On Corporate Social Responsibility

Channel News Asia reports:

Campaigners representing the rural poor, the environment and organised labour blasted the communique as a sideshow, stage-managed for corporations who are major contributors to the World Water Council, which organises the Forum…

"We demand that the allocation of water be decided in an open, transparent and democratic forum rather than in a trade show for the world’s large corporations."

Full article here.

Interestingly, Ethical Corporation Institute says that big businesses like Rio Tinto, SAB Miller, Coca-Cola, Intel and Molson Coors are "leading the way in water management" (link here) and saliently, Jeff Conant said last year:

As we learn from the WWF website, “One of the benefits of joining the WWC is the Council’s ability to influence decisions related to world water management that affect organizations, business, and communities.” Perhaps their secret meetings will also be attended by executives of the Worldwide Fund for Nature, whose recent partnership with Coca-Cola aims to help the global soft-drink giant become “the most efficient company in the world in terms of water use,” with “every drop of water it uses… returned to the earth or compensated for through conservation and recycling programs.” And, with this blending of fact and fiction, it would hardly be surprising to find Greene’s signature on the CEO Water Mandate, which has companies with such devastating environmental track records as Dow Chemical, Shell Oil, Unilever, and Nestlé pledging to “help address the water challenge faced by the world today.”

Full article here. The italicized names are linked to rather interesting pages in the original article. Greene here refers to James Bonds’ villain in Quantum of Solace.

What does one make of it all? Alas, these great tides of information and opinion indeed confound the mind.

Here are some excerpts from a 20 Dec 08 NYT article I chanced upon while absent-mindedly clicking through the net:

Mr. Siekaczek (pronounced SEE-kah-chek) says that from 2002 to 2006 he oversaw an annual bribery budget of about $40 million to $50 million at Siemens. Company managers and sales staff used the slush fund to cozy up to corrupt government officials worldwide.

The payments, he says, were vital to maintaining the competitiveness of Siemens overseas, particularly in his subsidiary, which sold telecommunications equipment. “It was about keeping the business unit alive and not jeopardizing thousands of jobs overnight,” he said in an interview.

…

[Debevoise & Plimpton] and its partners dedicated more than 300 lawyers, forensic analysts and staff members to untangle thousands of payments across the globe, according to the court records. American investigators and the Debevoise lawyers conducted more than 1,700 interviews in 34 countries. They collected more than 100 million documents, creating special facilities in China and Germany to house records from that single investigation.

Full article here.

Bribes went to people in Venezuela, China, Iraq, Israel, Vietnam, Italy, Argentina, Nigeria, Norway and Russia. The money trail led through Austria, Liechtenstein, Switzerland, Dubai and the British Virgin Islands. There are probably more places left unmentioned by the article.

Ouch. For so many reasons.

Here’s something related. I had the benefit of a chat with a businessman in Singapore last month, one of those older men who laugh at the silly ideals of young rascals like me. He has business links to various parts of Asia and Southeast Asia. He pointed out something darkly funny. We here in Singapore are raised on the values of transparency, accountability and honest business practices. But, he said, that’s not how the world works, especially in the countries around us. Does this set our businesspeople back when they head into the other Southeast Asian countries? Should we really be judging corruption to be an irrevocably bad thing in places that depend on it for some measure of decent living?

I don’t know.

Well, here we are at the end of another semester. To be exact, it’s been one week into the holidays and I’m supposed to get some things done for the Student Movement but unfortunately, I have been afflicted by what Renny, our former vice-president, diagnosed as "Post-Examination Slack Syndrome" (PESS). It seems to be very common among NUS students.

Anyway, I’ll be posting our Annual Report up soon enough. In the meantime, here’s an intriguing excerpt that overturns the conventional way we think about MNC-government relationships:

The company was also put to good political use by the president. To all intents and purposes Freeport became a quasi-state organization for Jakarta in West Papua as the principal developer and administrator of its project area and surrounds. At the same time, through support for the transmigration settlements and the military the company assisted Jakarta in its policy of "Indonesianization" of the area. Finally, back in the United States, Freeport became an influential public relations agent for the regime. Thus, far from Suharto’s being a puppet of the company, as was the general perception in Indonesia, Freeport had become a compliant and valuable asset that, with the company’s complicity, was exploited by the president.

- "The Politics of Power: Freeport in Suharto’s Indonesia", by Denise Leith, 2003

We normally think of the state as subservient to the mighty corporation, but here’s a case wherein Goliath has been tamed. Of course, there’s much more to the story than just this little excerpt. The Freeport-McMoRan case involves collusion, corruption, human rights violations and devastating environmental impacts, all of which were made possible within a special kind of dynamics with the Suharto regime. It’s almost a classic potboiler.

I’ve been meaning to write, but my schedule’s been so hectic. Four essays due and exams round the corner. Deadlines hang by a thread over my head like the sword of Damocles. Anyway, I thought I would just write a little bit today about something that’s been on my mind for a long while now.

I was looking around for a film to screen in school for our latest CSR event recently. We didn’t want to screen The Corporation, Wal-mart: the High Price of Low Cost and Enron: the Smartest Guys in the Room again. So I looked around, asked around… and then Cuiyu found this film called Toxic Trail. I haven’t watched the film, but from its website, I found that a prominent pharmaceutical was spilling poisonous compounds in Peru. If I recall right, it was also doing the same thing in Cambodia.

What’s interesting is, every year, this same pharmaceutical holds an environmental programme for youths in Singapore, and this programme is held in pretty high regard. I believe it also has some sort of award ceremony, but I’ll need to check that up again. It has also been thanked on the National Environment Agency website.

Greenwashing? Looks like it, no? What is even more interesting to me is that most people, if not everyone, here do not know about this corporation’s darker habits nor do they want to find out. When I reveal the company’s indiscriminate actions to student environmentalists, they either shut up or say that we have to compromise (this involves not talking about this issue at all to the general public) because we need the money to carry out our environmental campaigns.

Someone in a local environmental NGO reflected a somewhat similar opinion when I pointed out a major oil company’s sponsorship of the NGO’s advertisements. "It’s blood money," it was acknowledged, but they prefer to take the money to carry out environmental outreach rather than be incapacitated by a lack of funds.

To me, this is something of a concern. We are obliged to advertise the companies’ logos on our flyers, posters, websites, etc, whenever we take their money. People who see these ads would think these companies are good companies and buy their products. The revenue from these products go towards supporting the companies’ undesirable actions. Yet, we take the money.

To be sure, we do not know if the good done by taking this money is larger than the bad done by the companies. There is no precise method to measure the good and bad done. Also, we do not know if the companies even know that they are polluting the environment and, in the process, poisoning locals who depend on the environment. Sometimes, top management may have difficulty figuring out what is happening down on the ground. For instance, Topshop was accused this year of using sweatshops. However, the guy at the top, Philip Green (styled Sir, and "largely avoids personal tax by paying dividends to his wife, Lady Tina, who lives offshore"), claims he was told by his managers that his factories were definitely not run under sweatshop conditions. True or false, it is quite possible that middle management hides some information from its bosses.

Should we blame companies for their criminal actions, then? Or should we give them the benefit of the doubt, believe that they are true and innocent at heart, and continue giving them our dollar votes and maintaining or increasing their capacity to do more of the same thing? How do we verify that what the companies say is true? I don’t have the answers. We can’t simply attack companies for their unwanted actions, because in most cases, they are great fixtures of the economy and of society. Removing them may do more harm than good. At the same time, having them continue in their malevolent ways does not bode well for a lot of people. So, what do we do?

I’m still thinking about it, but in the meantime, I take every official statement by the corporate world with a large pinch of salt and research each one of them before making any decisions. In some cases, I have been compelled to boycott their products as it weighs too heavy on my conscience for me to give them my money. In other cases, it is simply too difficult to avoid using their products.

How do you deal with this issue? 

Fortune magazine features an interview with Anwar Ibrahim on the role of businesses in contributing to corruption in developing countries.

"Business has to be part of the development process, so we made intense efforts to promote the private sector. I strongly support market reforms, deregulation, privatization, all the mantras of today’s global economy.

But for this to work, we need business to be accountable, and we observed serious flaws in this regard. In my experience, business can tend toward cronyism, corruption and other poor practices in the absence of a free press, a vibrant civil society and effective law enforcement."

The full interview is available online here. 

A strong stance against corruption is one of the UN Global Compact’s Ten Principles. In many developing countries, where rule of law and institutional oversight is relatively weak, bribery may be seen as necessary to get the wheels of bureaucracy turning in favour of one’s business and investment needs. I doubt that many see such payments as corruption, but as business costs involved in succeeding in the local business environment. There may be a possible defence if the host nation has different laws and standards than the company’s home nation — but an offence like corruption likely appears in every country’s statute books. No excuse for dodging accountability this time.

I just saw Anwar on the BBC channel yesterday, speaking on the World Communication for Develoment panel. Seems like he’s getting pretty busy eh.