Strong Leadership and Good Governance Can Prevent Your Firm from Becoming the 'Star' of the Next Corporate Corruption Scandal

By Goodley, Simon | Financial Management (UK), April 2013 | Go to article overview

Strong Leadership and Good Governance Can Prevent Your Firm from Becoming the 'Star' of the Next Corporate Corruption Scandal


Goodley, Simon, Financial Management (UK)


Colonel Pickering once famously asked: "Have you no morals, man?" "Can't afford them, governor," replied Alfred Doolittle. Many readers will, of course, recognise that exchange from George Bernard Shaw's Pygmalion, but few will be sad enough to know that the lines have also appeared in a far more obscure script.

Back in April 1976, a witty Whitehall official used the quotation to preface a confidential UK Department of Trade paper on the subject of "special commissions and allied payments", which took a rather pragmatic view on how capitalism's wheels were being lubricated.

"The existence of, and need for, special commissions if business is not to go elsewhere has long been recognised," the document explained. "A possible reason for [the level of commissions rising as high as 25 per cent of the contract value] lies in the new rich oil markets in the Middle East and elsewhere where bribery has, for centuries, been endemic."

Denis Healey, Harold Wilson's defence secretary from 1964 to 1970, put the problem in more direct language. "Bribery has always played a role in the sale of weapons," he told The Guardian in 2007. "In the Middle East, people couldn't buy weapons unless you bribed them to do so, and that was particularly true in Saudi Arabia."

Plus ca change. The issue of corrupt payments periodically comes back in vogue and - following the 2010 Bribery Act - the issue is fashionable once more.

Just before Christmas Rolls-Royce, the aero engine group whose reputation appeared so robust that the UK coalition held a cabinet meeting at its Derby HQ in 2011, said it had passed information about bribery and corruption allegations to the Serious Fraud Office.

These are only allegations and the claims do seem to relate to the past, as well as involving the company's intermediaries. But intermediaries can do tremendous damage. They are recruited and approved by the company and there is a clear obligation to make suitable appointments and then monitor behaviour. Furthermore, the Bribery Act does not allow companies to explain irregular payments away by simply blaming it on some outside agent. Acting for the company is enough.

[ILLUSTRATION OMITTED]

So if a company of Rolls-Royce's standing can get dragged into these cases, then are any businesses immune?

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Strong Leadership and Good Governance Can Prevent Your Firm from Becoming the 'Star' of the Next Corporate Corruption Scandal
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