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359 Multi-national corporations (MNCs) play a significant role in economic globalization. The annual revenues of the largest companies—such as Exxon-Mobil’s $405 billion in 2007—put them among the largest twentyfive nations if these total revenues were equated to GDP. The top 200 MNCs account for over 50 percent of the world’s industrial output.1 MNCs undertake a wide variety of commercial activities: they export from their home country and manufacture and assemble in foreign countries. They have moved “off-shore” activities that were previously conducted in their home countries.2 They have then “outsourced” to third parties some of those “offshored ”activities, creating complex global supply chains. They are engaged in every form of commerce from production of heavy equipment to the distribution of consumer goods and the provision of financial services. They bid on major projects across the world. They employ tens, if not hundreds, of thousands of foreign nationals.And, increasingly, their share of revenues and profits from activities outside their home country is approaching—or exceeding —50 percent, with an increasing proportion of those foreign revenues and profits coming from emerging markets. Because of their size, reach, and visibility, MNCs also have—or should have—a significant role in attacking global corruption. This is especially so for corporations that are headquartered in the developed world, which must rely, increasingly, on revenue growth and profitability in the developing world. For purposes of this chapter, corruption is defined as bribery, extortion, and misappropriation.3 For analytic convenience, this chapter also focuses on MNCs that are headquartered in the developed world, while recognizing that MNCs headquartered in markets such as China and India are rivaling their developed world counterparts in size, strength, and reach.4 14 The Role of the Multi-National Corporation in the Long War against Corruption ben w. heineman, jr. 14 0328-0 ch14.qxd 7/15/09 3:52 PM Page 359 360 Ben W. Heineman, Jr. This chapter is prescriptive because there is still a tremendous gap between MNC anti-corruption rhetoric and action. This chapter seeks to address institutional and political constraints realistically but also to suggest courses of action that can improve anti-corruption performance. In so doing, this chapter looks at the role of MNCs in four settings: —With respect to the corporation itself, focusing on the actions needed to create a “high performance with high integrity” global culture; —With respect to the developed world’s efforts to stop foreign bribery by its own MNCs, focusing on the mixed record of the Organization for Economic Cooperation and Development (OECD) Convention on Combating Bribery of Foreign Public Officials since its effective date in 1999; —With respect to the efforts of international organizations to combat corruption in the developing world, focusing on the World Bank Group; and, finally, —With respect to the efforts of developing nations to combat corruption through economic growth and the construction of an institutional infrastructure that constrains corruption through transparent, accountable, and durable public sector entities that govern economic, social, political, legal, and administrative affairs. This chapter emphasizes the first issue. Motivating private entities to create truly effective internal anti-corruption cultures and anti-corruption programs must be the ultimate purpose of governmental action, which should seek not only to punish wrong-doers but to drive corporations toward durable and sustainable anti-corruption behavior.5 Since the mid-1990s, corruption in the developing world has been a prominent item on the global agenda.6 Few people today repeat the old argument that corruption is an efficient corrective for overregulated economies. The true impact of corruption is now widely acknowledged: corruption distorts markets and competition, breeds cynicism among citizens, undermines the rule of law, damages governmental legitimacy, and corrodes the integrity of the private sector. It is also a major barrier to development: diversion of funds to corrupt parties and systematic misappropriation by kleptocratic governments harm the poor. But there are few signs that the range and extent of corruption has diminished.7 The forces that will start and sustain the building of truly transparent, accountable, and durable institutional infrastructures in the developing world are complex. Such forces are likely to vary by nation because each has its own unique history and culture and each is at its own phase in the development process, from failed and failing to fragile and rising. But most experts would 14 0328-0 ch14.qxd 7/15/09 3:52 PM Page 360 agree that one important factor is an...

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Additional Information

ISBN
9780815703969
MARC Record
OCLC
489260840
Pages
497
Launched on MUSE
2015-01-01
Language
English
Open Access
No
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