Making problems disappear

I don’t think anyone doubts that something is rotten in the cozy world of the tabloid press. The unbelievable shenanigans surrounding News Corp and “The world’s greatest newspaper” would get a Hollywood scriptwriter fired. Even Scorcese  would struggle to pull off this fantasy of money, power, politics and corruption.

Corruption Perception IndexBefore this scandal resurfaced, Transparency International’s 2010 report into perceptions of corruption gave Australia a score of 8.7 out of 10 – significantly ahead of the UK at 7.6. Fortunately for “Brand UK” and anyone still needing to do business there, we now have the comfort of the new UK Bribery Act, which has just come into force. Perhaps it will help the UK clean up it’s image. Then again, even countries like Indonesia (2.8), the Philippines (2.4), and PNG (2.1) have signed and enacted the UN Convention Against Corruption.

When most people think of corruption, they are imagining envelopes of cash changing hands to get some land rezoned for development. While there have been some notable local council scandals here in Australia – the Wollongong Council affair springs to mind – I think most businesses would do well to keep a vigilant eye closer to home.

If potential suppliers think they need to wine and dine your team members to be invited to submit responses for an RFP, then you shouldn’t be surprised when your team members start posting Facebook photos of dinners at Aria.

Corruption is related to perceptions of acceptable behaviour. When leaders deal with difficult situations by telling team members “to make the problem disappear”, you are setting yourself up for problems. The language and behaviours of leaders can play a serious role in fostering corruption within organisations.

The NSW Independent Commission Against Corruption (ICAC) has just published recommendations to address corruption in procurement for the NSW goverment. Perhaps the ICAC is hoping to scare someone into boosting their budget, but they estimate that 12% of their complaints each year relate to procurement. Furthermore, when they surveyed suppliers to the NSW government, almost half the 1500 suppliers involved indicated that they thought corruption in NSW government procurement was a moderate to major problem.

The key ICAC findings:

“While most corruption in procurement that comes to the attention of the ICAC is at the lower levels of public agencies, it is widely spread across tiers of government and affects most types of agencies. The problem may well be characterised as systemic across NSW.

This suggests that conditions that encourage, cause or allow corruption exist at the state policy and procedural level rather than solely at the lower levels of operational agencies.

The work of the ICAC indicates that statewide corruption risks with regard to procurement stem from a combination of system design and implementation weaknesses:

Weaknesses in procurement system design

  • the absence of a central, leadership role
  • structural confusion
  • regulatory complexity

Weaknesses in implementation of procurement

  • poor information, advice and support to agencies
  • low levels of procurement competence across the state
  • weak oversight of policy compliance.”

The ICAC recommendations to address these findings are well worth reading, and make a strong case for a more systematic approach to leadership development, and corporate culture. Government departments clearly aren’t the only place you can find corruption. In Australia, if an employee is prosecuted for corruption, there is a possibility that the corporation and its directors can also be legally held to account. The next time you carry out a risk management audit, it is worth examining what mechanisms your organisation has in place to detect corruption and guide employees on appropriate behaviour.

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