Integrity Summit: Are We Serious?

Article excerpt

MANILA, Philippines - Aquino III told some 300 delegates attending the "Integrity Summit" last week, "to foster integrity in both government and the private sector." While business executives across Asia - not just the Philippines - regularly complain about corruption, Mr. Aquino appeared to suggest that business executives in the Philippines do more than complain, and refrain from succumbing to temptation.

The executives present are already doing that out of moral outrage, fear of prosecution, or having been found out and publicly punished. Frank Schmidt, vice president and compliance officer in Asia and Pacific for Siemens, bravely represented companies in that last category. In 2008 and 2009, Siemens was fined $1.6 billion by the US Justice Department, Securities & Exchange Commission, and German authorities for engaging in corruption.

The record fine was much smaller than the $5 billion Siemens originally feared it would have to pay. The company got off for much less because it cooperated with investigators. The scope of Siemens' depravation was breathtaking. From 2001 to 2007, the company maintained a slush fund totaling E1.3 billion. So engrained was the practice of bribing government officials in the Siemens culture that one observer noted, "At Siemens, corruption was just a line item."

Siemens subsequently announced that it had uncovered other corrupt practices in Africa, demonstrating that internal controls put in place in 2009 were effective in exposing illegal acts committed by its executives. The message was that corruption was not just unacceptable business practice. The company would cooperate with government regulatory authorities to prosecute executives who bribe government officials.

"Just don't do it," was the message Mr. Aquino seemed to want to communicate to the suits in the summit audience. Delegates present appeared receptive, and they stayed on for afternoon panels in which their counterparts in a variety of industries - from broadcast to IT-BPOs - explained how their companies reign in corrupt practices. The information was useful to many perhaps, but speakers were preaching to the choir.

Executives in about 500 companies signed an "Integrity Pledge" leading up to the summit. While that's an impressive number in a business community in which IT-BPO firms are among the largest companies in the country, it's pretty obviously a fraction of the executives who are in a position to offer or resist bribes - which is essentially every businessperson and every adult in the Philippines when we consider how engrained petty corruption is in daily life.

But we are not alone in that respect. The results of this year's ASEAN Outlook Survey - participated in by member executives of US Chambers of Commerce - shows that corruption is a dreadful problem throughout the region. …