Monday, January 18, 2021

The culture of corruption and bribery among c-suites in the corporate world

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Corporate malfeasance in the form of corruption and bribery is a major risk that many organisations have to deal with. Even in Singapore, which has forged a reputation as a “clean” place for doing business, such incidences have cropped up over the years.

For instance, it came to light in 2017 that Singapore rig builder Keppel Offshore & Marine (Keppel O&M) made corrupt payments of US$55 million between 2001 and 2014 to win 13 contracts with Brazilian oil companies Petrobas and Sete Brasil.

After the graft scandal was uncovered, Keppel O&M had to pay US$422 million in fines as part of a global resolution with authorities in the United States, Brazil and Singapore; a record for a Singapore-listed company.

A few years earlier, Singapore Technologies Marine (ST Marine) was busted when at least S$24.9 million in bribes were falsely claimed as entertainment expenses and made to employees of its customers in return for contracts. Seven former ST Marine executives were convicted in 2017 for their roles in the affair.

The financial and reputational costs of such scandals can be very high and widespread, says June Sim, Senior Vice-President, Head of Listing Compliance at Singapore Exchange Regulation.

“It is very costly because of the steps that you have to put in place in order to gain the confidence of your stakeholders, suppliers, customers. It is going to hit your pocket and fixing it would take time.

More: 53 chief executives being investigated in Georgia for money laundering

So, apart from an immediate loss in terms of reputation, you have all these knock-on effects in terms of costs and time that you have to spend,” she says.

John Purcell, Policy Advisor (Environment, Social and Governance) at CPA Australia, notes that failing to prevent corporate wrong doing can lead to a destruction of a company’s value, and can also “pervert the proper flow of funds, seriously undermining opportunity for wider economic participation”.

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