Sitting on the pavement and crying bitterly, she held a small box in her lap containing a flower and some workplace. I do not even know her name but I will never forget her face. A face I saw in a documentary about the Enron corporation and the corrupt business practices which in 2001 led to the one of the biggest bankruptcies in the US history and the fall of the so-called “America's Most Innovative Company”.
Having seen that documentary, I started seeing the very basics of compliance trainings in a different light. Whenever I have opened an ABC or Code of Conduct training package, the first slide always listed the largest penalties imposed or perhaps the face value of companies before they went bankrupt due to a corruption scandal as awareness raising. As compliance professionals, we can usually recall all the biggest FCPA cases and the penalties such as penalties imposed on Goldman Sachs Group Inc., Airbus SE or Petróleo Brasileiro S.A. But how many of us know another number of utmost importance, namely how many people have lost their jobs from one moment to the next due to human greed and financial fraud?
Just for the record, approximately 4,000 Enron employees were let go from Enron alone and 28,500 workers lost their jobs from Enron, WorldCom and accounting firm Arthur Andersen together, according to estimates of the labor union AFL-CIO. (Finding the information about the total amount of the lawsuit shareholder filed after the bankruptcy took less than a minute, however, finding an accurate estimate about people who lost their jobs as well as retirement savings required nearly one hour research.) How often do we collect data and tell them during our ABC trainings about what happens to human lives, our environment or our society due to corruption or negligence? When we see to lose a 20-years battle in a country due to systemic corruption in Afghanistan we have to face this question. A few years ago, we saw the Port of Beirut explosion causing one of the most powerful artificial non-nuclear explosions in history because of the lack of safe and proper storage of 2,750 tonnes ammonium nitrate, similar questions crossed my mind. Then, I immediately asked the next question.
Is there a way at all to estimate the costs corruption brings on global scale? In the first-ever Meeting of the UN Security Council Meeting in 2018, António Guterres, Secretary-General of the United Nations, emphasized that the problem of corruption is present in all nations — rich and poor, North and South, developed and developing. The World Economic Forum estimated the global cost of corruption is at least $2.6 trillion, or 5 per cent of the global gross domestic product (GDP). According to the World Bank, meanwhile, businesses and individuals pay more than $1 trillion in bribes every year. He added that corruption robs schools, hospitals and others of vitally needed funds, while also depriving people of their rights, driving away foreign investment and despoiling the economy. Corruption breeds disillusion with Government and governance and is often at the root of political dysfunction and social disunity.
So what should be done? First of all, we need to obtain an overview on business processes with clear reporting obligations both for companies and governments about their human-rights and environment-related risks. Once, I have heard a well-put analogy for corruption in an online course about sustainable development: we all should remember that sunshine is the best disinfectant. So, if we want to create a well-functioning CMS to “cure” corruption, we have to start with the very complex process of transparency. We need numbers. Numbers which are relevant, accountable and want to unveil structural human-rights and environmental risks instead of hiding them. Fortunately, there are many initiatives on global level from international organizations (ILOSTAT, UNSDG Indicators, Worldbank Open Data) or analysis published by research institutions (CPI, HFI, Resource Governance Index).
In addition, we need international and national legislators to establish frameworks like the recent ESG initiatives, Magnitsky-type human rights sanctions regimes or the Kimberley Process Certification Scheme. This is the only way to create human-faced, ethical businesses and sustainable, value-based global supply chains. On the other hand, in a world where many multinational companies´ exercise bigger influence than national governments, their cooperation and commitment are of utmost importance. Initiatives like UN Global Compact might help to involve companies to reach the sustainable development goals.
Finally, we need all compliance professionals for the task. We might not be high-level politicians, CEOs of multinational corporations or directors of international research institutes. But we are the ones who advise the decisions-makers on local and regional level every day. We have to tell them that knowing how to create long-term profit for the company starts with knowing how to respect people´s lives and how to preserve our natural values.