Compliance through the Lens of Corporate Corruption

Compliance through the Lens of Corporate Corruption

Part 1

Over the last decades, compliance with employment-related laws has become a topic of importance as many organizations are trying to implement these laws to ensure business entities are not involved in corruption offenses. In designing and implementing effective compliance, organizations try to consider applicable regulations and laws that must be taken into consideration in all business practices. Wald and Winterfeldt (2012) define corporate compliance as the respect for rights at work, fundamental principles, international labor standards, and the creation of a culture and environment that prevents the violation of labour laws. Employment-related laws apply to various issues, including working time, wages, paid leave, employment contracts, maternity protection, harassment, discrimination, occupational health, and safety. Therefore, compliance with these laws enables employers and workers to set policies, actions, and strategies to fight corruption by improving working conditions, social development, competitiveness, and productivity. Hire our assignment writing services in case your assignment is devastating you. We offer assignment help with high professionalism.

The laws governing hiring, training employees, professionalization, promotion, and rotation procedures play a significant role in combating corruption in organizations. Article 7 of the United Nations Convention against Corruption emphasizes the promotion, rotation, retention, and equitable pay scales for organizational employees (UNCAC, 2004). For instance, compliance with laws that demand staff rotation in departments or jobs with a higher vulnerability to corruption prevents the formation of corrupt relationships. Therefore, organizations are encouraged to develop procedures and standards that will promote the integrity of the business entities. One way the organization could improve the levels of integrity between employees and the business is by creating legislation that encourages all employees to report wrongdoing while protecting those who make disclosures.

As part of corporate social responsibility, organizations have adopted self-regulatory approaches to introduce whistleblowing procedures and policies to ensure reporting of wrongdoing. By observing the code of conduct and legislation, one aspect of showing socially responsible behavior would be to develop whistleblowing arrangements in all organizations. For instance, in 2008, the British Standards Institution developed the Code of Practice that aimed at encouraging whistleblowing (Vandekerckhove & Lewis, 2012). Consequently, this encourages employees to disclose wrongdoing as part of the entire CSR agenda. In addition, the Codes of Practice and employment legislation address and disclose conflicts of interest, which could encourage corruption. Conflicts of interest could be addressed through regulations such as those that forbid public officials from working in private sectors. Such measures aim to ensure that corrupt officials recuse themselves from any decisions that might lead to a potential or actual conflict. Additionally, this ensures that employees adhere to the duty of confidence and trust in terms of faithful service and obedience.

Part 2

Corruption in business has become a universal problem that affects companies globally. The most common form of corruption is embezzlement, which occurs when employees steal or misappropriate the assets the organization has entrusted them with. Embezzlement is associated with white-collar crimes due to the intention of misusing property or money. If not eradicated or detected, embezzlement can be the biggest plague in a business, which could weaken the entire organization (Bressler, 2009). Examples of embezzlement include taking money from different customers’ accounts without consent, inflating expense claims, stealing cheques, and misappropriating funds. One of the most significant embezzlement cases is that of a South African retail company known as Steinhoff International. The company operates in New Zealand, Australia, the U.S., Asia, Africa, and Europe. According to PwC investigations, the company lost $7.4 billion due to embezzlement (Motsoeneng & Rumney, 2019). Investigations by PwC revealed that some executives from Steinhoff implemented the deals and inflated the company’s asset values and profits.

Another recent form of corruption is kickbacks and commercial bribery, whereby employees of a company give employees from a different company expensive gifts, undue advantages, and payments. In the corporate world, kickbacks and commercial bribery could lead to a significant economic loss that damages the company’s reputation. Kickbacks are bribes that contractors pay to be awarded large contracts such as those of international development projects (Tackett, 2010). One recent case of kickbacks involved an employee who was charged with email fraud and conspiracy for approving invoices that were significantly inflated in association with the development of another hospital wing. In such a case, the building contractor accepts kickbacks in the form of construction, exotic vacations, and cash. Such conspiracies are examples of kickback schemes that focus more on the company’s purchasing function in search of favours on approval of purchases and selection of vendors. In other cases, kickbacks and bribes are disguised as consultant or management fees, payments made to individuals participating in consultation programs, and services offered by advisory boards.

Conclusively, many companies can fight corruption by ensuring compliance with employment laws and encouraging employees to “walk the talk.” By enforcing employment laws effectively, the companies will be able to develop a compliance culture whereby procedures and policies are communicated to employees and internalized. This means that companies must act in a manner consistent with the message of compliance to create an environment where shareholders, employees, and the company’s leadership are free to report wrongdoing while receiving protection for whistleblowing.

References

Bressler, M. S. (2009). The impact of crime on business: A model for prevention, detection & remedy. Journal of Management and Marketing Research, 2(1), 12-20.

Motsoeneng, T., & Rumney, E. (2019, March 15). PwC investigation finds $7.4 billion in accounting fraud at Steinhoff, the company says. https://www.reuters.com/article/us-steinhoff-intln-accounts/pwc-investigation-finds-74-billion-accounting-fraud-at-steinhoff-company-says-idUSKCN1QW2C2

Tackett, J. A. (2010). Bribery and corruption. Journal of Corporate Accounting & Finance, 21(4), 5-9.

UNCAC 2nd, I. R. M., & Harutyunyan, N. (2004). United Nations Convention Against Corruption.

Vandekerckhove, W., & Lewis, D. (2012). The content of whistleblowing procedures: A critical review of recent official guidelines. Journal of Business Ethics, 108, 253-264.

Wald, P. M., & Winterfeldt, M. (2012). Human Resources Compliance. The Encyclopedia of Human Resource Management: Short Entries, 258-263.

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Unit 1 Journal: Ethics as a Corporate Philosophy
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Compliance through the Lens of Corporate Corruption

Once a general ethical philosophy gains leadership consensus, it should be used in monitoring corporate social responsibility, modeling ethical behaviors, and ensuring compliance with all business-related federal and state statutes.
Refer to the attached document for assignment details and grading rubric.