Tuesday, December 29, 2015

Eliminating Corruption?

We all believe and strongly agree that corruption is a negative function that we would like to eliminate from the World.  The passion and intent of people was strongly visible with the Anna Hazare event a few years back - millions expressed solidarity physically as well as virtually.

Here, I am referring to corruption as deliberate fraud or stealing by the people who are part of an enterprise or a system as compared to thieves and bandits from outside the system who take by force.  And also, only financial corruption as compared to other forms of corruption - moral et al.

Unfortunately, corruption has been in existence since the humans came into being - cant be wished away and is part of the basic human nature.  Governance and laws cannot be a full or permanent deterrence really.  Harping on laws and legal bodies as the sole method of tackling the corruption is a waste of time.

We are aware that corruption can hurt more than any theft in any organization (Lockheed, Enron, Satyam as some of the many real world examples).

A few years back I had attended a session by Nigel Iyer (Septia Group), a UK-based CA and passionate consultant and expert who has over 20 years to understanding corruption as well as advising corporations on how to address fraud and corruption.

He made a few critical points:
1. Corruption can be separated out into three tiers - bottom tier (fudging travel claims), middle tier (typical sales orgn - bribery) and top tier (special relationships, kickbacks, modifying operating approach - like top bosses continuing to get bonuses in spite of poor business performance).
2. Corruption should be looked at from the perspective of opportunity (who holds the power/control) and motivation (who wants to).  Focusing on the top and middle tier is more impactful and less time consuming.  The focus on the lowest tier creates more and more work with mostly a feeling of control.
3. Addressing corruption is not a one time activity and can never be taken out of any group or company.  It can only be controlled and requires appropriate systems and constant efforts.

In my experience, operating with trust is critical, but not without systems and methods to address the potential for any one with the opportunity to take more than their due.  Over the years, I have also realized that trusting people can be taken by staff as laziness in process/financial diligence - and hence open to being taken for a ride. The challenge is in balancing trust with appropriate systems based deterrence to being taken for a ride.

I believe in automating the lowest level expense and claims systems and at the same time have an independent (read non-influenced) personae approving the highest level expense/spending.  For example:
1. Student fee collection through mobile money transfers
2. Geo-tagged mobile app for expense logging and reporting
3. Senior level expenses audited

Good Education, Leading by Example and self-correcting Systems are more relevant and long-lasting in the fight against corruption than deterrence by law and punishment.