7-13 February 2014 #693

Doing well by doing good

Good ethics is good for business. Honesty pays. Integrity yields long-term benefits through the triple bottom line

BILASH RAI
It is an indication of how little emphasis Nepal’s powers-that-be give to the economy and business that the recent news of the country dropping to the bottom of the world and South Asian rankings on the freedom to do business created hardly a ripple.

The Wall Street Journal and Heritage Foundation survey showed Nepal dropping eight points to rank 149 of 178 in the world for ease of doing business. If it’s any consolation, Bangladesh (131) and India (120) don’t fare much better, although Sri Lanka is way ahead at rank 90. But even among South Asian countries, Nepal is at the bottom of the heap.

The score is based on six criteria that include transparency, labour, investment laws, and governance. Needless to say, the report highlights endemic corruption in government, the judiciary, police, and the prevalence of organised crime in Nepal as the reasons behind the poor ranking.

Coinciding with the report, Kathmandu recently hosted a conference organised by the Brussels-based World Forum for Ethics in Business and which was addressed by Chairman of the Council of Ministers, Khil Raj Regmi. The fact that the interim prime minister, was still in office and giving speeches nearly three months after elections was itself a telling sign of the political paralysis that is at the root of the country’s economic stagnation.

Nepalis have become so blasé and tolerant of corruption that it seems almost futile to even conduct a seminar on the ethics of business. The private sector does not exist in a vacuum and most businesses admit that the external environment forces them to indulge in behaviour they know is unethical in order to survive. Their justification is that they are not being immoral, just amoral.

As FNCCI President Suraj Vaidya argued in a speech at the conference, Nepal’s private sector needs to admit that it is a part of the problem. The greed has now transcended just plain dishonesty: 518 private businesses owe Rs 6.19 billion in unpaid taxes, three bank CEOs are under investigation for embezzlement, an insurance company has been taken over for fraud, and several tycoons are in self-imposed exile to avoid arrest.

In such a situation, it may seem almost comical to talk about enforcing ethical behaviour in business and politics. However, part of the problem is that the media only highlights the crooks and headlines scandals. The honest cop, the public servants with integrity, the upright politicians do not make it to the news. Rather than individuals being corrupt, the prolonged political transition has meant that graft is now systematised. The solution therefore is not so much to go after individuals, but to address the in-built reasons that have made corruption so accepted. There is empirical evidence to show that good ethics is actually good for business. Honesty pays. Integrity yields long-term benefits through the triple bottom line.

The cycle of corruption starts with election financing, where candidates turn to willing businesses to fund their campaigns. The candidate has to return the favour when he is in office. Electoral reform and state-funding of political parties must be a part of the new election rules being drawn up in the constitution. This is our last chance to eliminate one of the most important reasons for systematic corruption.

The others are to reduce the size of government and the bureaucracy, pay them better, and undertake high-profile investigations against the Big Fish. The anti-corruption watchdog should not be an agency for political witch-hunts which it is presently, but be given teeth to go after crooks big or small.

If you clean up politics, you will clean up business. And the most effective way to clean up politics is to force elected politicians from the prime minister right down to the VDC chairman to become more accountable through clean elections. The last election, the new constitution, and local elections, hopefully this year, will in large measure take us in that direction.

Read also:

Cleaning up our act

"We are part of the problem and we are ready to make a difference."