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The Fight against Global Corruption

by Alan Boeckmann
August 15, 2005 | A version of this story appeared in Volume 83, Issue 33

This guest editorial is by Alan Boeckmann, chairman and CEO of Fluor Corp. and chairman of the Engineering & Construction Governors' Anti-Corruption Task Force of the World Economic Forum.

At the annual meeting of the World Economic Forum (WEF) held each January in Davos, Switzerland, prominent leaders from government, business, economics, science, academia, and nongovernmental organizations (NGOs) discuss and debate a number of the world's foremost challenges and identify strategies to improve the global community. It is a tenet of WEF that global businesses are uniquely positioned to effect change and have an obligation to help stimulate economic advancement in the communities in which they operate.

Starting two years ago, this is exactly what the Engineering & Construction sector of WEF set out to do by launching an initiative to combat corruption in the conduct of international construction projects. Since that time, the effort has been expanded and joined by companies in the energy and mining and metals industries to form the Partnering Against Corruption Initiative (PACI). To date, nearly 70 corporations have signed statements of support for the PACI principles, which spell out guidelines for fighting bribery and other forms of corruption in the conduct of global commerce.

Anyone who has spent time in the developing world is well-acquainted with how corruption--bribery and kickbacks--siphons money away from desperately needed services and infrastructure, resulting in roads not built, dams not erected, oil fields not developed, and schools and hospitals not constructed. It is enlightening to consider the scale of the issue in purely monetary terms.

The most recent estimate of the cost of corruption prepared by Transparency International (TI), the leading anticorruption NGO, concludes that corruption equals a full 3% of the world's gross domestic product, a staggering figure! Moreover, ethical companies continue to pay a high price for refusing to engage in bribery. The U.S. Commerce Department reports that, from 1994 to 2002, as many as 474 major offshore contracts, valued at nearly $240 billion, were lost by U.S. companies because competitors operating outside the boundaries of the Foreign Corrupt Practices Act (FCPA) willingly paid bribes to secure the business.

Over the years, a variety of actions have been taken in an effort to tackle corruption. In addition to the U.S.'s FCPA, there has been an Organization for Economic Cooperation & Development (OECD) convention, the UN Convention Against Corruption, and a host of laws passed throughout the world. The enforcement of laws in many countries, however, remains a huge challenge. Through pressure from entities such as OECD and NGOs such as TI, headway on the implementation front is beginning to be made.

New to the frontlines is PACI, which has rapidly gained credibility, demonstrating that business can and must have impact. Beyond simply signing on to a set of principles, we are now, with ongoing support from TI, pursuing a number of strategies to further strengthen our anticorruption agenda. These range from an ISO-type certification to aligning with complementary initiatives in the world's leading development banks. Just recently, the World Bank adopted anticorruption language recommended by TI and PACI into the institution's bidding documents.

Is there an opportunity for the world's chemical companies to become involved in the fight against global business corruption? Absolutely! Just as the PACI effort has been joined by leaders in the energy, metals and mining, and engineering and construction sectors, I believe it is a logical next step for the global chemical industry to come on board. Within WEF, we have encouraged staff to put PACI on the chemical industry's agenda at next January's annual meeting in Davos. With the impressive reach of the global chemical industry, participation in PACI would add considerable momentum to the anticorruption movement.

While it is critical for governments to continue doing all they can to thwart the demand side of bribery and corruption, it is just as critical that the supply side be joined by those industries that truly have a widespread and influential global presence. Few industries match these criteria as well as the chemical industry. I would hope that the chemical industry makes news this coming January and that the headlines read, "Chemical Industry joins PACI to help eradicate global corruption."

Alan Boeckmann
Fluor Corp.




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