Friday, July 18, 2014 9:30
Written by Steve Taylor
Although many businesses realize that corruption is a risk they need to look out for, it can often be easy to overlook simply because it doesn’t sound that bad on paper. For example, Wal-Mart is in the process of being investigated for bribing Mexican officials to expedite the process of passing building permits. That may not seem all that terrible, but corruption often posses more dangers than simply being unethical.
Several retailers found themselves in a jam last year after fires decimated many clothing factories in Bangladesh. In those cases, the fires were caused by a number of clear compliance violations. They were over packed, exits were blocked and the buildings had also undergone a number of structural changes that inspectors were paid to approve or overlook. For example, extra floors were built, a helipad was installed and electrical cables were exposed throughout these facilities.
The Bangladesh fires are an example of corruption being a major catastrophe in nearly every sense, ranging from financial drawbacks to social losses to loss of life to reputation damage. To make matters worse, organizations such as Transparency International have ranked Bangladesh among the more corrupt regions, so it’s not like major corporations get blindsided by these shady dealings. Whether they open their own factories abroad or simply partner with third-party vendors, they need to gain control of their operations and ensure that corruption and compliance risk are two threats that won’t come into play.
Trending Toward Safety in Garment Factories
As Apparel Magazine recently noted, various associations, comprised of corporations from around the world, have begun to enact meaningful change in Bangladesh. The goal of these organizations is to improve safety and reduce corruption and violations, all while maintaining satisfactory wages and working conditions for employees. The goal is to create a winning situation for everyone involved – a risk-free work environment for companies, profitable conditions for factories and satisfied workers.
For example, the Accord on Fire and Building Safety in Bangladesh is comprised of 100 international corporations, two global trade unions and multiple Bangladeshi unions and has set building and fire safety inspection and training programs in place. The Alliance for Bangladesh Worker Safety is made up of 26 North American retailers and has helped to inspect the structural integrity and electrical safety of 700 factories.
“To avoid any [Foreign Corrupt Practices Act] violations and thereby regulatory investigations and penalties, apparel brands should focus on creating and implementing a streamlined and reliable supply chain governance, risk and compliance program across their entire supply chain,” Apparel Magazine contributor Keri Dawson explained.
“Organizations should integrate multiple compliance, risk and audit programs including on-boarding assessments, security audits, CSR social compliance audits, quality inspections, production capacity audits, sustainability audits, environmental compliance, etc., to garner a unified view of supplier performance,” Dawson added.
Living in a World Under Increased Scrutiny
It’s no secret that compliance risk assessment is becoming critical to the success of any modern business. FCPA is the most common concern, with companies facing millions – and sometimes billions – of dollars in fines for violation, on top of the brand damage and other ramifications that can occur.
According to Corruption Crime Police, savvy businesses will begin seeking out compliance professionals to help ensure compliance is valued throughout the company. Other tools such as compliance management software can go a long way in helping companies to manage different compliance areas and ensure everything remains clear of violations.