Business can be complicit in corruption through the giving or taking of bribes or other corrupt practices, including facilitation payments. A useful framework for understanding most forms of corruption is that of supply and demand, in which the public sector represents the demand side and companies the supply side. Bribery and corruption are considered to exacerbate the frequency and potential for human rights violations. Corruption prevents the benefits of investment, taxes and revenue transfer to governments being shared fairly with the wider population. It also means that workers are less likely to have protection in terms of social welfare benefits including unemployment, sickness, maternity or disability insurances and pension rights.

The following examples were identified through background research:

• In September 2008, NGO Rights and Democracy reported on four cases where state owned enterprises in China undergoing restructuring or bankruptcy have paid retrenched workers compensation that is well below standard. There are also reports of corruption where officials are bribed to stop complaints from proceeding. Workers often end up with no compensation or work.
• In July 2008, Transparency International and Greenpeace called on the government to investigate allegations made in Papua New Guinea's daily newspaper that a government minister has received more than US$50 million in corrupt payments from Asian logging companies. The money is believed to represent a 2% cut from every log exported from Papua New Guinea between 2002 and 2007.
• A March 2009 report by Global Witness alleges that many of the EU's largest banks, including HSBC, Barclays, Deutsche Bank, Santander, Credit Lyonnais and BNP Paribas, are complicit in facilitating the movement of illegally acquired funds by corrupt regimes. The report also names two US banks, Citibank and Riggs, and the Bank of East Asia. The report says that such practices are facilitating corruption and state looting, which deny these countries the chance to lift themselves out of poverty and leave them dependent on aid.
• In March 2009, prosecutors in the United Arab Emirates indicted five businessmen and two Dubai Islamic Bank (DIB) executives on charges of bribery and fraud. It is alleged that these seven were complicit in embezzling US$501 million from DIB using forged invoices and fictitious deals. DIB is the third largest bank in the UAE.

How does a company mitigate against the risk of corruption when investing or operating in a country where corruption is widespread and encouraged to facilitate efficiency?

The following have been identified as possible components of this dilemma:

• Investment decisions
• Operating in a corrupt environment
• Local encouragement of bribery to facilitate efficiency
• Management of community investment funds