Joint Membership Meeting
Transparency and Economic Recovery

10 September 2009 - Transparency leads to a better environment for business and paves the way for economic progress. This was the point highlighted by Transparency International chair Huguette Labelle in the special joint meeting of the Makati Business Club, Management Association of the Philippines, and four foreign chambers of commerce at the Makati Shangri-La Hotel on 10 September 2009. As the keynote speaker, Labelle drew upon her years of experience with the Canadian International Development Agency and shared her thoughts on how to curb corruption not only in developing countries but in developed nations as well.

Labelle outlined the keys to an environment wherein corporations can thrive and ultimately improve the circulation of money. She cited the need for government to achieve transparency, accountability, and integrity, as trillions of dollars are lost because of corruption. Curbing corruption also means stemming the rise of poverty and stopping the spread of violence in countries. Labelle said that “corruption feeds poverty” and even buys “illicit weapons” in other countries, furthering the spread of violence. She also added that the presence of corruption distorts markets, thus affecting company profits and the safety of its people.

Integrity at the Center
She cited integrity, strong leadership and political will, good governance, and a system of political financing as the keys to the management of government institutions. Integrity must be at the center of it all, serving as the moral compass for all institutions. Political will and strong leadership are necessities as well, as these translate to having government officials and political leaders who do not serve to propagate corruption. It is also essential to have a system in place wherein it becomes impossible for parliamentarians to be “bought.”

To battle corruption, it is crucial to have a justice system wherein judges and policemen are professional and cannot be bought. In getting projects off the ground, budgets and revenues should be made known to the people. It is also critical that an anti-corruption oversight body be formed. An independent institution shielded from the executive branch of government should act as a watchdog against fraud. Statements of assets and liabilities of senior government officials should also be made readily accessible to the public, so that from their time of appointment to when they leave the service, whenever a question on integrity should arise, they can be immediately audited.

Taking a Stand
Corruption raises the cost of doing business and it is imperative that private businesses take a stand. By TI’s estimates, costs balloon by 10% to 25%, and these add-ons ultimately get passed to the consumer. According to a UN report, about 37% of management time is lost in dealing with corrupt government officials.

Companies that take action against corruption can expect to get the backing of their customers and consumers. Labelle cited the 2009 Global Corruption Barometer, a survey of 70,000 people, which found that over 50% of respondents were willing to pay more for a product made by a company that does not engage in acts that promote corruption.

In a corrupt system, smaller businesses will suffer more than larger corporations, thus it is critical for chambers of commerce to become more active. With a united voice, businesses can adopt a policy of zero tolerance towards corrupt practices. Many companies are already walking away from deals and biddings that have bribes as a requirement for participation. As more companies and business organizations adopt this type of stance, it creates pressure for government to take stronger action with regard to this critical issue. In order to promote the environment of zero tolerance towards corruption, it is desirable that a country adopt the guidelines of the OECD Anti-Bribery Convention.

To reduce corruption in construction and procurement, which accounts for 73% of budgets and expenses of most governments, she suggested that measures that promote transparency be instituted. In biddings, the involved parties can be asked to commit to integrity pacts, where any party found to have engaged in bribery can be disqualified and be made to pay fines.

Global Action
In raising the banner of transparency around the globe, Labelle shared that they are in talks with China and that Russia is already onboard with the OECD Convention.

As for money laundering, Labelle stated that with the global financial crisis, the G20 is taking steps to improve action on such activities. One of the proposed actions is for entities like Swiss banks to enter into bilateral agreements with countries needing their support. However, Labelle stated the need for financial havens to be the first to turn a new leaf in order to gain victory in the battle against money laundering.

ABOUT THE SPEAKER

Huguette Labelle
Ms. Labelle is chair of Transparency International. She is also currently the chancellor of the University of Ottawa, a member of the Board of the UN Global Compact, member of the Group of External Advisors on the World Bank Governance and Anti-corruption Strategy, member of the Advisory Group to the Asian Development Bank on Climate Change and Sustainable Development, and member of the Board of CRC Sogema. She served the Canadian government for a period of 19 years in various capacities.

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