Richard Karmel explains the link between Bribery, Corruption and Human Rights

Richard Karmel is the Global Head of Human Rights at Mazars LLP and alongside his team, he has devised innovative services to help protect companies and banks from the risks to their reputations, whilst ensuring compliance with their social obligations. 

In his latest blog, he outlines the links between Bribery, Corruption and Human Rights

How are these issues tied?

The link between human rights, bribery and corruption in business isn’t clear. However, below I demonstrate how they are inextricably linked:

  • Is it any coincidence that 5 out of the 10 most corrupt states are also the five where there are the worst human rights abuses?
  • Is it a coincidence that 2 of the 4 pillars of the UNGC are human rights and anti-bribery and corruption?
  • Is it a coincidence that the EU Non-Financial reporting directive that was passed this year sets out that companies need to report on their human rights and anti-bribery and corruption performance?
  • Is it a missed opportunity that last year’s amendment to our Companies Act only referenced human rights for additional reporting in the strategic report and not anti-bribery and corruption?

With the exception of the UK Companies Act, it is clear that many people at the United Nations and at the EU do see human rights and bribery at least aligned if not inextricably linked.

However, if one looks at the environments where the abuses of both flourish, there are at least two common factors:

  • Lack of transparency
  • Lack of accountability

The people who suffer from both are the most vulnerable in our society: marginalised peoples, women and children.

Why aren’t all three addressed in the same policy?

So why do the policy makers always seem to run anti-bribery, corruption policies and human rights policies in parallel and rarely together?

To address bribery we have the UK Bribery Act and many other areas of legislation that carry criminal sanctions. For human rights abuses, until recently following the introduction of the Modern Day Slavery Bill, which only addresses one small area of human rights, there have been few acts with any substance.

However, it’s not an unreasonable argument to suggest that if businesses address their human rights issues, they will end up minimising their risks to bribery and corruption.

So why do I say this?

Businesses’ understanding for respecting human rights remains in its infancy.

In 2011, the United Nations Human Rights Council unanimously endorsed the Guiding Principles on Business and Human Rights.

In essence the UNGPs outline that states have a duty to protect their citizens against human rights abuses; companies have a duty to respect human rights and both have a duty to remedy wherever they have been party to an abuse.

If we concentrate on the second pillar of companies’ duty to respect, this is where we make the connection between business, bribery and corruption and human rights.

Clearly, there is a massive bribery and corruption issue in the first pillar, which deals with a state’s requirement to protect citizens against human rights abuses, but for the purpose of this blog (and to keep it short) let’s put bribery and corruption within governments to one side.

Rana Plaza

The perfectly awful example of how a state and business combined through bribery and corruption to create the death of 1,130 people, is that of Rana Plaza.

The story of Rana Plaza is well documented.

In 2013, an 8-storey building collapsed killing 1,130 garment workers, mostly women.  When investigators looked into the causes they found that graft (bribes paid to government officials) played a key role.

Rana Plaza was built on swamp land which could not support an 8-storey building. The day before the collapse, cracks were identified in the building, but Rana threatened his workers with a month’s deduction of salary if they did not continue working.

He told the media that the cracks were nothing to be concerned about. Furthermore, it was revealed that the building only obtained consent for five storeys.

However, it was extended by a further three storeys due to Rana’s political connections. The building was built without observing proper building codes and laws, and using poor materials—something that should have been monitored from the beginning by the Bangladesh authorities.

Unfortunately, in Bangladesh, it’s documented that permission for high-rise buildings can be obtained through bribes, and the building can be built without procuring suitable building materials.

An extreme, but common example

Is this an extreme example? – I doubt it.

It’s known that corruption pervades the developing world and in many countries, it’s a way of life. Of course, corruption is wide-spread in the West.

FIFA is portrayed in the media as a high profile current example. Ignoring the corruption point that is being played out, just the awarding of the World Cup to a country where human rights aren’t a priority is an issue ignored by those who voted in favour.

Qatar uses the Kafala system of employment where immigrant workers have their passports removed, can’t change employment without permission and are not allowed to form unions or strike.

In the construction of the winter Olympic park at Sochi, 25 workers lost their lives; in the construction of stadia for the football World Cup in Brazil, six workers lost their lives; it was reported in the Guardian this week that over 1,000 workers have so far lost their lives in Qatar for the construction of the stadia of the 2022 World Cup.

What may come as a surprise, is that the multi-national companies that have been contracted by the Qataris are using these workers.

Mazars working to improve reporting

So to change the way all companies respect Human Rights, Mazars, in conjunction with the former United Nations team that drafted the Guiding Principles has just published a draft Reporting Framework.

An objective of this reporting framework is to bring about behavioral change within companies and their value chains.

Its aim is for companies to decide what is meaningful and viable to report and what is useful for a reader. Aside from protecting the rights of those negatively impacted, a key goal here is to bring about greater transparency in companies.

As I said at the beginning, where there is greater transparency and accountability there is less risk of corruption and human rights abuses.

The key points

A key ethos behind the Reporting Framework is that there needs to be greater engagement with all of a company’s stakeholders from its workers, suppliers, communities, investors, governments and NGOs.

If a company is more transparent, this will build trust and credibility in its reporting and many studies show that where there are high levels of trust there is greater profitability.

To my mind, the link between anti-bribery and corruption and human rights is clear; both need to be addressed by businesses to not only protect themselves and improve their performance, but also help those in the value chain who are negatively impacted.

Greater engagement, transparency and accountability need to be on all of our agendas.

Richard Karmel

Richard.karmel@mazars.co.uk

Mazars LLP