How Should Turkish Private Sector Read the 2021 Corruption Index?

The term corruption is often defined as the abuse of entrusted power for private gain. Corruption does not only kill public trust, but also prevents countries from unleashing their potential. Many studies indicate the negative correlation between corruption and sustainable economic growth. Entrepreneurship, investment, and business expansion all depend on transparency and accountability and may only flourish in an environment where corruptive attempts are fought back steadily. Therefore, performance in combatting corruption does also appear as a key factor in economic development.

Due to its extralegal nature, corruption cannot be measured accurately through conventional methods referring to public sources, which do not reflect the actual situation most times. Public perception of corruption functions better as an indicator of the corruption level within a country. The Corruption Perceptions Index (the “Index”), published by Transparency International annually, combines various scorings extracted from surveys with businesspeople and country experts. Thus, it is given credit for displaying reliable figures to get an insight into the frequency and intensity of corruption incidents in countries around the globe.

This year’s Index was out on January 25, 2022. It ranks Turkey 96th out of 180 with 38 points compared to last year’s 40. Remarks on Turkey mainly highlight its continuous decline for nearly a decade. Although the country has shown significant progress in implementing anti-corruption legislations, including the amendment to the Turkish Code of Misdemeanor that no more requires prosecution of a natural person to impose administrative fine against a legal person for acts of bribery, there are still much to go especially when it comes to enforcement. Effective enforcement of the legislation needs to be proven. The legislative ground can also be improved particularly towards corporate criminal liability, as the EU policymakers also discuss.

The 2021 Index serves as a warning to the private sector, too. From a risk-based approach, the worse the public perception of the corruption level of a country, the more precautions the corporate stakeholders should take. Those that wish to minimize risks of corruption should begin with drafting policies and procedures to fight it under their corporate bodies. Given the coverage of foreign anti-corruption laws, such as FCPA and UK Bribery Act, over extraterritorial activities, those documents are usually in place for international companies with legal presence in Turkey. However, it has not become a country standard yet. Ideally, anti-corruption policies should be customized by evaluating the risks that the company may face depending on its sector, scope, and scale. But in any case, they should include strong check and control mechanisms to prevent or detect corruptive engagements. Intolerance against corruption should be incorporated into organizational culture and the embracement of whistleblowers is as much important. Providing necessary trainings for the employees and urging them to be vigilant, companies should guarantee that those who witness any adverse incident feel no concern to report it. The reporting mechanism should be responsive and the matter needs to be followed diligently. In the same vein as the countries, the major problem the individual efforts against corruption deal with is enforcement. The content of a policy or a procedure makes no sense unless it is applied properly. Internal or external audits may help assess and ensure implementation.

In conclusion, the 2021 Index brings unsatisfactory results for Turkey besides the rest of the world. This should alert both the public and private sectors. Decision-makers should first admit the country’s failure in fighting corruption and more efforts for recovery need to be put at the governmental level. Meanwhile, the private sector should better not confine itself with the framework drawn by the government. Companies should take the matter into their own hands. Strict corporate rules are key for success. Enforceability is another issue, as it is also a major obstacle for Turkey in its entirety. As long as the human factor exists, neither countries nor companies will be able to eradicate corruption. However, compliance with predetermined rules may help manage the risks and liabilities. Providing a comfortable workplace for whistleblowers can also make a significant difference.

First published by The Compliance & Ethics Blog in Mar 28, 2022.

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