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Corruption riots, scandals and corporate asset seizures, eight potential mitigating actions

It’s no surprise that serious social unrest over corruption and big business is emerging in India.

Another riot took place just this weekend past. Here’s some background.

Here’s a few lines from the BBC report:

“Police in the Indian capital Delhi have baton-charged hundreds of anti-corruption protesters angered by the government’s sale of coalfields without open bidding. An auditors’ report last week said the mis-selling cost India $33bn (£20bn).”

There are lots of factors in play here. Rising literacy, greater access to information, larger and larger deals being done, frustration with growing inequality, government mismanagement etc. The list could go on.

What’s interesting about the increasing social unrest over corruption (not new of course, it’s been happening for centuries) is that the names of large companies are becoming increasingly highlighted in major national scandals.

This is not just in India. But the current events in India may show an increasing trend whereby companies seen to be involved in dodgy deals are individually targeted by protestors and campaigners alongside governments.

In the UK, Europe and the US, that usually involves peaceful protest. But that is not always the case elsewhere.

I’d wager it’s only a matter of time before a major company HQ somewhere is attacked by a mob accusing them rightly or wrongly of corruption. It could be a US/EU firm, or your local partner in country.

This has happened before of course. My point is it may happen more often in future as access to information and rumour grow, even in nations such as China.

Indeed, in China, foreign companies are often useful scapegoats for a struggling government. Mobs hit Japanese firms a few years ago, you may recall.

This was permitted as a release of pressure that might otherwise have been directed at the government.

So if foreign companies are shifting from the old, never-quite-true paradigm of the 1990’s as unstoppable forces with great influence, to vulnerable interlopers with assets to spare (the truth will be somewhere in the middle of course), what role can responsible business play in mitigating citizen riot or asset loss risks?

(I appreciate I am casually throwing the two together, but the solutions are similar)

Here’s a few thoughts, culled from conversations with friends of mine who do this kind of thing below for a living:

1) Be essential to surrounding communities

Your company, supplier or local partner must understand that good community support is your first, and in the case of violence, your final ring of defence.

We know how to get communities on board (A constant circle of study, listen, formulate, consult, act, report, improve) but not enough companies understand the value of these communities beyond supplying workers, particularly when crowds or politicians can become aggressive.

2) Be the employer of choice to local workers

This speaks for himself. I know for a fact that in China’s recent labour unrest where factories were invaded and sacked by disgruntled workers, several that treated workers well were left untouched. Help your suppliers and partners run better businesses in the factories you don’t own, but do depend on. It pays back in a wide variety of ways.

3) Be useful to local government

There’s a fine line to walk here of course. Too close and you are asked for backhanders or may have inappropriate influence. Too far and you are first in line for political and public ire. The trick is to be practically useful to local politicians. This might be by having progressive employment practices, by sponsoring an NGO that builds capacity in local government, or by helping bring outside experts and speakers in to local events to show how things are done better elsewhere.

4) Show support for institutional / social capital development

Partly this is covered by the last two points above, but on a national level.
There are many other ways too. Here’s a report I wrote on some of them. There’s a lot more to talk about here.

5) Have allies in national politics who can call on data to defend you

This is linked to point 6 below. If you can show your company has a positive influence on a particular region or country, despite the inevitable negatives, you may be able to make a loud and clear case that you are ‘one of the good guys’.

Increasing numbers of companies are producing economic and social impact reports on the important markets where they operate. The headline above is part of the reason why.

6) Sponsor independent research (via credible third parties) to show positive impact

As above, research can help you defend your company name and assets/value chain in a country. But there must be a level of credibility involved.

Simply paying a consultancy to produce what will be seen as a PR document is dangerous, expensive and unhelpful. Work with a respected academic outfit or a combination of NGOs. It’s much harder to do, but will produce something of value.

7) Be honest about your social and environmental negatives, and show a plan for tackling problems with targets

We’ve seen some companies produce country CSR reports. Others have done country economic or impact studies. Some have produced site reports on controversial projects. What you produce is all about your operations, risks and impacts specifically. But showing a site, national, or regional plan for improvement in countries where you name, buildings, sites or assets are vulnerable is a good idea. The media will write about it and politicians, community leaders will listen if you do it right.

8) Show a willingness to partner – with anyone

Collective corporate action, in partnership with local and international NGOs is vital in tackling corruption. This article shows how it can be done.

Whether the issue is corruption or your own controversial operations, partnerships are vital.

If your partners or suppliers, (assuming they are big enough) don’t understand this, you should make them. Alliances, like brand partnerships, are going to count more and more in the coming years. Who you partner with depends on the issue.

Job one is getting your country or local chamber of commerce up to speed and working as a catalyst for business to business partnerships. NGOs should not be neglected. They remain the most credible voice out there in your defence.

This blog post could of course, be a lot longer.

As usual I have just scratched the surface with a few ideas as to how companies can offset public indignation, show integrity and persuade stakeholders of their right to a license to operate.

(All this is provided, of course, you deserve one. Doing this without cleaning up any current dodgy practices wouldn’t work long term)

As always, I welcome comments on what I have missed. No doubt there is much more to add on this topic.

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