Guest Post: Collective Action by Multinational Companies–A Recipe for Fighting Corruption in Emerging Markets

GAB is pleased to welcome back Gönenç Gürkaynak, the managing partner and head of the Regulatory and Compliance Department at ELIG, Attorneys-at-Law (Istanbul), who contributes the following guest post:

In too many countries, particularly emerging markets, corrupt public officials and getting rich by taking bribes, and they often seem immune from domestic law enforcement due to their influence over the judiciary. In such situations, collective action by the private sector—in cooperation with civil society—may be the key to changing the rules of this corrupt game. In particular, multinational companies (MNCs) can and should act collectively to require their intermediaries (e.g., distributors, agencies, etc.) to comply with stringent anticorruption rules. Considering that MNCs working in foreign jurisdictions act mostly through intermediaries (e.g. distributors, agencies, etc.) and that, according to the recent OECD Foreign Bribery Report, three-quarters of foreign bribery cases involve intermediaries, using collective action to targeting corruption by local intermediaries can help choke off the supply of bribes that corrupt public officials are so keen to extract.

The collective action strategy suggested here is designed for settings in which many MNCs, as well as large local companies, work with a limited number of local intermediaries that provide assistance in dealing with a sector or government agency prone to corruption; the approach is most effective when other potential intermediaries might be able to compete with the more established intermediaries if given the opportunity. In such a setting, the collective action approach—perhaps initiated by the MNCs, perhaps facilitated by some third party like a civil society organization—could work as follows: Continue reading