Curbing the Menace of Corruption in Nigeria – Ezieme Iheoma

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Private Sector & Corruption Menace - Ezieme Iheoma
Iheoma-Ezieme

Corruption is now widely recognized as one of the greatest barriers to prosperity, economic competitiveness and development, and political and social stability of Nigeria as well as other countries. The key question now is not whether we should combat it or whether it is important—but how can we effectively combat it?

Measures that address the supply side of corruption aim at limiting the ability of the private sector to willingly engage in corruption. Efforts on the demand side of corruption, on the other hand, aim at limiting the ability of public sector employees to extort bribes and use their power of public office for personal benefit. In the end, measures on both sides aim at correcting the institutional problems, i.e. taking away the incentives and opportunities to be corrupt. It is important to look beyond simply weeding out corrupt individuals to reforming systems that reward corrupt behavior.

Recommendations

  1. Set up an independent anti-corruption committee

An independent committee to investigate and eradicate ethics and corrupt-related problems in partnership with anti-corruption agencies like the EFCC and ICPC can be set up and entrenched into the Article of Association. The committee should be organized in such a way that after investigations have been carried out within the organization, then the anticorruption agency (EFCC or ICPC) will carry out their own independent investigation after which the committee will make their final decision. The committee should be headed by independent board members, which reports directly to the Chief Executive Officer (CEO), with the committee members appointed by the Chairman. Because it is possible for the CEO to be investigated, it is useful to empower the committee and allow it to carry out its investigations despite having views that are contrary to that of the CEO. The anti-corruption committee may establish company code of ethics and state formally the acceptable standards, procedures and decisions, which a majority in the organization is expected to follow.

  1. Whistle blowing initiative

Whistle blowing is a protective initiative from discriminatory or disciplinary action, for employees who report in good faith and on reasonable grounds suspicions of corrupt misconduct, illegal acts or failure to act within an organization, to competent authorities. Whistleblowing is viewed as a positive act that can make a valuable contribution to the business efficiency and long-term success. It is not disloyal to colleagues or the company to speak up. The initiative is committed to achieving the highest possible standards of service and the highest possible ethical standards in public life and in all of its practices. To help achieve these standards it encourages freedom of speech. In this respect, empowering employees to voice their concerns may be useful given their close proximity to ground level activities. Besides the employees, the whistleblowing initiative may extend to creditors, customers, environmentalists and other interest groups. This is to formally integrate the stakeholders’ interests into the company’s decision-making process. 

  1. Increase the penalty cost

It is well established that an employer has the right to discipline an employee who has acted improperly in the workplace. Because of the associated cost imposed on the organization (like loss of goodwill and reputation, and wastage of managers’ time to deal with the issues), the offenders should be liable to pay a penalty. However, it is important that before any penalties are imposed, the performance standards are properly defined and made known to agents. Detecting deficiencies must be done objectively and fairly, with the causes properly defined and assessed. It has been suggested that punishments should only be imposed as a last resort (because an organization incurs costs in imposing punishments like the affected workers becoming anxious, fearful, revengeful, and violent), possibly when the offences are committed despite repeated warnings. In other circumstances, corrective discipline (like encouraging, coaching, and training) may be imposed to correct one’s behaviour before more severe punishments are applied.

  1. Strong political leadership to inculcate the incorruptible virtue
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The Chairman of the Board, CEO and executive managers must set good examples for others to follow. They should constantly appeal to the moral consciousness of their staff and remind them of the benefits of doing good and the negative implications of seeking private benefit at the expense of the principals’ interest. The intention is to inculcate a corporate norm that acting incorruptly is unacceptable. As such, establishing corporate norms is useful so that internal rules are complied with.

Declaration of managers’ family assets should serve as a useful deterrence against acts of bribery and extortions. Successes in these acts will subsequently generate suspicious increment in their assets. If there is an allegation against the executive managers of assets wrongfully gained, they should be asked to explain how the assets were acquired. If they are not able to explain how they had acquired the assets, the anti-corruption committee for corruption should investigate the matter further.

  1. High levels of remuneration that support a reasonable standard of living, and removes incentives to engage in corrupt activities

If individuals are responsive to incentive and disincentive measures, paying competitive salaries to the staff may serve as a useful deterrent against acts of corruption. The briber would then have to pay a more substantial amount to entice one to act corruptly. Paying competitive salaries also help the organization to retain competent staff. To further reduce the incentive for corruption, private sector organizations could adopt the “pay for performance” principle with a greater proportion of the staff salaries converted into variable form. This may be useful because individuals are generally marginal thinkers; additional incentives create additional efforts to excel in the working place.

  1. Signatories to international organisations

Many international instruments and initiatives have been launched in the fight against corruption which gives room for private sector participation. They include:

  • The World Bank: The World Bank in 1997 began its anticorruption efforts in Eastern Europe and Central Asia with the design of diagnostic tools. It has since developed a full program of analytic work, technical assistance, training programs and lending instruments targeted towards reducing corruption. More recently through the World Bank Institute is promoting the disclosure of project and contract information in public-private partnerships.
  • OECD Guidelines for Multinational Enterprises (OECD Guidelines): The OECD Guidelines are voluntary codes of conduct for multinational enterprises (MNEs) in terms of inter alia working rights, human rights and environmental safeguards. Corruption is addressed in chapters III and VI.
  • United Nations Convention against Corruption (UNCAC): The UN Convention against Corruption (UNCAC) requires member states on the one hand to prevent corruption within the private sector (Art.12, for example, requires the enhancement of accounting and auditing standards of companies) as well as to criminalize certain corrupt practices related to the private sector within their national jurisdictions.
  • The United Nations Global Compact (UNGC): A voluntary initiative for businesses whereby they align their strategies and operations with the universal principles (including anticorruption) and societal goal to promote collaboration and innovation.
  • The United Nations Office on Drugs and Crime (UNODC): A global leader in the fight against illicit drugs and international crime, in addition to being responsible for implementing the United Nations lead programme on terrorism and combat the growing threats of transnational organized crime and corruption.
  • Extractive Industries Transparency Initiative (EITI): EITI which aims to strengthen governance by improving transparency and accountability in the extractive sector. It is a global standard that promotes revenue transparency. Each implementing country creates its own strategy based on the EITI standard overseen by participants in the government, companies and the civil society.
  1. Deploying smart technologies
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Smart technology should be deployed in procurement process to give room for transparent and accountable system of doing business. Cash transactions should be completely abolished or minimized as much as possible. With electronic movements of cash everything could be within watch and can be tracked.

Anti-corruption software tools are being designed specifically for detecting and responding to fraud, including “intelligent mining” of data sets and administrative procedures. This software helps to identify projects susceptible to risks of fraud, conflict of interests or irregularities as well as data mining tools through open source procurement monitoring and analytics portals.

To strengthen internal processes and prevent fraudulent practices, data analytics are able to periodically investigate transactions in procurement and payment models, check for anomalies and quickly identify suspicious transactions, such as illicit financial flows. Other benefits of technology that lead to detection and prevention include the automation of processes that remove human agents, e.g. contracting officials and corruption opportunities from procurement operations. This is targeted at reducing bribery in operations and can be employed in any system.

In the public and private sector, forensic tools for auditors such as Self-Monitoring, Analysis and Reporting Technology (SMART) should be employed to combat corruption risk. In Nigeria the anti-corruption internet database (Acid) has pulled together data and information, tools and resources, and forged a coalition of players to fight the corruption that pervades society

  1. Recruitment and Training systems

Organisations can organize trainings internally (for their personnel) and externally (for their stakeholders, customers, clients etc). The essence of the training is to uphold the organisations’ zero tolerance for unethical behavior and corrupt practices.

The recruitment system should be very transparent. The prospective employees should be made to understand that the organization is known for integrity and high ethical standards as well as expertise; and does not tolerate any form of misconduct and also sign an undertaking in case they default. By so doing the individuals are kept abreast of the code of conduct and will make efforts to adhere.

  1. Engage civil society

Involving think tanks, business associations, and other nongovernmental organizations in the reform process is vital to spreading understanding of the costs of corruption and building demand for change. These are key players in promoting accountability in both the public and private sectors.

  1. Streamline laws and regulations

Eliminate or reconcile duplicative and conflicting commercial laws in order to reduce barriers to doing business along with incentives to pay bribes. One method is to grant independent commissions of judges the authority to reconcile or strike down inconsistencies. Business associations and think tanks, too, can create inventories of legal barriers and duplicative regulations that need to be changed on a priority basis.

  1. Establish sound procurement codes

For the sake of integrity in public contracting and fair competition, transparency must be built into procurement. Procurement codes should require open bidding and tenders. Bids should be open to public scrutiny, and civil society should participate in monitoring procurement processes.

  1. Integrate the informal sector into the mainstream economy
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Large informal economies emerge when conflicting laws and regulations make compliance impossible, particularly for small firms. Informal firms can be brought into the mainstream by lowering the barriers to starting and operating a formal business, for instance, by streamlining business registration procedures. Another approach is to exempt small firms from certain regulatory requirements.

  1. Simplify tax codes

Simplifying tax codes reduces corruption in two ways: by limiting the ability of officials to use discretion in applying tax regulations, and by reducing tax evasion (increasing tax compliance) through lowering taxes. This is also a good route to reducing the shadow economy.

  1. Introduce civil service reforms

A living wage for civil servants that is competitive with private sector salaries reduces the demand for extra payments. At the same time, professional standards, training, and performance monitoring should be implemented. The authority of inspectors should be carefully defined so inspectors do not overstep their bounds.

  1. Promote clear rules on conflict of interest for the public sector

In many countries, it is still possible for government officials to hold additional paying positions in private or state firms, or to accept consulting fees from private firms. At a minimum, such relationships should be disclosed and the officials barred from making decisions affecting those firms. In addition, officials should be restricted from moving into positions in firms doing business with the ministries or agencies with which the officials serve.

Conclusion

Corruption is not only a moral issue; it is also an economic one. Combating corruption, therefore, requires looking at the costs that it imposes on business, governments, and society and instituting good governance mechanisms within both the public and private sectors. Such mechanisms take away the opportunities for corruption and hold corrupt public officials and companies accountable for their actions. As corruption is a problem of the private and public sectors, both sectors should implement anti-corruption measures. Simply blaming corruption on the other party, as is often done, does not solve the problem. Also, anti-corruption measures should not be focused on weeding out single corrupt individuals. Such measures merely deal with the symptoms of a larger problem. Instead, anti-corruption initiatives should address the root sources of corruption—inefficient institutions. Building a system of strong, balanced institutions reduces corruption by creating a set of reliable incentive structures, where compliance is not costly and corrupt behavior is monitored and punished. Initiatives to combat corruption should come from the private sector, as well as from Governments and civil society groups. To reduce corruption, a widespread commitment by both the private and public sector, regardless of size, industry, and location is essential. As corruption came to be part of Nigerian political, economic and social system, it can also be eradicated if strategic and stringent measures are adopted to combat it. As John Nooanan in his book titled “Bribe” opined:

“as slavery was once a way of life and now… has become obsolete and is incomprehensible, so the practice of bribery in the central form of the exchange of payment for official action will become obsolete”

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