Dissecting corruption in the private sector - CNBC Africa

Dissecting corruption in the private sector

Southern Africa

by Tendai Dube 0

Dissecting at corruption in the private sector. Photo: Flickr.

Corruption is the abuse of public resources by private or public people or institutions; this is according to David Lewis of Corruption Watch. This comes in light of the Transparency International's corruption perception index report which came out last week rating South Africa 61 out of 178 countries, with a score of 44 out of 100.

"This places us in the ranks of countries with serious corruption problems but by no means the most serious in the world - we want to have a look at what is below us and we want to know how important it is to avoid going much lower," said David Lewis, Executive Director for Corruption Watch.


Lewis explains how every time you bribe to get a government contract or to get some kind of licence, there's a public and a private player involved – most frequently when both public and private are involved it’s in money laundering, tax evasion, collusion, price fixing.

“The measurement of corruption is very difficult because it is not like homicide or house robbery where there is a victim willing to report,” said Lewis.

So “usually it amounts to collusion between two equally guilty parties so it is not reported.”

Does corruption deter investors?

Instead of always deterring investors into South Africa, Lewis says that “some may cynically simply count them as the cost of re-entering the country”.

"Corruption is about the sanctity of contracts, it’s about knowing what it is that I am going to pay in order to business in a country, it is something that they have to take account of as much as they would take account of the cost of rent or labour," said Lewis.

He adds: “It was considered a way of doing business particularly in developing countries and since the passing of the foreign corrupt practices act - the U.S legislation which is a very effect deterrent against corruption all over the world - companies have found new ethical standards to abide by.”

Nowadays Lewis states, most big companies have an anti-corruption compliance code and many of them take it very seriously.

“But I think that many of them would argue that it’s quite difficult to be clean in a very dirty environment,” Lewis said.

“When your competitors are not playing by the same rules, you need to try and level the playing field which is what the foreign corrupt practices act is done for all companies associated with the United States."

Mitigating the issue

Lewis believes it needs a top down and a bottom up approach and start by changing the culture of companies at all levels. He says business reputation is at a low ebb and that is a problem.

"I think the trick is that companies have got to stop looking only inwards, by now it is taken for granted that you will have an anti-corruption compliance programme and start thinking about what a big brand company can do by associating it's brand with fighting corruption.”

On Thursday, Corruption Watch will be hosting a conversation with South African business leaders, Reuel Khoza, Bonang Mohale and Isaac Shongwe at the Wits Business School to find ways companies can attack corruption.