A Draft Corporate Corruption Bill

The text of a proposed law is not the sexiest subject for a blog, but some laws are capable of a transformative impact on society and they should interest all of us. An example of a law that can completely transform society is one that ends Apartheid.

My proposal for a ‘magic bullet law’ aimed at endemic corruption is potentially transformative not just of Nigerian or even African society. This draft law is scripted for Nigeria, but it is relevant to any society whose public institutions are still nascent.

Why this is a Great Idea
is explained in some detail in my December ’08 and December ’07 blogs. Do read them for a little background.

The corporation is far older than the modern African state. Companies have sold and bought everything from 17th century slaves to 21st century shirts. The borders of many African states were carved by companies. Much of Southern Nigeria was originally ruled by the Royal Niger Company, which sold its ‘interests’ to Britain in 1900 to establish the protectorate of Southern Nigeria. Similar stories will link many historical companies – the German West African Company, The Mozambique Company, The British South African Company, and the Serria Leone Company, for instance  –  to the countries where they operated.

This history is important because the nascent democratic and administrative institutions of many modern states are not proof against the well-run modern African company, how much more the modern multinational corporation.

Many a decent fellow, of any nationality, will succumb to the temptation of a million dollar bribe. (This much we can glean from the ease with which dodgy ‘419 ‘ proposals attracted takers from all over the world.) Thousands of companies can also afford to pay million dollar bribes, if the deal is right. However, while a Nigerien, Nigerian or Togolese colonel may conceivably take a bribe to overthrow his government, no British or French colonel is likely to receive, or accept, such an offer, for obvious reasons. Because African institutions are still relatively unstable, Africans have to devise peculiarly African solutions to a peculiarly African problem.

There are a few reasons why mere fines are inadequate to address corporate corruption. Halliburton may have been fined close to $US600 million dollars for giving US$180 million in bribes to Nigerian officials, but the fines went to enrich the US treasury, not the Nigerian people or government who were the victims of the corruption.  And the loot itself always goes abroad. Besides, although the fines were reckoned in millions of dollars, the contract for which the bribes were given  were reckoned in billions of dollars. It is also the case that in corrupt societies, only the tip of the iceberg is ever exposed. So companies need never stop the practice. They only need to get smarter.

What is this Magic Bullet?
All those calculations change with this proposed law. The concept is simple enough: companies that are guilty of serious corruption should be liquidated. It is the equivalent of capital punishment for Enterprise. It spells Zero Tolerance.

It does not  work like ‘magic’, and it still requires courageous enforcement. The draft itself is a template, neither will it address every facet of serious corruption. Yet, it can be the critical component in an anti-corruption toolkit. Once this law is on the statute books, the average multi-national would rather shut down its operations in Nigeria than deliver a ministerial kick-back. No chief executive would risk a 100 billion dollar share capital to secure a 1 billion dollar contract. Shareholders are less likely to pressure chief executives to deliver obscene dividends ‘whatever it takes’ if they are dicing with expropriation.

That is exactly the spirit we need all over Africa.

The Risk of Capital Flight
The instinctual objection from Corruption Inc is that such a law will lead to capital flight from investors who are afraid of arbitrary expropriation. Most countries should of course welcome the departure of companies willing to risk conflict and war, but unable to commit categorically to probity. This will make way for the arrival of ethical companies which have for decades been unable to operate in our societies.

It is important to emphasise that it is not every corporate act of corruption that will activate the liquidation process. A company driver who pays a ten dollar bribe to a traffic policeman will not trigger the liquidation of a billion dollar corporation. There is a Sphere of Governance, and there is a threshold for the bribe. The Magic Bullet Law is not aimed at petty corruption, although its effects will certainly filter down with time.

Time to Break a 500-year Curse
The Scramble for Africa continues apace. It is  now the responsibilty of our generation to put on the brakes. This Magic Bullet Law is one way to do it. All we stand to lose are our exploiters. As we speak, a constitutional amendment is rocketing through Nigeria’s National Assembly. Clearly, when Legislators are properly motivated, they do legislate. Of course there is not much incentive for beneficiaries of a broken system to fix it. That is where WE come in. A Corporate Corruption Bill is soon heading for the National Assembly. Please add your thoughts, suggestions and comments below. If you agree that this magic bullet should be fired, please send your name, address and country of interest – for now – along with any special skills you may want to contribute to this campaign here.

And do spread the word. We will contact you in the days and weeks ahead.

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Read the Draft Law here