Mitigating the Threat of Corruption in the Private Sector: The Role

of Business Principles

Peter Nikolaevich Kobets

, Kristina Aleksandrovna Krasnova

, Mátyás Szabolcs

and Andrei Viktorovich Borisov

Center for organizational support of scientific activity, Federal public establishment «National Research Institute of the

Ministry of Interior of the Russian Federation», Povarskaya street, 25 (bldg. 1), Moscow, the Russian Federation

Department of Criminal Law, The North Western branch of the Federal State Budget-Funded Educational Institution of

Higher Education «The Russian State University of Justice», Aleksandrovsky park, 5, Sankt-Petersburg, the Russian

Federation

Faculty of Law Enforcement, University of Public Service,

Ludovika tér, 2, Budapest, Hungary

Law Institute, the Federal State Autonomous Educational Institution of Higher Education “Russian University of

Transport”, Obraztsova street, 9 (bldg. 9), Moscow, the Russian Federation

Keywords: Criminal Law, Corruption, Bribery, Combating Corruption, Business Principles.

Abstract: The relevance of the study is propelled by the fact that corruption remains a pressing problem in international

business. Bribery can only be effectively prevented and eliminated if private sector firms implement anti-

corruption management controls. The purpose of this study is to offer insight into the global business

principles of combating corruption, as well as to provide a detailed analysis of the impact of corruption on

business processes by testing the hypothesis about the negative impact of corrupt practices on the company's

reputation and by assessing the reliability of the assumption that the implementation of internationally

developed business anti-bribery principles help maintain the company's reputation of integrity. Methods: The

authors present a systematic review of Russian and international literature that investigates corruption,

identifying the factors of corruption in business and other economic activities. To search for relevant studies,

we used Scimagojr, Research Gate, Science Direct, Google Scholar, and Sage Open. Results and novelty:

Certain international organizations recognize that corruption and bribery are detrimental to business integrity.

Bribery can only be effectively prevented and eliminated if companies and the private sector in general

implement anti-corruption management controls as a necessary and essential part of their day-to-day

governance on the same basis as economic security controls. Conclusions. Based on an in-depth review of

international anti-bribery business principles, the authors conclude that incorporating anti-corruption

principles into their daily operations enables them to compete and trade fairly around the world, supporting

investment and economic growth, and helping to fight corruption crime at the national and international levels.

1 INTRODUCTION

The fight against corruption remains on the agenda at

the supranational and national levels, despite the fact

that it affects the life of societies in different countries

of the world to varying degrees (Krasnova &

Nikonov, 2020). Various literature emphasizes that

each socio-political and economic system generates

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its own model of corruption, and there is not a single

state in which corruption somehow does not exist,

although it is indisputable that corruption tends to be

more widespread in poor states (Sharifullin, 2020).

The most attention in the specialized literature is

traditionally paid to the study of the potential of

criminal law remedies in the implementation of anti-

corruption policy in business (Zhesterov, 2021;

Kurbanov & Krasnova, 2020), based on the

Kobets, P., Krasnova, K., Szabolcs, M. and Borisov, A.

Mitigating the Threat of Corruption in the Private Sector: The Role of Business Principles.

DOI: 10.5220/0010645700003152

In Proceedings of the VII International Scientiﬁc-Practical Conference “Criminal Law and Operative Search Activities: Problems of Legislation, Science and Practice” (CLOSA 2021), pages

415-419

ISBN: 978-989-758-532-6; ISSN: 2184-9854

415

successful experience of Great Britain (Nam,

Nguyen, Nguyen & Luu, 2020), USA ( Gorshunov,

Armenakis, Harris & Walker, 2021; Posthuma, 2021;

Liu, Liu, Ullah, Wei & Hu, 2021), China (Yang, Ma

& Cui, 2021) and a number of European countries

(Brzic, Dabic, Kukura & Podobnik , 2021; Ferris,

Hanousek & Tresl, 2021). At the same time, the

successful anti-corruption practices of individual

states do not cancel out such indisputable statements

as that today there is no global consensus on what

“corruption” is and that things that are considered to

be “illegal corruption” in one country are recognized

as a legitimate business practice in another (Bandeira,

2013).

In modern conditions, business representatives, in

an effort to avoid compliance risks (that is, regulatory

risks that arise for an organization as a result of losses

due to non-compliance with legislation), create

compliance management systems. They represent

internal controls over compliance with legal and

corporate anti-bribery requirements. They are usually

based on various guidelines proposed by regulators

and non-governmental organizations (Kobets &

Krasnova, 2020).

2 MATERIALS AND METHODS

In this article, we present a systematic review of

documents developed by nongovernmental

associations and literature that investigates

corruption, identifying the factors of corruption in

business and other economic activities. To search for

relevant studies, we used Scimagojr, Research Gate,

Science Direct, Google Scholar, Sage Open.

3 RESULTS AND DISCUSSION

Corruption risks in business. Currently, the risks

associated with corrupt practices are a growing

concern for both large and small companies, which

face demands to take bribes, both from their

competitors acting in a corrupt manner and from their

own employees who violate established codes of

conduct.

Increased enforcement of bribery laws abroad,

record-breaking fines, and the threat of criminal

penalties for directors and employees (Zhesterov,

2020) are prompting executives to consider how to

step up their anti-corruption efforts. In addition, in

modern conditions, the pressure on business is

increasing more and more from socially responsible

investment funds and indices, which add criteria for

assessing the fight against bribery to their selection

procedures almost every year. Development banks

and export credit agencies are increasingly imposing

prohibitive sanctions on companies that are known to

be involved in corruption. As a result, the

management of most companies understands the need

to protect and promote their reputation for integrity,

since not only business partners, but also society as a

whole becomes less tolerant of corruption.

Business principles of anti-bribery. In today's

environment, companies have the opportunity to

respond positively to growing corruption risks and

mitigate threats with robust anti-corruption policies.

To help companies develop and implement effective

anti-bribery policies, international organizations such

as Transparency International (TI) and Social

Accountability International (SAI) have joined forces

to launch Business Principles for Countering Bribery.

The development of these principles, which can be

introduced into business and other economic

activities, was carried out with the participation of

many stakeholders in cooperation and with the

support of a Steering Committee, which included

representatives of the international business

community, academia, trade unions and other non-

governmental organizations.

Business Principles nowadays play the role of a

code of good anti-bribery practice for many

companies. They have influenced many local anti-

corruption codes, tools and guidelines. Their

introduction has stimulated the development of other

similar anti-bribery codes. Multinational companies

and researchers now look to them as a benchmark.

For example, ENKA's Code of Corporate Conduct

states that the company has adopted the principle of

“zero tolerance for bribery” and is committed to abide

by the relevant laws, rules and principles in its

“Global Business” section.

Global PACI initiative. At the beginning of the

third decade of the 21st century, the Partnering

Against Corruption Initiative (hereinafter, PACI) has

become the leading platform for discussing anti-

corruption issues in the private sector. PACI is based

on anti-bribery principles, which are the product of

the work of a target group created by member

companies of the World Economic Forum (World

Economic Forum, hereinafter referred to as WEF)

[11, p. 8]. Discussion of the corruption agenda takes

place at the WEF’s annual meetings, based in

Cologny, canton of Geneva, Switzerland. The WEF

mission is worded as an aspiration to improve the

state of the world. The Forum provides a platform for

businesses, governments and civil society to work

together on numerous projects and initiatives. WEF

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also prepares a series of reports and engages its

members in sectoral initiatives.

Today, PACI works with business leaders,

international organizations and governments to focus

on implementing global anti-corruption agendas. The

PACI's goal is to identify innovative anti-corruption

approaches and global, regional and sectoral agendas

in collaboration with representatives from civil

society, academia and governments. In other words,

the PACI initiative acts as a global platform based on

the above principles and works to ensure that

companies can maximize their collective influence in

the fight against corruption (Pryazhnikova, 2019).

Currently, guided by the identified needs and

interests of its member companies, PACI is taking

initiatives to address industry, regional or global

issues related to anti-corruption and compliance.

Since its inception in 2004, PACI serves as the main

CEO-led platform in the global anti-corruption arena,

relying on public and private sector collaboration,

responsible leadership and technological

advancement (Krylov, 2012). The PACI Task Force

is a dedicated group of senior leaders who oversee

compliance, ethics, strategy and various other

corporate functions and create a safe space to interact

with peers to implement the core principles

underlying PACI principles, improve organizational

compliance and raise overall standards of business.

The PACI Principles were revised and updated in

2013 and renamed the PACI Principles for

Countering Corruption. The revised PACI principles

expand the focus beyond bribery and represent a

natural evolution of the goals of the PACI signatory

community (Sterhov, 2014). These principles are

intended to provide a guiding framework for a

business willing to take the lead in combating

corruption in all its forms.

The PACI Principles begin with six core

aspirational principles that underpin the ongoing

pursuit of transparency, honesty and ethical business

conduct. They also include a set of implementation

guidelines that outline the key steps companies must

take to translate their commitments into concrete

action. Recognizing the power of multilateral

cooperative action in transforming the global,

regional and sectoral anti-corruption agendas, the

PACI principles also serve as a call to action for

companies around the world to join collective action

initiatives that increase public confidence in business,

ensure fair markets and level the playing field by

combatting corruption.

Rules of the International Chamber of Commerce.

In this context, it is also necessary to talk about the

rules of the International Chamber of Commerce,

which also contribute to countering corruption in

business. The International Chamber of Commerce

(ICC) is the largest and most influential business

organization in the world. Its global network includes

more than 6 million companies, chambers of

commerce and business associations in more than 130

countries, covering the entire private sector of

economy. The worldwide network of National

Committees regularly informs the ICC International

Secretariat in Paris of national and regional business

priorities. More than 2,000 experts from ICC member

companies use their knowledge and experience to

develop ICC's position on specific business issues.

ICC interacts with the UN, the World Trade

Organization, the G20 and other intergovernmental

organizations.

The ICC was the first commercial organization to

issue anti-corruption regulations, publishing its anti-

extortion and anti-bribery code of conduct back in

1977. It updated these rules in 1996, 1999 and 2005

to reflect the adoption of key international legal

instruments such as the 1997 Convention against

Bribery of Foreign Public Officials, the Organization

for Economic Cooperation and Development and the

2003 UN Convention on Corruption. These

documents, which are the most important milestones

in the fight against corruption, have received active

support from the business community. The revised

2011 ICC Anti-Corruption Rules reflect an

impressive evolution in the ethics and compliance

practices of leading companies. They are based on

numerous contributions from ICC National

Committees, member companies and experts from the

Corporate Responsibility and Anti-Corruption

Commission.

The main idea of the ICC Rules for the Promotion

of Commercial Negotiation is that the best deals are

made between negotiating partners who not only want

or need cooperation, but also trust each other. Aimed

at small, medium or large businesses across many

sectors, ICC rules are a concise set of principles to

help negotiators conduct effective commercial

negotiations. In today's multicultural business world,

it is often difficult for parties to reach a successful

mutual agreement due to differences in interests, legal

practice, traditions or negotiating styles and

experiences. The ICC rules were developed with the

assistance of international negotiating experts and are

used in the context of a wide variety of different

business transactions. The rules are also used as a

checklist to consider when preparing for a

negotiation, as a basic set of guidelines to be agreed

with negotiating partners, or as a guideline for

guiding a party's own behavior during the negotiation

Mitigating the Threat of Corruption in the Private Sector: The Role of Business Principles

417

process in order to conclude sustainable business

deals.

Anti-corruption business principles of the World

Federation of Chambers of Commerce. In 2019, The

Center for International Private Enterprise

(hereinafter, CIPE) and the World Chambers

Federation (hereinafter, WCF) of the International

Chamber of Commerce (ICC) developed another set

of principles to help business associations and

chambers of commerce in preventing, identifying and

mitigating corruption risks.

CIPE and ICC WCF have developed these

principles in light of the unique set of risks faced by

business organizations, as well as feedback from

business associations, chambers of commerce, and

association management and anti-bribery experts

from around the world with a focus on emerging

markets. These principles complement the CIPE and

WCF Joint Governance Principles for Business

Associations and Chambers of Commerce, ICC Anti-

Corruption Rules for Enterprises and other business

guidelines such as Transparency International's

Business Principles for Countering Bribery.

These principles apply to associations, chambers

of commerce and federations of associations

operating at the international, national, regional and

local levels that serve as trade bodies representing the

collective interests of their business members,

whether they are sole proprietorships, companies or

other organizations. These principles are voluntary

and the implementation of the association's

compliance program is based on a risk-based

approach, where policies, procedures and controls are

reasonable and proportionate to the corruption risks

faced by the business association.

It should be emphasized that CIPE and ICC WCF

strive to support the efforts of the business

community to implement effective anti-corruption

measures by providing the business community with

a variety of tools.

World Bank Group Business Principles. It is also

worth mentioning another anti-corruption tool, the

World Bank Group Integrity Guidelines (hereinafter

referred to as the Guidelines). This document

includes standards, principles and components that

are generally accepted by many institutions and

organizations as methods of good governance and the

fight against fraud and corruption. Their content is

based on anti-corruption regulations, in particular: the

2009 OECD Recommendation for Further

Combating Bribery of Foreign Public Officials in

International Business Transactions; the Anti-

Corruption Integrity Compliance Program of the

Global Infrastructure Anti-Corruption Center; the

World Economic Forum's Basic Anti-Bribery

Principles Partnership Against Corruption, etc.

The Guidelines describe the components of an

integrity program that aims to prevent, detect and

eliminate corruption, collusion, coercion and fraud

(misconduct) within the company. This effective

program incorporates all the integrity efforts of the

parties and functions as an integral part of daily

practices. The guidelines under review are constantly

being updated. Thus, the Guidelines should be

recognized as reflecting generally recognized

standards of corporate ethics and compliance.

4 CONCLUSIONS

Corruption as a social and economic phenomenon is

interpreted too ambiguously in different countries and

at different levels of legal regulation. As a result, at

the global level, a universal approach has not yet been

developed that allows to unambiguously identify the

impact of anti-corruption programs in the economic

sphere. This requires a deeper knowledge of how to

properly assess the success in the fight against

corruption. The rapid growth in development and use

of anti-corruption metrics over the past two decades

suggests that corruption and anti-corruption

assessments are increasingly recognized as essential

tools for analyzing trends and monitoring global,

national, regional and local anti-corruption efforts.

While huge resources are invested at various

levels in the fight against corruption, documenting

and reporting results remains challenging. Limited

evidence on the effectiveness of newly developed

anti-corruption principles, programs or national

strategies may be wrongly recognized as evident of

their effectiveness or, on the contrary, failure. In this

regard, it is necessary to continue scientific research

of methods and tools that objectively measure the

impact of anti-corruption programs.

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