What are the Main Causes of Business Corruption?

What are the Main Causes of Corruption?

Due to the definition of corruption, it can include a wide range of examples and types. They can relate to personal, societal or organisations characteristics.[2] As a result, there is a huge range of causes. These are important to know so that criminal activity can be prevented.

 

Societal or Organisational Characteristics

Greed for personal gain

One of the most common causes is selfishness to obtain as much personal wealth as possible. This is often at the expense of other individuals, and even businesses. Individual gains can take the form of money or power, especially when giving bribes.

This is a problem, as it is natural to seek money or power. However, society should teach people only to do so by legitimate means. Where this fails there are consequences for all.

 

Lack of personal morals

This simply means people know what good behaviour is, but they choose to act badly. Greediness is often combined with this factor, as it affects people’s moral compass.

Unethical behaviour at work may persuade a colleague to follow suit. For example, bribery, a person taking credit for work they didn’t complete, abusing power to harass someone, or hiring someone who is a close friend all set bad examples.[3] As a result, this promotes toxic values that employees take in.

 

Low awareness of the issue

If employers fail to conduct employee ABC training, it is more likely they will commit an offence. This is because staff members are unaware of the consequences of their actions. All employers have a legal duty to train staff members.

In addition, if employees cant spot the signs of criminal activity, they cannot report it. Therefore, corrupting behaviour goes unnoticed, and criminals get away with it. Furthermore, under ABC laws like the Bribery Act 2010, failure to disclose information can be considered a criminal act.

 

Lack of transparency

If a country or business fosters an environment where corruption is accepted and commonplace, people will offend more. This often comes in the form of underhand government deals or threatening press freedoms. Furthermore, this occurs in an organisation’s setting, whereby a lack of compliance can promote bad behaviour.

 

Weak regulations and monitoring

Corruption is a threat to businesses and societies alike. It damages economies and the reputations of organisations. Corruption means that a person has abused a public office of power, strictly for individual gains. Corrupting behaviour can take the form of bribery, fraud and identity theft. An allegation of any may result in significant penalties imposed by the Serious Fraud Office (SFO).

One tool to prevent the spread of criminal activity in the UK is Transparency International’s Corruption Perceptions Index.[1] Published yearly, it gives a rank to lots of countries based on the strength of their anti-bribery and corruption (ABC) policies.

Transparency International’s corruption index states that criminal behaviours affect developing economies the most.[4] One reason for this is that these countries have less money to spend on ABC compliance, and so the regulations are weaker.

Consequently, weak monitoring systems make it much harder to catch criminals. So, as we know, criminals will target the weakest countries and businesses first. For example, if a bank is known for weak transaction flagging systems, criminals are more likely to use their accounts to transfer illegal money.

If employees or organisations spot any of these, they must be stopped immediately. Corrupt practices should not be allowed to spread, as the situation can get out of control fast. To prevent an allegation from escalating, formal grievances can be made to the employer. As a result, this will raise the issue, and formal procedures must be put in place as a reaction.

 

For more information, you can complete our online ABC training courses.

 

[1] https://www.transparency.org/research/cpi/overview

[2] https://blog.iese.edu/ethics/2014/11/06/corruption-10-possible-causes/

[3] https://examples.yourdictionary.com/examples-of-unethical-behavior.html

[4] https://www.transparency.org.uk/corruption/corruption-statistics/corruption-cost-for-developing-countries/