Singapore (Singapore), 28 August 2018 - In 2018, ASEAN economies have attained a record level in attracting massive foreign direct investment (FDI) relative to GDP. Pressing investment needs in infrastructure up to 2030 in the region are estimated by ADB at $1.7 trillion per year to maintain the growth momentum, tackle poverty, and respond to climate change.
Huge investment opportunities come with high corruption risks. Data confirms pervasiveness of corruption in the private sector in ASEAN: according to the World Bank Bribery Index, 30% of business transactions in relation to public services require informal payments and gifts, and more than 40% of companies are expected to give gifts to secure public contracts in the ASEAN region.
Recent corruption cases, prosecuted by foreign jurisdictions, have brought to light the fact that large amounts of bribes are being paid in Southeast-Asia using intermediaries to secure contracts: in the 2017 Rolls Royce case, $18.8M in bribes were given in Thailand alone. In another 2018 case, Panasonic executives illegitimately paid a public official $750,000 over six years to obtain information.
To address these issues, the development and implementation of regulatory frameworks to forbid bribery of foreign public officials and establish the liability of legal persons are key. ASEAN Member States have all ratified the United Nations Convention Against Corruption (UNCAC), which include requirements to introduce these norms.
The need for joint public private action to address bribery involving companies in the ASEAN region was discussed at a Regional Seminar on Effective Measures for the Private Sector to Prevent Bribery, organised by UNDOC together with the National Anti-Corruption Commission, the Thai Institute of Directors and the American Bar Association, on 2-3 August 2018 in Pattaya, Thailand. More than 190 participants including private sector actors and anti-corruption agencies from ASEAN, Hong-Kong, Singapore and the Republic of Korea, shared their latest developments in combating foreign bribery and introducing prevention of corruption mechanisms.
This was also the occasion to disseminate to the local business community the new guidelines developed by NACC in Thailand on legal requirements and appropriate internal control measures to combat bribery.
The Regional Seminar illustrated how securities regulators, stock exchange, associations and the private sector can support each other to create a level-playing field: 'in Thailand, for example, 11 asset management companies, controlling over 90% of the domestic market share, introduced 'corporate governance funds' in August 2017 and agreed to contribute 40% of their fund managements fees to organisations that support anti-corruption programmes' noted Mr. Sucharitakul, Securities and Exchanges Commission (SEC), a strong incentive to promote business integrity.
Many countries in Southeast-Asia are implementing new regulations against bribery. Ms. Lee, Public Prosecutor from the Republic of Korea, shared the promising impacts of the new "Improper Solicitation and Graft Act" which led to 14 cases that were indicted or faced punishments within only a year and a half'.
Participants highlighted that in order to be truly effective, strategies to combat corruption must be built on the joint actions of States, private sector and civil society. With this in mind, UNODC supported the ASEAN Responsible Business Forum, organised by the Asean Corporate Social Responsibility Network on 27-28 August 2018 in Singapore. The forum provided a platform for key stakeholders, governments, ASEAN bodies, the private sector and civil society to engage in practical discussions about the future of businesses and their role in fighting corruption.
With more than 200 delegates from ASEAN and beyond, discussions illustrated the business case for companies to operate in an ethical way and the pressing needs for action: 'In Myanmar, Thai companies cut down trees and relocate population without proper compensations. What can we do? noted Dr. Seree Nonthasoot, Thailand's Representative to the ASEAN Intergovernmental Commission on Human Rights (AICHR), our entry point is to start with big companies listed in the Stock Exchange Commission (SEC) of Thailand, having clear anti-corruption policies' he added.
'Climate change goes hand in hand with corruption': Mr. Gerard Forlin, lawyer, gave useful insights on how governments can tackle corruption and its impacts on the environment by implementing international legal standards such as the UK Bribery Act. 'Yet, it is very unlikely that businesses operating in ASEAN will be prosecuted for corruption, although it remains a technical possibility'.
Mr. Francesco Checchi, UNODC Regional Anti-Corruption Advisor, highlighted that while positive trends since the first review cycle of the UNCAC Implementation Review Mechanism can be noted, as legislations on liability of legal persons are progressively being introduced in ASEAN -Indonesia, Singapore and Thailand being the most prominent example-, significant gaps remain, such as the enforcement of liability of legal persons and foreign bribery.
Equally important is the development of corporate integrity prevention systems within companies.
On the second day of the Forum, the Regional Working Group on Promoting Integrity in ASEAN, led by ASEAN business associations, developed its 2018-19 private sector's engagement action plan. 'Business Integrity Forums in each country can address specific challenges: in Indonesia, that is procurement and permits, the number one corruption-prone area', noted the representative from Indonesia Business Links, a member of the Working Group. Regional coordination mechanisms were also identified as a priority in the 2018-19 workplan.
The ASEAN CSR Network and UNODC initiated the working group in 2014, with support from the UK Foreign and Commonwealth Office.
Read more about corruption risks for businesses operating in Asia in our interview with Dr. Seree Nonthasoot, representative from Thailand to the ASEAN Intergovernmental Commission on Human Rights (AICHR), one of the role-players in the fight against corruption met at the ASEAN Responsible Business Forum.
Some useful UNODC tools and materials:
