Opinion

Edward Hadas

A corporate abdication of corruption

Edward Hadas
Jun 4, 2014 14:39 UTC

By Edward Hadas

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Allegations of corruption did not exactly cost King Juan Carlos the Spanish throne, but they probably played a role in his decision to abdicate. A popular desire for change was fuelled in part by claims of a 5.6 million euro fraud by his son-in-law, Inaki Urdangarin, who denies any wrongdoing. The resulting dynastic change may be considered a sign that corruption has become less acceptable. That would be a misreading.

Actually, it is hard to decide whether corruption is waxing or waning globally, because the concept is hard to define. A Danish anti-corruption group’s explanation captures the ambiguity: “Corruption is a broad term covering a wide range of misuse of entrusted funds and power for private gain… A corrupt act is often – but not necessarily – illegal. In handling corruption you will often face grey zones and dilemmas.”

That sounds about right, and the grey zone is large. A bribe, for example the sort of payment alleged to have contributed to Qatar’s selection as host nation for the 2022 soccer World Cup, is obviously corrupt. But what about a consulting arrangement that channels a substantial portion of the revenue from an oil well to someone with excellent political connections? In the country with the oil, such payments can be perfectly legal and socially accepted remuneration for services rendered. Outsiders see a corrupt power and business elite.

The Danish group was not considering the huge pay packets of corporate chief executives, but they seem to qualify as at least grey. Like a consulting contract, the money in question is considered a legal and socially accepted remuneration for services rendered. However, outsiders usually see a corrupt power and business elite. The seals of approval from remuneration committees and consultants only make the corruption look more deeply entrenched.

The ongoing ethics struggle of banks

Edward Hadas
Mar 5, 2014 15:58 UTC

The Swiss Bank Employees Association has told an uncomfortable truth: it was “generally known” that for many years some of their employers profited from customers’ “tax evasion.” That is incontestable, as many of the banks’ managers concede. But the practice, supposedly now ended, raises an important question about ethics and business. Why were neither the managers of the Swiss banks nor their employees worried by this business model?

The hardly hidden truth was included in an Association press release which called on Brady Dougan, the chief executive of Credit Suisse, to apologize for insulting the Swiss bank’s employees.

Dougan, who was trying to explain to U.S. legislators how Credit Suisse had stopped helping Americans escape taxes, said that “some Swiss-based private bankers went to great lengths to disguise their bad conduct from Credit Suisse executive management.” The claim, said the employees’ group, slighted the professionalism of the workforce. Besides, it was “hardly credible.”

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