Firms spend over Sh3 trillion in bribes

By John Oyuke

Private companies spend an astonishing Sh3 trillion (US$40 billion) annually to corrupt politicians and Government officials in developing nations.

A new Global Corruption Report (GCR), 2009 also reveals half of the international business executives believe corruption raises company costs by at least 10 per cent.

"Revolving doors between public office and the private sector facilitate unscrupulous public procurement deals where non-competitive bidding and opaque processes lead to immense waste and unreliable services of goods," the authoritative annual report indicates.

Transparency International-Kenya Executive Director Job Ogonda says public officers are the biggest beneficiary of corruption, despite existence of the Public Officer Ethics Act and the Public Procurement and Disposal Act.

Dr Ogonda, who was speaking during the launch of the report in Nairobi yesterday, said existence of the two Acts has not prevented reckless companies or officers from disregarding laws and flouting regulations.

Kenya Association of Manufacturers Chairman Vimal Shah speaks at the launch of the Global Corruption Report (GCR), 2009 in Nairobi on Wednesday. With him are World Bank Country Director-Kenya Johannes Zutt (centre) and Transparency International-Kenya Executive Director Job Ogonda. [PHOTO: TABITHA OTWORI/STANDARD]

He said between 50 and 60 per cent of businesses transacted in the country depends on the Government.

Despite Kenya’s impressive infrastructure by sub-Saharan Africa standards, he said, the country lags behind in attracting foreign direct investment due to corruption.

Ogonda said lack of private investments could threaten realisation of key pillars of the Vision 2030 economic blueprint.

No sacred countries

World Bank Country Director, Kenya, Johannes Zutt, said they are committed to working closely with the Government to fight corruption in development projects.

He said the bank was helping in consolidating public financial management systems in the Ministry of Finance, and results will be seen soon.

The GCR, 2009 says no country or region can claim to be immune to corruption or exhibit consistently superior performance in tackling the vice.

Overall, some of the most troubled and poorest countries continue having the gravest problems with corruption.

However, the supply of corruption often comes from wealthier countries, making the problem global.

The report says emerging economic powerhouses such as China, India, and Brazil should be brought more strongly into the global fight against corruption.

Likewise, it adds, countries and companies in the North must do more to fulfill their responsibilities.

It presents a wealth of innovative tools and promising approaches to strengthen corporate integrity. The right mix depends on business size, sector, and operating context.

In Tanzania, Small and Medium Enterprises have found a way to counter corruption through collective action by routing requests for fraudulent payments to a single contact point.

Exchange notes

Major players in the defence industry, for example, compare notes and discuss corruption challenges.

The report also presents innovative approaches by regulators and law enforcement agencies.

Compliance monitors, for example, can be placed in companies convicted of corruption to ensure they put in place better compliance systems to prevent future wrongdoings.

Deferred prosecution agreements, it points out, if used appropriately, can sanction wrongdoing more swiftly and effectively.