Building an Anticorruption and Ethical Business Culture

Corruption is a difficult topic to address anywhere in the world, but especially in Mexico, where the perception of corruption among citizens, investors and businesses is very high. Multiple international organizations and sources address Mexico as a high-risk country to do business because of insecurity and corruption. How can companies address these challenges? Developing an ethical culture might be obvious, but what does that mean?

According to a Transparency International report called Corruption: Latin America and the Caribbean, Global Barometer of Corruption, our country is ranked as one of the most corrupt in Latin America. According to the Global Corruption Barometer, more than 51 percent of Mexicans surveyed have paid a bribe to access basic services and 31 to 40 percent to obtain identity documents. Does this mean that we are condemned to be corrupt? Definitely not.

Due to our global experience in emerging markets and the importance of knowing how and with whom we are doing business, we believe companies should consider building an anticorruption and ethical culture based on: 

First step: Framework based on documents only

Unfortunately, but true. Is it a good start? Many companies in Mexico are responding to or addressing international or key business partners’ anticorruption compliance requirements only by “checking the box.” This means that companies are doing the minimum required to retain or start business with global corporations or key clients by just responding to the compliance questionnaires, including certain requirements, and showing documents that attempt to address the key compliance framework. 

Furthermore, it is sometimes required that a professional consulting firm specialized in the subject of compliance certifications validate the information shared by the company, but no further requirement is requested to demonstrate the operation and effectiveness of the program.

Does this mean that the program  is not valid or addressing the anticorruption compliance requirements? Some people may say that the companies are starting by at least doing something. Yes, indeed; however, the enhancement and commitment from top management still needs to be in place to appropriately address the creation and execution of a compliance program. It could be the starting point of an anticorruption and ethical culture, but what is beyond it?

Beyond the first step: Operation and efficiency

If companies want to go beyond and commit to creating and building an anticorruption and ethical culture, it requires at least the following  to prove the existence of the construction of a real anticorruption and ethical culture: establishing a whistleblower line. 

A clear “speak-up” culture, talking about compliance issues, internal reporting and, of course, forensic auditing, are also necessary to talk about an anticorruption culture and business ethics, as these  will be vital elements to guarantee regulatory compliance actions, emphasizing a no-retaliation policy and protocol. To understand its main features and benefits, here are  five (5) essential points:

• Investigation process

What is the mission, vision, and values of your company? The first benefit of having an anticorruption and ethical business culture has  to do with the correct and efficient transmission of the vision, attitude, conduct and values of the company and, of course, of corporate governance and senior management, considering:

• The leading role of these superior and control entities as an example of behavior.

• A specific code of ethics and conduct that must be communicated at all levels.

• High awareness of the importance of conducting themselves through organizational principles, considering these among the most lasting and valuable assets.

• Developing a general framework of ethical behavior where culture and ethics will be the maximum exponents of the credibility and reliability of the organization.

• Have a code of conduct

Another of the benefits of having an anticorruption and ethical business culture is,precisely, having a single code of conduct (according to the environment and particularities of each company) which, in addition, must include:

• Business philosophy and values.

• Regulations and establishing how to properly deal with ethical risks as well as their control mechanisms.

• Outlawing unacceptable conduct considering the integrity and particularities in internal relations and with third parties (customers, suppliers, etc.).

• Diversity of possible scenarios where ethical behaviors are clearly established in each case.

• Establishment of reporting channels and channels with a high level of confidentiality and anonymity.

• Review procedures and sanctions that will be applied in case of non-compliance.

• Consider the means of guidance and even training for any member who has doubts about any conduct, behavior, or situation.

• A better reputation

Having an anticorruption and ethical business culture lead to the improvement of the reputation of any organization/brand, since guaranteeing behavior of this type will help to obtain:

• A superior hallmark and, with it, a clear competitive advantage.

• Generation of long-term and highly reliable relationships with customers.

• Development of high value-added production chains with suppliers.

• Strengthening of relations with the authorities, which can even become mitigating in investigations.

• Access to top-level national and international financing schemes and with preferential conditions.

Remember that, currently, a company’s reputation is one of its most important differentiators, so having a culture of this type (which is put into practice) will be an unparalleled driver for reputational improvement

• Direct hit on corruption

On the other hand, and although it seems redundant, it is important to emphasize that an anticorruption culture and business ethics will be a direct blow to the multitude of criminal or corrupt behaviors to which we can be subjected as a society, since it will directly combat:

• Recurring “facilitation” payments.

• Devalued ideas about the importance of individual behavior.

• Little awareness of the negative effects of unethical behavior.

• Complaints that remain unpunished or without follow-up.

It is necessary to promote the creation of a solid pillar with specific practices and values, which are reinforced through the codes of conduct.

• Better results in audits by your business partners

An anticorruption and ethical business culture will also help in all compliance processes and, of course, in their possible audits, since it will have an influence on the creation of:

• Predictive and preventive management models.

• Best business practices.

• Training and coaching processes.

• Complaint procedures and transparency mechanisms.

• Integrity policies.

In sum, such a culture will provide considerably more positive results, in addition to promoting a gradual and solid transformation at all levels of the organization.