June 25, 2015
The U.S. government’s FIFA bribery investigation has been a long time coming. It is a story of enormous public interest, with many facets beyond the lucrative business of football. It is an illustration of systemic organizational corruption, the consequences of warped incentive structures, the limits of financial audits, and America’s role as global anticorruption enforcer.
But perhaps the most powerful long-term effect of these events will be to highlight the social devastation that corruption can cause, and refocus attention on the links between bribery and human rights abuses. By examining these links, business leaders can evaluate the tools they use to address corruption and human rights issues and consider some new approaches.
The investigations of FIFA officials has focused attention on other issues that might be festering as Qatar prepares for the 2022 World Cup, including reports of deaths, poor working conditions, and restrictions on freedom of movement among workers who are helping with construction for the big event.
Multinational construction companies working in the Persian Gulf are often concerned to implement measures that prevent such abuses in their own supply chain, but this industry’s supply chain is notoriously complex—which is one reason Transparency International has cited construction as the industry with the highest corruption risk. Companies may be able to drive human rights standards for their immediate business partners in the Gulf, but the supplier’s subcontractor’s subcontractor’s subcontractor is probably just a guy with a mobile phone, procuring workers at short notice.
Operating as a responsible construction company in this region is difficult, not only because of complicated supply chains. Beyond the normal challenges of managing the workforce, the role of the government in the economy necessitates majority local partners and can significantly reduce companies’ room for maneuver in implementing their own corporate standards.
The correlation between complex supply chains, corruption, and human rights abuses is not unique to the Gulf. In the 2008 earthquakes in Sichuan, China, thousands of school classrooms collapsed, and as many as 70,000 people died. The cause of these deaths was not the earthquakes themselves, but corruption—the schools had been built in a rush, on fault lines, and with shoddy materials that likely weren’t up to code.
Usually when discussing the links between corruption and human rights, someone will argue that corruption is one of the means by which human rights are undermined. It’s rare for corruption itself to be cast as a human rights abuse. Indeed, neither the OECD’s anti-bribery convention, nor the UN Convention Against Corruption frame corruption as a human rights violation. The UN’s Universal Declaration of Human Rights does not include freedom from corruption as a human right. Nor do the Sustainable Development Goals make reference to corruption, even though other goals, such as poverty elimination and universal access to energy, are impossible without sustained and robust efforts to tackle corruption.
Part of the reason these issues are treated separately is due to the enormity of the challenges individually. It also reflects international legal frameworks, which treat corruption as an issue of legal compliance, while human rights standards are (so far) addressed through voluntary frameworks. While human rights abuses certainly can be legal violations, the level of attention paid to the Foreign Corrupt Practices Act, the Bribery Act, and other national anticorruption laws—plus the enforcement focus and the penalties—means that companies set aside more budget and resources for corruption than for human rights.
Government-mandated anticorruption frameworks also mean that corruption is primarily treated as a problem that can be solved by a set of internal policies and process, and responsibility for prevention sits in compliance departments. Human rights approaches, on the other hand, are much more fragmented. Some focus narrowly on labor law, while others are based on the UN Guiding Principles on Business and Human Rights, which acts as a form of soft law, and can be seen as a voluntary corporate responsibility initiative.
But given the strong connections between corruption and human rights, the two should be viewed holistically in many cases. Company approaches to corruption would benefit from a focus on the wider impacts and consequences of bribery. This would make the issue more vivid and compelling to employees. Likewise, human rights approaches would benefit from the attention, budget, and focus that is given to anticorruption.
What does this mean, in practical terms?
Market-entry studies and project evaluations should consider risks and impacts from the point of view of the rights and consequences on stakeholders and communities, and should evaluate the risks of corruption and human rights abuses in tandem. Corruption-risk assessments are required elements of an anticorruption program and involve assessment of market, sector, transaction, business opportunity, and business-partnership risks, as well as the nature and level of interaction with the government. These assessments could easily be extended to consider human rights issues across the same risk categories—something that would require little extra budget and time while providing extensive additional insight. Similarly, third-party anticorruption due diligence often requires detailed confidential research and intelligence gathering, and it would not be a stretch to examine the human rights standards of a potential business partner at the same time as assessing its bribery risk.
Anticorruption programs could also include a focus on the wider impact on stakeholders of investments and business relationships. Human rights frameworks focus on impacts as a way to demonstrate that the issues are wider than corporate risk. As we can see from the issues in Qatar, bribes also can have disproportionate societal impacts, and considering these would allow companies to more explicitly link their anticorruption efforts to their commitment to ethics and values. This would also allow the company to pay more attention to societal impacts, corporate responsibility, and the company’s broader stakeholder and community relations.
Some BSR members are already incorporating corruption criteria as a material issue in their human rights impact assessments, and this approach could be adopted far more widely.
As the FIFA scandal shows, corruption can have impacts on people and society that far exceed the value of the bribe payment or the internal organizational consequences. As a result of a systemic degradation in the relationship between government and society, bribery can be a force multiplier for human rights abuses. But if companies consider corruption and human rights in tandem, we may see improvement on both.
Let’s talk about how BSR can help you to transform your business and achieve your sustainability goals.