Businessmen slay monster of corruption.

When German businessman Frank Straub was recently negotiating a joint venture contract with a Bombay firm to manufacture stainless steel kitchen sinks, he was disturbed to find that the managing director's salary didn't show up in the company's accounts. The company ran a `reptile fund' to pay bribes and up to 30 per cent of the sales, or DM400 million, were in black money--a legacy of India's one time punitive taxes. `We managed to get that sum down, not to zero, because sometimes you have to pay customs officers or wait for weeks and weeks. We could not go all the way at once in eliminating corruption,' Straub said. The joint venture went ahead and now the MD has a small fund of $4,000 a year for `facilitating' payments. Straub hoped the company would eventually eliminate this altogether.

Straub was addressing the Caux Round Table (CRT) group of business executives who meet each year in Caux. CRT wants companies to go all the way in hauling on board their social responsibility, including a zero-tolerance of corruption--like so many Beowulfs slaying the monster Grendel, as Stephen Dillenburg, Managing Partner of Summit Investment Partners in Cincinnati, put it.

CRT reflects the growing debate about the corporate world's ethical role in globalization. Top accountancy firms such as KPMG and PricewaterhouseCoopers (PWC) are increasingly being called in by companies to audit their so-called `triple bottom line'--not just the accounts but also their environmental, social and ethical impacts. But adding up the balance sheet is one thing. Measuring a firm's ethical performance is not nearly so precise.

Now PWC, four of whose executives were at this year's CRT, are drawing up a range of benchmarks, based on the CRT's publication Principles for Business. The aim is to provide tools for companies to assess how well they are meeting their obligations to all stakeholders.

The big question, said PWC Partner Glen Peters, was `how to integrate environmental and social audits. How do you measure reputation?' A `quality methodology' was needed to satisfy five stakeholder groups: employees, shareholders, customers, suppliers and joint-venture partners. `Now we have got two great brands, Caux and PWC. The synergy of the two could move us forward apace,' Peters said.

CRT Chairman Winston Wallin, who is Chairman Emeritus of the heart pacemaker multinational Medtronic in Minneapolis, claims that the Caux Principles have become `the most widely circulated and accepted worldwide standards for ethical and responsible business practice'. Published in 12 languages, they express the corporate world's social responsibility to all stakeholders, including the need to tackle corruption, unemployment and the world's rich-poor gap.

But `putting principled business leadership into action'--the theme of this year's conference--is easier said than done. Mark Wade, head of sustainable development at Shell International, said that Shell had had its own code of ethical conduct for 25 years. But it didn't prevent the company's annus horribilis in 1995 over the disposal of the Brent Spar oil platform. `We seemed to be lacking in the principles we espoused and were out of touch with people's expectations of us. The world has moved from a "trust me" to a "show me" world. However much you think you are right it is not the same as getting it right in other people's perceptions,' he said.

Brent Spar led to a major review within Shell. Now Shell's managers worldwide have to commit themselves in writing each year to three performance targets: business integrity; health, safety and environment; and a `statement of General Business Principles'. `We have even fired chief executives for bribery and corruption,' Wade said. As the annual Shell Report puts it: `Company guidelines are of little value unless there are rigorous procedures to make them work.'

Frank Vogl, President of Vogl Communications in Washington DC and Vice-Chairman of the anti-corruption body Transparency International, urged the CRT to assist TI in monitoring the performance of companies in the war against corruption. A recent OECD convention, signed by 34 countries, prohibits paying bribes to foreign officials and is being ratified into law by national parliaments. `Come and work with us to ensure that the law is implemented and build an ethical world. Peer pressure among corporations will make it work,' Vogl said.

www.cauxroundtable.org

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