That C-word - Is Battling Corruption About to Get Tougher?

Each year, 9 December is recognised worldwide as. The year 2011 however is especially significant as we've seen corruption make it to the very top of the political agenda.
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Each year, 9 December is recognised worldwide as International Anti-Corruption Day. The year 2011 however is especially significant as we've seen corruption make it to the very top of the political agenda.

In fact, it marks the culmination of a decade of public concern about the detrimental impact of corruption on the economy and society. That decade started with the Enron scandal in 2001 and ended with both the downfall of corrupt dictators in the Middle East and the 'Occupy' protests in London and New York against corporate greed.

The good news? Over that period there's been considerable progress in the fight against corruption. The bad news? In the next decade, fighting corruption will be even tougher.

Following the Enron collapse, there was a wholesale transformation of the regulatory environment in which companies have to operate. Led by the US, there have been a host of international instruments against bribery, insider trading, money laundering and corruption. The rate and size of successful prosecutions and settlements for fraudulent activity, bribery of public officials and other misdemeanours have increased exponentially over the years.

Why is this? Whether it's because the new regulatory environment has exposed more wrongdoing, social media has enabled more vocal public opinion or indeed because there's actually more corruption, 2011 has seen the 'C-word' make it to the top of the political agenda. And governments and leaders are under pressure to take some action.

The Arab Spring was just the start. India is in turmoil following their scandals in the telecoms and construction sectors. And even in countries such as Russia where opinions are harder to express, public fury has taken the shape of reduced support for the governing party during this week's parliamentary elections, a raging debate in the Russian blogosphere, and now street demonstrations against electoral fraud.

India's and Russia's example indicates why the fight against corruption is going to be even tougher in the decade ahead. In 2001, the emerging countries constituted only a relatively small part of the global economy. With their coming of age, their share of the global economy has increased dramatically - and with it their contribution to global corruption.

According to the latest edition of Transparency International's annual Corruption Perception Index published last week, the fastest growing countries hover around or below the median. Bringing corruption under control is perceived there as costly and complex, even unpopular and destabilising in countries where it is a way of life and part of the local culture.

At best greasing palms oils the system, compensating for governance and institutional inefficiencies, weak rule of law, and underpaid public officials. At worst, without corruption, would the entire system for such countries grind to a halt?

The challenge of the next decade will be how to develop a consensus that corruption is in fact harmful to the long-term interests of the countries that will dominate the global economy.

Clearly, to those involved in maintaining the culture of corruption, arguments about the national interest hold no more sway than the traditional ethical arguments against corruption. IBLF believes the driver for change will come from elsewhere: the events of 2011 have shown that public tolerance of the social inequalities caused by the dishonest accumulation of wealth and abuse of power by a small and self-serving elite has reached its limit.

If the regimes of corruption don't change voluntarily, they will be changed forcibly. With that threat on the horizon, it may now be possible to engage the leaders of government and business in the emerging markets in a more constructive dialogue on how to curb corruption. And crucially, to ensure that the proceeds from their countries' continued economic success is spread more equitably and transparently amongst those who really need it.