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Last updated: Monday, November 12, 2018

 

Corruption in Business: Is the Enterprise a Victim or a Perpetrator?

Posted: Wednesday, October 24, 2018

Public employees cause troubles to enterprises who will then have a motive to give bribery for those troubles to be resolved. The former tends to have more reason to cause more troubles. That is the currently popular vicissitude of corruption. Enterprises’ active bribery to gain advantages shows that enterprises are not just victims, but also culprits.

In addition, corruption and fraud among enterprises or even within an enterprise is also commonly seen with such manifestations as sweetener and bribery among enterprises, business officers who aim to use common property for personal purposes, and business leaders who install close relatives into important positions in the enterprise.

There are many reasons given to argue for corrupt conducts in business like saving time in making deals with authorities or gaining advantage of winning a contract or giving facilitation pay for bigger benefits. All interests are immediate and short-lived but easily visible.

Meanwhile, corrupt practices in business, whether detected or undetected, lead to significant repercussions for enterprises: Rising unofficial costs, business opportunities lost amid an increasingly transparent business environment, eroding business competitiveness, and even severe legal consequences.

Mr Gregorio S. Navarro, President of Integrity Initiatives Inc. (the Philippines), said, the Government cannot fight against corruption on its own. The private sector needs to take part in and do its part; otherwise, we cannot make breakthrough changes. Substantial changes require joint commitment, action and participation of all people.

To be successful, corruption resistance needs to be acted collectively. Government agencies and businesses themselves need to join hands to resist corruption in business. Collective actions will firstly enhance corporate competitiveness and require strong support and political will from the government. This has already been a challenge thus far.

According to the “Supporting SMEs to Resist Corruption” Project under the “Enhancing Integrity in Business” Action Plan launched by the Business Office for Sustainable Development, Vietnam Chamber of Commerce and Industry (VCCI), internal control in business entities is an indispensable, but also practical, action to prevent corruption.

Strong internal control can bring many benefits to the business, like limiting and preventing unnecessary risks or undue losses, and ensuring continuity and accuracy of financial data, accounting and statistics for production, business and investment activities; help prevent fraud, corruption, abuse of business resources for personal interests. In addition, internal control helps create a smooth, transparent and efficient operating mechanism and helps employees understand and adhere to the views that the leadership puts forward.

The abovementioned benefits are just reasonable assurance from each angle of view and each specific stage cannot make an absolute guarantee in all angles and stages. Businesses need a strong and reliable internal control system to meet the needs of all stakeholders such as donors, owners, borrowers, shareholders and banks.

Many small and medium-sized enterprises (SMEs) in Vietnam do not have the resources to build a professional management, inspection and supervision system. The question is: what should businesses do to protect themselves?

According to the Toolkit “Guidelines for SMEs to resist corruption” adapted by the Project “Supporting SMEs to Resist Corruption”, there are generally four main steps to build the internal control mechanism: (1) Identifying and analysing risks; (2) building business rules; (3) preventing and detecting corrupt behaviours; (4) and informing employees and partners.

Every enterprise needs to build a strong internal control system to ensure that it does not face operating risks. However, no matter how good the system of regulations and standards is, it will not generate practical benefits if its leadership does not pay much attention, make a strong commitment or deliver firm application.

To have best benefits, this mechanism must have specific regulations on execution and clear definition of individual responsibility. Notably, business operation is changing and internal control systems need to change and improve over time to fit the company’s operations and characteristics. Hence, persons who are responsible for deploying and developing internal control mechanisms need to study and control them periodically so that they can upgrade their systems to suit their needs.

Quynh Anh








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