Tue, Nov 23, 2010 - Page 8 News List

Building anti-corruption awareness

By Carol Lin 林志潔

After former president Chen Shui-bian (陳水扁) was found not guilty on Nov. 5 of charges of accepting bribes related to the second wave of financial reform, the issue of corruption has once again become a focus of attention.

Less than a week later, Chen was found guilty of bribery in a final verdict on the Longtan land acquisition case. Both cases show that Taiwan must deal decisively with corruption. While everyone has been focused on corruption involving the former first family, an important aspect is being overlooked: If businesses did not offer bribes, politicians would have one less place to look to for illegal profits.

Businesses play various roles in corruption. At times they may be the perpetrators of a crime as they bribe civil servants to further the company’s interests, encouraging civil servants to breach their duties to benefit business. For example, the political contributions that surfaced during the second wave of financial reform were given so that these companies would benefit from the influence of publicly-owned firms.

At times like this, businesses become accomplices in the broad sense of the term. Sometimes, however, they become the victims of corruption. There have, for example, been cases in which companies have had to give out “contributions” against their will after being blackmailed by corrupt politicians. Other companies operate on the fringes of the law, such as when a financial holding company allegedly gave a cash wedding gift of NT$6 million (US$195,900) to Chen’s son, Chen Chih-chung (陳致中).

Shareholders entrust managers to run their company in accordance with the law. Financial holding companies are not only responsible to their shareholders, they also control the savings of the public, which means they have a wide scope of responsibility. However, too little attention has been given to business corruption. Although government agencies have started to study business-related corruption over the last two years, we have yet to see any concrete legislation or integrated action.

If a company gives money to government agencies, it follows that they will not hesitate in taking money in private. A culture of corruption is not something that forms overnight. We should also think about who pays the bribes. Does the chairman or chief executive of the company cover the cost? If the company absorbs the cost, how is the expenditure accounted for? With bribes often reaching millions or billions of NT dollars, how could they not affect the finances of a business?

If the money does not show up in financial reports, we need to ask if these companies are falsifying their accounts. In such a case, shouldn’t the financial and accounting staff of the companies be held responsible? Haven’t the companies’ legal departments set up mechanisms for handling self-discipline and risk management?

When company officials bribe the government, they hurt the interests of their company and place it at risk. This is clearly a breach of trust.

To stem corruption, Taiwan should implement reforms immediately involving the following.

First, businesses should ask themselves three questions: Do we have any anti-corruption policies or guidelines? Have we implemented these policies or guidelines? Are these policies or guidelines attaining their expected goals?

The government should encourage businesses that are successful in implementing anti-corruption policies. For example, this can be done by offering tax benefits to such companies or by giving them preferential treatment when choosing contractors. If a business becomes involved in corruption, but can show that it has anti-corruption policies in place and that it has done what it can to prevent corruption, courts could perhaps consider giving special consideration when issuing a sentence. These methods would all be intended to increase the willingness of businesses to fight corruption.

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