‘Unmasking’ Corruption

The following is an interview with Anne-Christine Wegener, co-author, “Unmasked: Corruption in the West.”

RB: Dear Anne-Christine, first, thank you for taking the time to meet with me during my recent trip to Heidelberg, and I really enjoyed our exchange of perspectives over a good coffee! So, for those who might want to know more about your background, perhaps you can share a little about your career, prior to co-authoring “Unmasked: Corruption in the West.”

AC: Dear Richard, the pleasure was all mine, thank you for reaching out, I very much enjoyed our discussion. It feels hard to believe but yes, there was a time before writing “Unmasked”. I started out in the pharmaceutical industry many years ago, then moved into international development in Bonn and European policy in Brussels for a while before starting at Transparency International UK in London. I helped build TI’s work on transparency in defence, from measuring defence corruption through two then-novel “Defence Anti-Corruption” indices, to working with companies and governments on tackling the issue. I loved the work but wanted to spread out my wings after five years, so I went freelance for a couple of years to write the book with Laurence Cockcroft, and do work on anti-corruption in other sectors. In 2015 I relocated from London to Frankfurt and joined Germany’s development agency GIZ to work on sectoral anti-corruption.

RB: So, why write “Unmasked,” as you mentioned, it’s a time-consuming and demanding process. Did you feel that there was a gap in field in terms of our understanding?

AC: Yes, we felt that there still was a lack of understanding with regards to how corruption works and affects us here in Europe and North America. We wanted to drill down and dissect how corruption works in the West. Thankfully there is an ever-growing anti-corruption community, which is getting stronger by the month – this is not so much a book for them as for people outside the anti-corruption world, who would like to understand how corruption works.

RB: Right at the start, you share that “banks have been successful in ensuring that regulatory authorities do not develop the teeth to control them effectively.” Yet, we see a pretty steady stream of enforcement actions against global banks, from violations of anti-bribery laws, money laundering and sanctions. So, are you seeing any positive movement here?

AC: The more than $300 billion of fines on the big banks mainly addressed mis-selling, what the lawyers called ‘reckless lending’, as well as money-laundering and sanctions. This is different to transgressing anti-bribery laws. The cumulative impact of these fines has been to make the banks’ leadership much more aware of the issues for sure. But in a recent survey by the Banking Standards Board in London, a third of the mid-level staff surveyed questioned whether their organisation’s stated values clashed with everyday business practices. So it looks as if the reality is that we have some way to go and in a world in which US regulatory practices are likely to become lighter rather than stronger.

Corruption in Pharma:  A ‘Bitter Pill.’

RB: I found the chapter “A Bitter Pill: Pharmaceutical Corruption,” extremely engaging, and that’s a great title. But again, we have seen recent enforcement actions against Teva, the settlement of GSK issues, and yet another steady stream of settlements in Medical Devices and Pharma. You mention GSK specifically, and they now share how they changed their business model, as to make sure that corruption doesn’t get in the way of “public health.” Again, are you seeing this as heading in the right direction, or just a minor change involving a few companies that ‘got caught.’

ACI am glad you liked the chapter, I had long wanted to take a closer look at the pharmaceutical sector. And you are right, we have seen a steady stream of anti-corruption investigations and settlements in the pharmaceutical industry, and still… Like in other sectors, scandals help the transparency cause, and those companies hit by it often then develop the most advanced anti-bribery regimes. But it still puzzles me: with the number of high-value settlements and investigations against companies, how is it that we keep seeing cases of bribery coming to light? Granted, some of them are from a decade or so ago, and you would hope that they come to light as compliance regimes get stricter. But there is still a long way to go with regards to compliance culture. Let me give you an example: In the US, there is a law requiring pharmaceutical companies to disclose which doctors they have paid for studies, product trainings etc. While not perfect, this system provides some transparency for me as a patient. A similar system was established in France after a major scandal that led to the death of hundreds of patients. However, we see only a very watered-down version of this is countries like Germany, and next to no transparency in other countries. As a patient, I find this troubling. For policy-makers, this should be a red flag and a call to action.

 Is the Defence Industry ‘Wired’ for Corruption?

RB: Let’s move onto your chapter on the “Defence Industry: Wired for Corruption?” I would also be keen to hear your perspective from your TI experience. We now see major defense contractors moving their teams and targets to regions where there are lucrative growth opportunities, especially in the wake of reductions in Western based spending, but these are regions which I like to call the “TI Sea of Red” in terms of corruption and public procurement risk. Anne-Christine, are we looking at a potential lethal combination  of “insufficient transparency of procurement systems,” mixing with forward based sales teams looking to grow in those environments? Or, are both the demand and supply side of the procurement process now engaging at a lower level of risk and a higher level of integrity?  From my decade in the field, and knowing the intermediary peril, this looks like trouble ahead.  What say you?

AC: Richard, thank you for this question – I wish more people asked questions about the defence sector and corruption therein, as it is one of the most corruption-prone sectors. I think we are seeing two things simultaneously: a lot of companies ramping up their compliance structures after some hefty scandals that really gave the industry reputational problems; and a struggle for new growth opportunities. Yes, growth opportunities currently exist in countries where government systems – from procurement to human resources to the highest levels of government – are non-transparent to varying degrees. But there are always two sides to the coin, and I would not want to let people get away with the ‘it’s the other side’ excuse that you often hear initially. High-risk environments should raise red flags for any defence contractor, and I do not think that these risks have necessarily diminished. The corrupt are always getting more sophisticated, so the exchange of companies on the subject through forums such as IFBEC is pivotal. At the same time, there has been promising work by TI and others with both governments and companies on strengthening their own integrity systems, and with civl society on oversight. We know where the risks are, and there are experts out there who can help companies and governments identify and tackle them, political will etc provided. But, on a self-critical note, we must do better as an anti-corruption community in sharing lessons learned across sectors.

The Power of Networks and Accountability

RB: Also, perhaps you can share a little about IFBEC  (International Forum on Business Ethical Conduct), where I had the pleasure to present at their 2015 Annual Conference. Do you think this sort of industry association can be a model for other markets?

AC: I would say so, yes. I am a big believer in networks and the power of holding each other accountable. It is a classic behavioural and transparency scenario: when I tell others about what I am going to do, it is much more likely that I will actually follow through. At the same time, the group can really raise standards together, and share information. As with all voluntary networks and codes of conduct, there is a question of quality-assurance and enforcement. But the idea of the major players of an industry across continents voluntarily getting together to raise the bar, yes, I find that very encouraging. And there we are at the signaling effect of the industry again: if you can do it in an industry that is a keen on keeping the cards to their chest as the defense industry, there really is no argument for other industries not to follow suit, and some already have. But having worked in the not-for-profit sector for a long time, I also have to add this: having industry codes and networks is great, and the hope is always that it leads to more transparency. But to ensure that there also needs to be external oversight.

RB: Well, Anne-Christine, thanks again for your time. Here’s a link to buy the book (or, alternatively, here if you prefer the big online seller), again, with my strong endorsement, and I know you are going on a book tour. Is there any way people can keep up with that, or contact you if they want to know more?

AC: Richard, thank you so much for giving me this opportunity, and I am so glad you liked the book. We are still on book tour in Europe and the US, which is great fun as it sparks so many great conversations with people everywhere. For everyone who’d like to get in touch, we can be found on Twitter (@acwegener or @flcockcroft), The Facebook page for the book is here and my LinkedIn profile is here.

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