Corruption Caused the Asian Recessions
|November 20, 2003||Posted by Staff under Progress Report, The Progress Report|
Evil Should Never be Tolerated
Asian Recessions Spur Self-Criticism on Corruption
by Ron Corben
At the height of Asia’s economic miracle, many governments and people tolerated corruption and viewed it as an inevitable, if not so savoury, part of economic growth.
But the region’s crisis has changed this. It has focused attention on the business ethics that raised so many corporate bubbles in decades past, and are now being blamed for much of the weakness in Asia’s financial systems.
Corruption is now at the fore of debate from the private to the public sector, leading to calls for transparency and better governance to avoid a repeat of the present contagion.
The once high-growth economies of Indonesia, Thailand, Vietnam, South Korea, and the Philippines have all been cited in business surveys as having significant levels of corruption.
”It is easy for the public to turn a blind eye to corruption when economic times are good,” the Hong Kong based Political and Economic Risk Consultancy Ltd (PERC) said in a report this year.
”(But) As economic times worsen, however, such tolerance disappears,” PERC said. ”(As) economic conditions were becoming more difficult ..it was easier for businessmen to see the link between deterioration and corruption,” the consultancy added.
And while Asian leaders have taken pains to explain that corruption is not solely to blame for their countries’ recession, they acknowledge it is time to root out such unhealthy practices.
As the ranks of the region’s millions of unemployed grow, pressure is growing on government and the private sector alike to set new standards in both business ethics and human rights — and demonstrate greater social responsibility beyond making profits.
”Increasingly, business ethics is on the international agenda,” said Wesley Cragg, chairman and president of Canada- based Transparency International, at a United Nations symposium on human rights and business here last week.
”The need for the development of policies addressing their social responsibilities locally and internationally is now widely recognised by multinational corporations,” Cragg added.
But international corporations have also chosen to operate in countries where human rights protection was overlooked or rights legislation poorly protected, especially when these conditions benefit business operations.
Thus, Cragg said there was a ”need for a new approach” where the private sector also took responsibility for human rights abuses in their place of operations. A new social contract must include corporate policies and codes that encompass respect for human rights in all aspects of their operations, he added.
Opening the U.N. symposium, Thai Prime Minister Chuan Leekpai said there was a need to ”build a partnership among the state, business and society to promote good governance”.
These would be based on ”ideals of shared responsibilities, public interest and conscience,” he explained. ”On the state’s part, good governance means creating a legitimate and responsible government.”
And while an efficient civil service that respects the will and the rights of the people was necessary, business also needed to ”do its part to promote good governance and human rights”, he pointed out.
”Indeed, we have to encourage business to recognise that its responsibilities towards society go beyond activities motivated primarily by profit,” Chuan noted.
”A sense of corporate social responsibility should be cultivated,” he said, saying a code of business ethics would help fight corruption ”which undermines morality, the rule of law, and hinders the economic and social development of the country”.
”Ethics and business are not adversaries,” added Anand Panyarachun, former Thai prime minister and a well-respected businessman.
”In the long run they need each other. The market cannot be sustained by economic value alone. It requires a set of ethical standards to make the market not a place of exploitation, but of mutual gain,” he explained.
Thailand itself has seen a wave of corruption scandals, from police taking bribes, to health officials boosting drugs prices paid by rural hospitals or collusive pricing in contract bidding.
Anand echoed calls for a ”unified and standardised code of ethics for business practice”.
Among the guidelines he suggested for this code are the Social Accountability standard 8000 (SA 8000), the Organisation for Economic Cooperation and Development guidelines for multinational enterprises and the International Labor Office tripartite declaration of principles for multinational enterprises.
Another is the Caux Round Table Principles for Business, which calls for the world business community to play an important role in improving economic and social conditions.
Likewise, Anand pointed to the Amnesty International Human Rights Principles for Companies, which believes the business community ”has a wider responsibility – moral and legal – to use its influence to promote respect for human rights”.
In the end, Anand said the guidelines need to be ”realistic and practical” but ”unwavering in principle”, yet efficiently administered, verifiable and regularly reviewed.
Robert MacGregor, president of the Minnesota Centre for Corporate Responsibility, says the regional crisis is an opportunity to do some ”reflection on what has gone wrong”.
”And one of the things that has gone wrong — capitalism when it’s not practised properly doesn’t function well,” MacGregor argued. ”When you have corruption or a lack of transparency, and cronyism, that hurts everybody.”
What’s happening in your country? Is corruption taken seriously, or winked at, or rewarded? Tell us your views!