SMEs and Corruption

In my last column, I talked about transparency and the need to live the talk.

This time, I am using the word corruption, to gain the attention I need. Corruption is simply defined by the World Bank as the “misuse of public office for private gain.” My definition is simple, it is an act of dishonesty. One does not have to be a public official. It can be a private individual performing a corrupt act like fraud, bribery, irregularity and vice. When a person gives bribe money to a public official, he becomes a corruptor. However, if the private individual is “forced” by circumstances like delayed permits for no reason at all, or intentional slow processing of documents, he becomes a VICTIM.

There can be “private-to-private” corruption. Where the negative transaction occurs between two private persons where one of power may pressure a lower ranking employee to the detriment of the company. As stated in the book ANTI-CORRUPTION MANUAL for SMEs by the Asian Institute of Management corruption can take different forms. Bribery is most common.   Extortion and kickbacks are familiar too. State Capture however came new to me. According to Anti-Corruption Manual, this is a “situation in which a powerful individual or group makes payments to public officials to induce them to pass laws and regulations that give unfair advantage to that individual or group.”

In our country, most prone to corruption practices are the Small and Medium Enterprises (SMEs). The 2009 Social Weather Station study showed a graduation of corruptions avenues. It is noted that bribes in all forms and levels takes the top rank among the corruption modes. The reason for the bribes vary from collecting receivables from government for a transaction made e.g. contract payments for supplying items to government like paper; to assessment or payment of taxes.

Although I resent the branding of our country among the most corrupt, I cannot deny that such practices are happening here as in any country. Though in other better economies, they have more sophisticated and possibly not so blatant ways. And their citizens don’t talk about the ills unless in very exceptional cases. If not, they make innuendoes in movies. Here, we declare it to the dismay of our reputation! Still, I would like to believe, we are not as bad and that things can be done.

The move of the Asian Institute of Management to reach out to the SME’s to fight against the proliferation of corruption is a commendable effort.

So how does one avoid being corrupt or corrupted? The answer is to implement an effective anti-corruption program in the company. This can be done through policies. Any form of bribery must be prohibited. A rule on gifts and entertainment must be made clear. Until what extent is a gesture of gratitude or appreciation on a birthday or occasion, or a token for a legitimate service? This must be defined. Conflicts of interest must be reported. A code of conduct would also be most helpful.

Training of employees on anti-corruption program would help them keep the corporate values against corruption. To support this, the business should have clear systems and controls. Very important, so as not to be subject to fixers, would be accurate and speedy payment of government taxes. By paying taxes even before its due date, one can save on rebates through incentives, and other may avoid having to go through the redtape in order to postmark their payments on time.

It is encouraged that a policy be made known so that once the company is known for this, they will not be even exposed to the men with the “moneybag” as the “snatchkins” will be wary of being exposed.