Corruption in state-owned enterprises is a global menace

Axel Threlfall of Reuters (left) and João Elek of Petrobras during the session. Image: Mauro Pimentel

Axel Threlfall of Reuters (left) and João Elek of Petrobras during the session. Image: Mauro Pimentel

State-owned enterprises are considered vital to many developed and developing countries; however, both corruption and bribery continue to plague many of them, despite welcome changes adopted by countries towards addressing these issues.

Jermyn Brooks, Chair of the Business Principles Steering Committee of Transparency International, acknowledges that corruption in state-owned enterprises is not a unique problem to certain regions but is instead a ‘worldwide’ problem. Speaking at the session on ‘Building Trust in the Business Sector – Combating Corruption in State-Owned Enterprises,’ Brooks said, “Corruption in state-owned enterprises is not just a regional issue but a global issue, and in most instances countries depend on state-owned enterprises for value creation.”

He also noted, however, that when addressing the issues of both bribery and corruption, it was important not to overload companies with additional requirements, while also understanding the political environment state-owned enterprises were operating in. “We also need to understand that state-owned enterprises are quite different from normal enterprises,” Brooks said.

State-owned enterprises were identified as the ‘poorest of performers’ in a study by Transparency International which analyzed what companies were doing to address bribery and corruption. “State owned enterprises do not feel the need to be open about what they are doing, and they tend to hide behind non-disclosure, as a way of avoiding too much scrutiny by the general public,” Brooks said.

Meanwhile, Matthew Murray, Senior Advisor on Governance and Rule of Law, Center of Excellence on Democracy, Human Rights, & Governance (DRG) of the USAID said that steps have been taken to assist the energy companies in Ukraine by introducing certain initiatives to the loss-making sector such as corporate governance to help convert the state-owned enterprises from loss- to profit-making organizations.

“State owned enterprises are regulated differently than other companies, and if they are under-regulated and under-supervised then they are facing a higher risk,” he said. Murray also said that steps have been taken to guide companies to select a more appropriate management while stringent measures have also been put in place to enhance transparency among these loss-making organizations.

The session was also a platform to showcase some remarkable changes at Petrobras, the Brazilian state-owned oil company at the center of a massive corruption scandal. João Elek, Chief of Governance, Risk, and Compliance at Petrobras, who was appointed to the position in 2015 following the scandal, shared the various steps taken by the present management to enhance transparency as well as accountability within the organization. He told the session that steps were taken to appoint a committee free of political appointments which in turn decides on who can be appointed to the organization.

“The committee can even disregard a political nomination if the person is deemed to not fit the position,” he said.

Elek was also commended by panelist Murray who said that it took courage to do what Elek was doing. “He should be applauded, it takes a person to actually take the step and make the difference and João has done this,” Murray added.

 

Munza Mushtaq is a senior journalist from Colombo, Sri Lanka with over 16 years of journalism experience. The former News Editor of two leading English newspapers; The Nation and The Sunday Leader, Mushtaq writes extensively on current affairs, with special focus on politics, human rights, corruption and business affairs concerning Sri Lanka. Her work has appeared in the Los Angeles Times, among other leading international news outlets. She is the Sri Lankan Correspondent for Asia Times and the Nikkei Asian Review, and also serves as the Assistant Editor – Asia Desk for the International News Services based in the United Kingdom. Mushtaq also contributes to the news desk of the Colombo Telegraph, and functions as a special correspondent for the Los Angeles Times where she reports on significant Sri Lankan political developments.

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