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	Global Corruption Report 2009: Corruption and the Private Sector by Transparency International Germany   Oct 2009   Bribery in business captures news headlines around the globe and leads to massive reputational and financial repercussions for the implicated companies. Bribery, though, represents only part of the picture when profit comes at the expense of integrity and sustainability. Other corrupt practices, such as corporate fraud, cartels and undue influence on public policy, work as destructive forces that undermine fair competition, stifle economic growth and ultimately undercut companies’ own existence.   Featuring analysis of more than 75 experts, Transparency International’s 2009 Global Corruption Report lays bare these and other corruption challenges that cut across countries and industries, exposes soft spots in existing corporate anti-corruption measures, and examines promising innovation in the sector.   With its roots in a lack of transparency and accountability, the global economic crisis brings into sharp focus the need for the business world to align its dynamism and innovation with a concerted stance against corruption. The business case is irrefutable: “Basing a company or fund’s future on personal relationships and unpredictable systems or simply operating in a dark space without oversight and accountability is a path to guaranteed failure,” said Huguette Labelle, TI Chair.   As a path to sustainable economic recovery is sought, governments must ensure that every step is grounded in transparency, accountability and integrity. Efforts cannot be limited to addressing past failures – leaders must also act on the growing challenges stemming from emerging economies and markets.   With €40 billion worth of carbon-dioxide-equivalent emissions traded globally in 2007, the global shift to a green economy is gaining momentum. However, the report illustrates how even well-intentioned initiatives are not immune to abuse, documenting the carbon market’s vulnerability to corruption in the form of market manipulation, fraudulent emissions reporting and corruption in forest governance among others.   Sovereign wealth funds have also seen rapid growth, with total investments estimated to be worth up to US $15 trillion by 2015. Many funds’ investment policies, governance structures and accountability mechanisms are shrouded in secrecy, despite being entrusted with the current and future wealth of their citizens. In the case of the Kuwait Investment Authority, disclosure to the public of the funds’ assets is prohibited by law. Furthermore, the often ad-hoc regulation of the funds raises questions about potential conflicts of interest between a government’s regulatory and supervisory duties and its ownership functions.   In developing and transition countries alone, companies colluding with corrupt politicians and government officials supply bribes estimated to be worth up to US $40 billion annually. When corruption allows reckless companies to disregard the law, the consequences can be devastating. Examples include exploitative work conditions in China, illegal logging in Indonesia and unsafe medicines in Nigeria.   Emerging economic powerhouses with international reach provide fresh impetus for the effective enforcement of anti-corruption conventions, such as the OECD Anti-Bribery Convention and UN Convention against Corruption (UNCAC). Of the so-called BRIC countries, India has not yet ratified either convention and China and Russia have only ratified the UNCAC. Although Brazil has ratified both the OECD convention and the UNCAC, TI’s latest OECD progress report shows that the country has made little to no effort to enforce them. Moreover, the report shows how all countries would benefit from the establishment of an effective UNCAC review mechanism, critical to tracking progress and accelerating the strengthening of legal frameworks at a country level.   As the report details, lobbying walks a fine line between participatory democracy and undue influence on public policy. Corporate lobbying and financing of political activities are carried out by most large corporations, and can be a legitimate and positive force. Yet, the extensive funds at the disposal of businesses and the close relationship that exists between many companies and lawmakers can lead to undue, unfair influence in a country’s policies and politics. Inappropriate gifts, hospitality, company board positions and illegal bribes can all go to exert underhand influence.   Tighter regulation of and enhanced transparency in lobbying are needed to help to balance the interests of companies, parties and politicians. Commitments must involve full disclosure of political contributions by political parties, politicians and companies alike, and the creation of registries to track the activities, spending, contacts and targets of lobbyists.   One of the first steps for reform in the private sector is for companies to commit to integrating codes of conduct and anti-corruption systems into all aspects of their business. While many companies already trumpet high-level, strategic commitments to prevent corruption, the report highlights that many do not communicate sufficiently on how these aims are met, if at all.   Almost 90 per cent of the top 200 businesses worldwide have adopted business codes, but less than half report that they monitor compliance. Disclosure is an essential link in the accountability chain and can be a strong indicator of the quality and comprehensiveness of a company’s efforts to address bribery and corruption, as well as sending a powerful signal of a company’s commitment to clean business. Visit the related web page
	Darkness on the Edge of Monotown by Leon Aron New York Times Russia   In Russia, company towns the products of the Stalinist industrialization, grew around a single plant or factory (there are more than 460). Hence their Russian designation: “monotowns” (monogoroda). Most were erected, often by prison labor, in the middle of nowhere and in complete disregard for long-term urban viability, not to mention the needs and conveniences of the workers and their families. In addition to being the single employer, these “town-forming enterprises” are responsible for providing all social services and amenities, from clinics and schools to heat, water and electricity, for populations of 5,000 to 700,000. (There are also more than 1,000 similar but smaller “workers’ settlements.”)   Many of these now crumbling monotowns seem frozen in the 1930s or ’50s; the fat years of 2000 to 2008 have passed them by. Worse yet, many of these places were among the first victims of the plunge in industrial output last year, when production fell by almost 20 percent. As a result, the “town-forming enterprises” have begun laying off or furloughing workers, and salaries have been cut, delayed or unpaid for months.   For most Russian workers, there are unemployment benefits from 850 rubles to 4,900 rubles ($29 to $167) per month. (For those in the severe climate zones of the Far East, Far North and some regions of Siberia, the payments are as much as twice these amounts.) As many as two-thirds of the unemployed seem to be unaware they are even eligible for these payments, so of the estimated 6.5 million unemployed in Russia (nearly 10 percent of the work force) in July, only 2.194 million registered for benefits. And not one of the many reports about or from the monotowns that I have read so much has mentioned unemployment benefits as a source of sustenance.   At the same time, the local administrations in many regions have been of little help, having been bled dry by recentralization efforts during the presidency of Vladimir Putin that redirected 70 percent of local revenues to Moscow. As a result, some grocery stores have been forced to stop offering credit to customers who have not been paid for months. In particularly hard-hit monotowns, people are reported to be eating potato peels and spending their days foraging in forests for roots and berries to consume or sell for a pittance.   In Pikalevo, a monotown of 22,000 near St. Petersburg, citizens grew desperate after the shuttering of their plant, which produced cement, aluminum and potash. There were no prospects for work; people were without assistance of any kind. A resident told a reporter over the summer: “We are eating — excuse me — grass. It’s shameful.” But when the town’s heat and hot water were shut off in May — the cement company had stopped paying the bills — it was the last straw. After an occupation of the mayor’s office brought no relief, angry Pikalevians blocked a major highway.   A few days later, Prime Minister Putin traveled by helicopter to Pikalevo. Russian crisis management techniques haven’t changed much since the days when czars threw boyars off the Kremlin walls to be torn, limb from limb, by rebellious hoi polloi below. With national television cameras rolling, Mr. Putin berated the local administration, plant managers and the plant’s owner, Oleg Deripaska, formerly Russia’s richest man, whose BaselCement conglomerate is now almost $30 billion in debt. He then ordered them to sign a pledge to reopen the plant. “I did not see you sign!” Mr. Putin barked at Mr. Deripaska. “Come here and sign!” (“And return the pen!” Mr. Putin snapped afterward.)   Of course, neither Mr. Deripaska nor the local government will be able to keep an all-but-bankrupt enterprise open for long. And while the Kremlin’s grip on the national news media has helped keep the monotowns out of the spotlight, Mr. Putin’s very public intervention in Pikalevo is likely to encourage more protests across the country.   This could be very serious: after all, a quarter of the urban population — 25 million people — live in monotowns and produce up to 40 percent of Russia’s G.D.P. And these struggling workers embody Russia’s work force: largely immobile, because the lack of affordable housing makes it impossible to seek employment elsewhere, and sadly inflexible, thanks to their overdependence on these enterprise-based social services, part of what President Medvedev has denounced as the “Soviet-style social sphere.” Indeed, the monotowns seem more and more a bellwether of the national trend toward deepening impoverishment and further job losses.   According to the World Bank, this year the number of Russians below the poverty level has grown by 7.5 million to 24.6 million, or 17 percent of the population. An additional 21 percent, or almost 30 million, have incomes less than 50 percent over the poverty level. Together, that’s 4 out of 10 Russians. The Federation of Independent Trade Unions predicts that up to 400,000 more Russians may become unemployed in the next three months, while the World Bank projects that the unemployment rate there will reach as high as 13 percent by the end of the year.
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