FBCCI and business confidence

Business leaders at a dialogue on Bangladesh economy and future perspectives with the interim government on September 5 pleaded that wholesale drives against the corrupt, the black money-holders, tax dodgers, commodity hoarders, bank accounts, and the sources of money accumulation inquiries by the ACC and the NBR have caused panic among the business community. "We are passing sleepless nights in fear of NBR and ACC drives," said Abu Motaleb of FBCCI.
Why so? My brother, an entrepreneur in Comilla told me that since 1/11 he has been enjoying sound sleep for the first time in years.
Mistakes can creep in, but does FBCCI have specific evidence of honest businessmen being harassed or persecuted since anti-corruption drives were activated. Are the FBCCI directors pleading that those members who are alleged to have engaged in corruption and unethical business practices should escape accountability and sleep peacefully?
In his response, Chief Adviser Fakhruddin Ahmed stressed that the measures to improve governance and reduce corruption would ultimately help develop the country's private sector to operate with efficiency and competitiveness through reducing hassles, costs and uncertainties.
As Fakhruddin conceded, some discomfort and loss of confidence are inevitable when the parameters of business operations are shifting from a politicised and corrupt environment to a relatively corruption free, politically neutral, and competitive condition. We all realise that businesses are the ultimate engines of employment and economic activity.
Restoring businessmen's confidence is paramount to macroeconomic stability and poverty reduction. However, like politicians, businessmen must realise that the old ways of running businesses are over.
On January 21, 2004, the then UN Secretary-General Kofi Annan initiated a comprehensive, inclusive, and transparent consultation process on the possible introduction of a tenth principle against corruption. To get broad-based support, a formal letter was sent to all participants (1,205, as of December 31, 2003), seeking their views.
By May 7, 2004, 563 responses had been received, of which 536 (95%) supported the tenth principle in the following form:
"Business should work against corruption in all its forms, including extortion and bribery."

• Two of the main arguments supporting this principle are:
• Business should be conducted in an environment of fair competition; corruption is against the spirit of competition and meritocracy.
• Business efficiency relies on confidence between business partners; corruption undermines business confidence.

Curbing corruption and unethical business practices is becoming a high priority within the business community globally. The development of rules of corporate governance across nations is also prompting businesses to spotlight on anti-corruption measures as part of their modus operandi to protect their reputations and the interests of stakeholders. Engaging in unethical business practices exposes a company to the following undesirable outcomes.

• Regardless of what form a corrupt transaction may take, there are obvious legal risks involved. No wonder that the businessmen in Bangladesh are now passing sleepless nights
• Evidence indicates that businesses whose policies and practices fail to meet high ethical standards, or those that take a relaxed attitude to compliance with laws, are exposed to serious reputational risks.
• There is now clear evidence that in many countries corruption adds upwards of 10 per cent to the cost of running a business, and that corruption adds as much as 25 percent to the cost of public procurement.
• Added costs to businesses accrued due to corruption undermine business performance and divert public resources from legitimate sustainable development.
• There is growing evidence that a company is less likely to be under pressure to pay bribes if it has not done so in the past. Once a bribe is paid, repeated demands are possible, and the amounts demanded are likely to rise.
• A business executive representing a large international company in China recently confirmed that, despite pressures to do otherwise, his company did not succumb to tantalising bribery offers.
• By resorting to corrupt practices, company managers expose themselves to blackmail. Consequently, the security of staff, plant, and other assets is put at risk.
• A truism that is often ignored is, "One who cheats will be cheated against." A company that engages in, or puts up with, corrupt practices is risking the erosion staff loyalty, and compromises ethical standards within the company when it does not apply the same in its external dealings.

These are no soliloquies -- they're summarised by Global Compact Office in New York (May, 2004) from real life worldwide experiences of business operations.
The business community has a vested interest in social stability, and in the economic well being of the people in the community. It's crucial to recognise that corruption diverts resources from their most efficient use. Financial resources that were intended for local infrastructure development may, as a result of corruption, end up in foreign bank accounts.
The on-going hunt for the mischief doers must continue undeterred. Of course, some businesses are suffering because their owners are either hiding or hibernating to avoid being persecuted.
Corrupt politicians, public servants, and business people are partners in crime -- they're mutually parasitical. After 1/11, they lost the blanket protection from their political godfathers. That's why they're now passing sleepless nights. The FBCCI, instead of whining and sympathising with its scared members, must support all reform measures to bring market discipline for the good of business and the country. The FBCCI must also reform itself and clean its own house.
In the US, near a road or bridge repair site, we often see signs which read "Short-term inconvenience brings long-term relief." The FBCCI must propagate this message to all its members. In fact, the executives of this august body should visit its district and sub-divisional level chapters and explain that the regulatory reform being introduced by this government is the last ditch hope for establishing market discipline long polluted by politicisation and unprecedented unethical business practices.

Dr. Abdullah A. Dewan is Professor of Economics at Eastern Michigan University.