Corruption and the world

The following article is based on my own interpretation of the said events. Any material borrowed from published and unpublished sources has been appropriately referenced. I will bear the sole responsibility for anything that is found to have been copied or misappropriated or misrepresented in the following post.

Versha Mishra, MBA 2015-17, Vinod Gupta School of Management, IIT Kharagpur

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Corruption is a global scourge, sometimes becoming so deeply ingrained in countries that combating it seems impossible. In January, Transparency International released its annual corruption perceptions index, noting that the problem “remains a blight around the world.”

The International Monetary Fund, for example, has just warned Ukraine that its $40 billion financial bailout could be cut off, owing to fears that corrupt officials will steal or squander the funds. And, during his recent visit to Mexico, Pope Francis called on the country’s leaders – several of whom (including the president and his wife) are embroiled in conflict-of-interest scandals – to fight endemic corruption.

But change is possible, as we have seen in the world of corporate governance in the last couple of years. Not even a decade ago, companies were run from “black box” rooms controlled by a few people whose authority seemed untouchable. Shareholder activists who thought otherwise were regarded as a nuisance – so many dreamy do-gooders who would never change anything. The only thing that would ever matter, “realists” argued, was return on investment, regardless of the cost to people, the planet, or economies.

The realists were wrong. Since the beginning of the year, Berkshire Hathaway’s Warren Buffett and JPMorgan Chase CEO Jamie Dimon have been holding meetings with other business leaders to discuss possible improvements in corporate governance. On February 1, Laurence Fink, the chief executive of investment firm BlackRock, wrote a letter to some of the world’s largest companies in which he issued a stern warning against short-termism and demanded that companies lay out clear strategic plans.

None of this happened overnight. Change is coming faster now, but only as the result of momentum that has built over time. Whistle blowers would not be silenced, reporters investigated bad corporate actors, and investors were held accountable for their choices (leading them to act like Norway’s wealth fund). The cumulative, mutually reinforcing effect of these and other factors has brought about change that only recently seemed unimaginable.

Clearly, there is still a long way to go; no one is hanging up a “mission accomplished” banner. But the process of change provides a roadmap for the battle against corruption.

 

Journalism has played a larger role as well. Reporters have gained more knowledge and more outlets to share their stories, including social media. And they are covering people who, in the face of blatant corruption, are no longer willing to be silent. For example, in Moldova, Europe’s poorest country, a billion-dollar banking scandal has spurred a wave of public protests calling for fresh elections.

This is the kind of momentum that signals real change. Indeed, many government officials are taking principled stands. In Ukraine, Aivaras Abromavičius, resigned as Minister of Economic Development and Trade, citing high-level obstruction of anti-corruption measures.

Corruption thrives wherever power, secrecy, and repression combine. It is undone by civic mobilization, sunlight, and vigilant enforcement. Those who view it as intractable should take note of the similar process that has begun to transform corporate governance.

 

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