of medium companies is of 7% perceiving it as extremely frequent and 22% as quite frequent, and large companies perceive corruption as extremely frequent by 2% and quite frequent by 26%.

Concerning the perception as to the magnitude of corruption, small companies perceive corruption to be extremely large by 16 % and quite large by 31%, while medium companies perceive it as extremely large by 6 % and quite large by 22% and large companies as extremely large by 2 % and quite large by 26%. This shows that larger companies have a tendency of lower perception of frequency and scale, perhaps due to the existence of more articulate corporate policies and control mechanisms.

Moreover, a total of 39% say that they believe corruption is increasing and 46% affirm that it will keep rising in the future. However, most of the respondents do not consider corruption as a problem. Even more worryingly, 37% of the respondents who said they do not perceive corruption as a problem also stated that corruption will increase.

When read together the two following results demonstrate the problem with corruption perceptions: the construction sector perceived the highest rate of corruption, with 55% perceiving it as frequent and 56% in large scale. However, it was noted that, despite the perception that corruption was frequent and in large scale, the construction sector does not perceive corruption to be problematic.

An important point to note is that the business community seems confused as to what constitutes an act of corruption. It is unclear to many where they must draw the line, and they are thus sometimes unable to figure out what would or would not be deemed corruption. The survey contained examples of different types of actions, asking the participants whether they perceived them as corruption or not. This part of the survey proved that there is a pressing need to raise awareness in order to ensure that the businesses know what constitutes compliance. In the most worrying example, while a majority found that offering advantage to public officials to procure an irregular service absolutely constitutes corruption, a considerable percentage chose to answer that this ‘can be considered’ corruption, illustrating their uncertainty as to the matter.

Following the same line of thought, it has come to light that some people give bribes with the perception that this is a good deed. This illustrates once again to what extent confusion in the minds of stakeholders’ causes corruption to persist. Moreover, 46% of the businesses taken into consideration for this study did not have a code of ethics or a corporate policy. When there are no such guiding principles and policies, this creates an environment of lack of education on the matter and lack of structure and framework to fight corruption.

Moreover, similarly to stakeholders not being able to distinguish between what does or does not constitute a bribe, stakeholders are also mostly unaware whether other participants have engaged in corrupt behaviour. This is caused by the secrecy of such behaviour and is influenced by the confusion as regards to what constitutes corruption. This environment of information asymmetry feeds corruption and enables it to persist. This is an aspect within the fight against corruption where companies can take concrete steps, by informing and training their employees and implementing adequate mechanisms.

Adopting compliance programs or anti-corruption programs within private companies would help achieve great progress in the fight against corruption and it would create awareness on the matter among stakeholders which would help tackle the issue of reporting corruption. According to the survey, 60% of the participants have affirmed that they would not report corruption, even if they were aware of it. When asked why they would not do so, their answer in 30% of the cases was based on the lack of a reporting mechanism. It is of paramount importance to make sure that training and compliance mechanisms are enforced, to enable reporting of corruption. Companies should communicate the message that reporting corruption is a duty towards the company, and thus give the opportunity to identify, sanction and ultimately eradicate corruption.

Consequently, the project, among others, comes to the conclusion that the fight against corruption should be a united one, namely through Collective Action. This way, collective action can help overcome corruption by changing the general perceptions, making compliance the norm, raising awareness among the participants and isolating bad participants. Collective Action can be beneficial in the fight against corruption as it can take place on every level and stage, and any type of declaration or monitoring action which would eliminate information asymmetry and bring parties together would be deemed a Collective Action. Collective Action, especially coming from the business sphere, brings hope in changing the corrupt behaviour and perceptions in place. Companies setting the tone, implementing effective monitoring mechanisms and compliance programs, while sticking together and isolating the wrongdoers could be one of the most effective ways to overcome the problem of perception, and changing behaviour for the better.

The TUSIAD survey also inquired whether participants thought Collective Action would be of benefit in Turkey. To that end, 66% to 77% of respondents believe that the use of Collective Action could in fact prevent corruption or at least increase awareness in the field. However, 54% of the participants expressed concerns on whether the Collective Action is legally binding and on the existence of monitoring mechanisms and sanctions. This is actually a general criticism towards Collective Action, as one could argue that if one is not obeying the law, one would not keep promises made to other parties either. In that sense, it seems like Collective Action would progress significantly better through monitoring initiatives. Moreover, it can be suggested that Collective Action should not be left up to the private sector completely, and civil society organisations could take the lead in gathering the public and private sector to achieve more effective results.

NGOs and civil societies

Occurring in the private sector, Collective Action would require competitors to trust each other and share sensitive information, an aspect that could hinder Collective Action to be established easily. To ensure that this tool remains effective, facilitator institutions, such as civil society organisations or NGOs must take action, making it possible for concerned parties to unite. Moreover, such organisations, creating the opportunity to fight collectively will increase the impact and credibility. The role of such facilitators is to bring stakeholders together and provide a neutral platform, to share and provide advice on the best-practices and to nominate external monitors or auditors. The unity created by such organisations will provide the whole matter with strength and importance. Participants will keep in mind a common intention, as opposed to trying to further only their personal benefits, and thus work towards achieving a common goal. Taking each personal capacity and uniting them as a whole will not only help achieve the group’s objectives with each participant making a contribution, but will also help influence other stakeholders.

The more people are part of a Collective Action, adhering to rules of anti-corruption and conducting clean businesses, the more this becomes the norm and stakeholders will find themselves obliged to act accordingly, not only for the sake of clean business, but also for the sake of retraining their market share and competitiveness. The importance of unity is famously reflected in the saying of Aristotle ‘the whole is greater than the sum of parts’.

NGOs and civil society organisations would benefit from Collective Action in the areas of improved access to essential resources such as healthcare and education, higher quality of products and services, increased trust and confidence in business, consistent and fair enforcement regulation and greater traction for their objective of more transparent environment and more attention to corrupt practices as well as better social development when and where the financial resources are invested in social projects instead of corrupt acts and bribery. Moreover in a general manner, Collective Action tends to be more successful if conducted by a neutral supporter.

In conclusion, one of the targets in the fight against corruption should be to achieve adequate education, awareness and the correct perception on matters of corruption, enabled by Collective Action and the collaboration of NGOs with the stakeholders. These initiatives will be most effective if conducted as a united force, fighting against corruption hand in hand.

Gönenç Gürkaynak is Managing Partner, and Ç. Olgu Kama a Partner at the Turkish law firm ELIG, Attorneys-at-Law, where Tahnee Türker is Associate.

Gönenç Gürkaynak

Ç. Olgu Kama

Tahnee Türker