GrowthiQ

Changing corrupt cultures

How would you assess your respective governments’ records on tackling corruption?

VR: Since the new Indian government came to power in 2014, the perception on the ground is that it has taken steps to curb transactional and institutional corruption, but that it still has a long way to go. India is very decentralised through its 30 states; each has significant power and they are not always in tune with what happens in the centre. But from the centre the message has been clear: it’s focused on growth and governance, and implementing e-governance in particular – meaning you don’t have to interact with government officials, where the incidence of corruption is highest.

DM: At the start of 2014, the Brazilian government approved  its anti-money-laundering laws. Since then, I think, indictments have quadrupled. The commitment is growing but there is a long way to go, especially because of the acceptance of the corruption culture, which makes things harder to change. But companies are scared. With the introduction of anti-corruption laws we have seen – perhaps for the first time in history – very wealthy people arrested. So I think Brazil is in a much better place than it was previously.

Is there anything the business community can do to demand more transparency?

VR: Many companies have started adopting what’s known as an ‘integrity pact’ that Transparency International devised many years ago. In its simplest form, if you’re a company and you’re dealing with a government agency or state-owned entity, the two parties sign an integrity pact committing to not engage in corrupt practices during the lifetime of the contract. Both parties would agree to an independent monitor to ensure that they comply with the terms of the integrity pact.

DM: Companies in Brazil are now required to invest more in software changes to adapt to internal revenue service information system requirements, which will monitor conversations between clients, vendors and tax compliance authorities. We’ve also seen an increase in staff training on anti-corruption and law compliance. We get invited to about 10 to 15 events a month to talk about compliance and how to build a culture of zero tolerance. I think the business community is trying to raise the bar, or at the very least to have practices that are as good as the rest of the world with regards to tackling corruption.

How would you rate the prospects of your respective countries for improving their Transparency International scores?

VR: I think India has a good chance of improving its score but it requires political will to change the current system, combined with companies committing not to make corrupt payments. But the score itself is just an end result. The aim should be to reduce corruption, improve compliance with laws and regulation, and re-establish faith in institutions like the judiciary and other agencies. Our score will improve if perceptions on the ground improve.

DM: I’ve been analysing the index for the past few years. Despite politicians going to jail for corruption scandals and the passing of strong anti-money laundering and anti-corruption laws, Brazil has stayed in the same place, just two to three positions higher or lower. This suggests other countries are taking action too, so we clearly need to do more.

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