Ten Commandments

At the end of June the Global Compact Leaders Summit drew more than 400 corporate executives, government officials and civil society leaders "for the largest and highest-level gathering ever held at the United Nations" headquarters. The Summit adopted a simple statement that "business should work against corruption in all its forms, including extortion and bribery."106 This became a tenth principle of the Compact, to reflect the recently adopted United Nations convention on this subject. Peter Eigen, Chairman of Transparency International, an international non-governmental organization (NGO) devoted to combating corruption, recalled that until very recently, the world business community regarded corruption as a necessary evil, with some top executives openly defending the practice of bribing foreign firms with a shrug of the shoulder and an offhand remark: "I hate to do it... and I hate all the problems it will cause down the line... but I have to." He said that this had changed and "there was now a solid consensus behind the need to fight corruption."

One example of possible corruption was particularly topical, given the US Presidential campaign. Questions mounted about the involvement of United States' oil services company Halliburton in the distribution of US$180 million of allegedly corrupt payments on a $10 billion gas export project in Nigeria made while Dick Cheney headed the corporation - before becoming US Vice-President. The allegations have been the subject of a state investigation in France since October 2003 and in Nigeria and the USA since the beginning of 2004. In 1999, Halliburton's wholly owned subsidiary KBR (Kellogg, Brown & Root), along with three other contractors, made a payment of $51 million to a British lawyer, Jeffrey Tesler. The lawyer confirmed this in a statement to the French investigating magistrate, insisting it was legitimate remuneration for his work as consultant on the gas project.107 'Nice' work if you can get it - but was it too good to be true? Lawyers are known to receive ridiculous sums, but even the top earners at firms like Slaughter and May and Clifford Chance take home about £1m a year.

Even at that level of income there are accusations of foul play. The largest legal firms have doubled their revenue in six years, promoting Britain's Law Society to draft a code of conduct for solicitors to discourage them from putting profits before professional ethics. The Society's training chief, Sue Nelson, said there were concerns that 'young lawyers don't have any ethics,' yet might it be the ethics older lawyers, who own the companies, who force young lawyers to meet unrealistic targets for billable hours? In which case, the partners in law firms should be the target of ethics training. Whether you can train a greedy old dog new ethics tricks is another matter - perhaps a topic for further research.108

Not many firms of lawyers are participants in the Global Compact. Nor, unsurprisingly, is Halliburton. Participation in the Global Compact suggests an intent to improve ones ethical conduct; the initiative does not address those companies who express no such intent. And those with no such intent are, we might assume, more likely to be engaged in corrupt practices. Thus it is the system of laws, police and courts that appear more pertinent to combating corruption than a voluntary initiative. For example, Halliburton is being investigated in France due to the 1997 adoption of an OECD convention on the "fight against the corruption of foreign public officials in commercial negotiations" which came into effect in French law in 2000.109 Companies can be investigated in the US under the Foreign Corrupt Practices Act.

Nevertheless it is useful for companies to express their commitment against corruption, and the rhetorical power of the Global Compacts ten commandments of corporate citizenship could prove transformative. However, open and honest engagement in the problem of corruption will lead Compact participants to a realization of the need for greater enforcement mechanisms against those who participate in corruption. "Relying on companies to disclose information voluntarily has so far failed because they fear being undermined by less scrupulous competitors" argues the campaign Publish What You Pay.

Therefore, to "work against corruption" as participants are called to do, could imply joining initiatives such as this, which are calling on G7 governments to require transnational resource companies to publish the net taxes, fees, royalties, and other payments made in countries where they operate. They call for stock market regulators to require that resource companies report net payments to all national governments as a condition for being listed.110

How the Compact relates to the need for irresponsible performance to be discouraged, punished, stopped and redressed, rather than only incentivizing and facilitating better performance for those who want this, is an issue that is increasingly recognized by its participants and leaders. This was reflected in new publication on the Compact, called Gearing Up: From corporate responsibility to good governance and scalable solutions, which was launched at the Summit.111 The report represented a more mature appreciation of the potential and limits of voluntary corporate responsibility, recognizing that "some responsible businesses have scratched the surface of global issues like climate change and HIV/AIDS, but just as many work to maintain the status quo. The efforts of business, in combination with government and civil society, are quite simply being outpaced by the problems."112

Furthermore, the report points to the complicity of many companies in creating the system conditions within which social and environmental problems worsen. "Where links between companies and government do exist, they are often dominated by regressive lobbying - the automotive industry lobbying against effective action on climate change, for example, or fast food companies lobbying to slow controls on their industry." The report calls on Global Compact participants to help drive system-level change. Business is generally encouraged to stay out of politics, but the challenge business leaders face is increasingly political. Co-author of the report, SustainAbility Ltd chair John Elkington, said that "business leaders must align their companies' lobbying with their corporate responsibility activities. They need to help governments to act courageously in such areas as climate change, corruption and HIV/AIDS." Another co-author, Georg Kell, Executive Head of the Global Compact said the corporate responsibility movement "will need to focus on two things simultaneously: achieving critical mass across all industry sectors, and connecting private actions with public policy efforts so that root causes of problems are tackled."

The report set out a "Global Compact Challenge", which asks companies to question among other things, how they can "help co-evolve wider governance frameworks". It also suggests that the UN use its "convening power to foster new thinking on ways in which business can help promote necessary changes in governance and market systems, ensuring adequate representation from developing countries." The report did not go into the various issues that would need to be addressed in to drive system-level change in the global economy. That issue was taken up in another publication launched at the Summit, Learning to Talk, where one chapter mapped out a future agenda for the Compact based on a systems view of corporate citizenship, including issues such as currency flows, mandatory corporate accountability, competition law, tax evasion.113

Given the growth of the Compact, as well as some criticism, previously chronicled in this column, Gearing Up also reporting that the Compact is toughening its criteria for participants, requiring all to submit regular communications on progress, and threatening delisting if these are not forthcoming.