On Corporate Social Responsibility

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.

Cuiyu had a little bit of a skeptical post on greenwashing some time ago. It’s a very important topic, considering how environmentalism is on the rise at least in terms of consumer awareness. From the New York Times via CorpWatch:

There’s been a spike in reports of corporate responsibility recently. UN News Service has one on how CSR helped companies "achieve and retain market leadership". Inter Press News has one on the "hazy" impact of the Global Compact. CSR Asia has one on how irresponsible countries may lose out on a USD$750 billion market. The Herald Tribune has one on the increase in toxic Chinese exports. CorpWatch (via the Inter Press News) has one on how investment firms are being pushed to act responsibly for a terrible mudslide from a gas project they funded. There’s also one in the Wall Street Journal about how Singapore’s Temasek Holdings is feeling international pressure to become more transparent, but I can’t link that because it’s a paid read and I’m too poor to pay for it. Thanks to Professor Montesano for showing it to me.

So, we have some good news and some bad news. Hopefully, over time, the good news will outnumber the bad news. We’ve got another piece of good news to encourage everyone with. Very nice folks at the Glasshouse Partnership (thanks!) have informed us of AccountAbility’s report, summarized on their website thus:

"The State of Responsible Competitiveness 2007: Making Sustainability Count in Global Markets is essentially a progress report on countries’ efforts in advancing competitiveness based on responsible business practices. It provides a unique health check on responsible globalization."

You can download the full PDF report, or take a look at their Responsible Competitiveness World Map, which ranks countries according to how responsibly competitive they are (makes sense, right?). Singapore didn’t come off too bad. We’re 15th. China is 87th (I’m quite scared of their food exports now and my father’s stopped eating snacks from there). Here’s a brief SEAsian view:

Malaysia is 25th, Thailand 37th, Indonesia 48th, Philippines 61st, Cambodia 99th. No news on Laos, Vietnam, Burma, Brunei and East Timor. How strange. Well, at least we know Singapore isn’t all that bad. 15th! Still, there is enormous space for improvement.

News reports on AccountAbility’s report can be found in The Guardian and in Reuters.

All right, folks, it’s lunchtime for me. I shall now go and chew my veggies and wonder from which country they came and which farmer or company grew them, and where my spoons and bowls and cups come from and if all these companies have been good or bad. Bon appetit!

"He’s making a list, and checking it twice…"

This is an amazing story. It all started from a bitchslap, which led to stolen Picasso and Monet paintings. Several immunity deals and wealthy colourful characters later, federal prosecutors in US are now getting Milberg Weiss for fraud.

What does it have to do with CSR? Maybe precious little. But I once wrote something (for class) on conflicts of interest in class action lawsuits, and this article just blows me away.