Corporate Governance for Countering Bribery:
Controlling the Supply Side of Corruption
By
Charles D. Adwan
The Lebanese Transparency
Association
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Corporate Governance for Countering Bribery:
Controlling the Supply Side of Corruption
Charles D. Adwan
Executive Director
The Lebanese Transparency Association
I. Abstract
As markets become more open and global, and business more complex, societies
around the world are placing greater reliance on the private sector as the engine of
economic growth. In both developed and developing nations, a growing proportion of
economic activity takes place in firms organized as corporations. This presentation
will revolve around the role of corporate governance initiatives in developing
economies, exemplified by the current Corporate Governance program of the
Lebanese Transparency Association. It will shed the light on the dynamics of
corruption in the Lebanese private sector, and discuss possible ways of dealing with it.
The specific situation of Lebanon, that might be common with other transitional
economies, leads to a reverse strategy in tackling corporate governance. The absence
of shareholders and the predominance of family owned SMEs facilitates addressing
the issue of corruption first then moving into the internal corporate governance of
firms.
Thus corporate governance stops being a means to fight corruption, reducing
corruption rather becomes a means to promote corporate governance.
II. Presentation
Corporate Governance and Globalization
Globalization trends are currently enhancing the strength of market forces relative to
that of governments, and in both developed and developing nations a growing
proportion of economic activity is taking place in firms organized as corporations.
Societies around the world are thus placing greater reliance on the private sector as
the engine of economic growth, with privatization and liberalization movements
constantly adding to the power of these corporations. Research has shown that
corruption hinders a county’s ability to absorb the beneficial side of globalization, and
makes it more vulnerable to its risks such as the increasing likelihood of currency
crises.
This high cost is translated by FDI flight or reduction.
1
The growing importance of the private sector has also raised concerns with the
direction and control of these corporations. Following the Asian financial crisis,
corporate governance came to the forefront of the international financial, and
development policy agenda; and crises, such as in Russia, have moreover highlighted
this issue.
At the core of both the Asian and Russian crises were
corporations and governments that failed to create a system of
transparent, market based principles of business practices.
The
collapse of companies like Enron and Andersen last year, have brought furthermore to
the fore the significance of good corporate governance. In the Arab region last year’s
1
Wei, Shnag-Jin, Why is Corruption so Crucial for Embracing Globalisation; in the Global Corruption
Report 2001. Transparency International. P. 289
.
- Winter '14
