Corporate Governance

A Breakfast Meeting organised and hosted by the Council for Business with Britain, under the aegis of the Ceylon Chamber of Commerce, was held on 20th April, 2017 at the Hilton Colombo Residences. Entitled ‘Corporate Governance: Staying ahead of Bribery and Corruption Risk’, the meeting was designed to discuss the shifts in bribery and corruption risk, its implications for the business community in Sri Lanka, as well as trends in enforcement action by government and non-governmental agencies.

To discuss this important topic, an expert panel was convened, including the British High Commissioner for Sri Lanka and Ambassador to the Maldives, H.E. James Dauris; Director General of Commission to Investigate Allegations of Bribery or Corruption, Sarath Jayamanna; Senior Vice President, Global Ethics and Compliance for GlaxoSmithKline Plc, Nick Hirons, and Group Finance Director of John Keells Holdings Plc, Ronnie Peiris, who all shared their thoughts and perspectives. The meeting and discussion was moderated by Managing Partner of KPMG Sri Lanka, Reyaz Mihular.

The discussion encompassed many aspects of bribery and corruption risk and its impact on business and society at large. It was said that the financial impact of bribery and corruption globally was greater than 5% of the worlds GDP, and represents a significant obstacle to social and economic development, primarily due to the link between corruption and inequality. The panellists commented on the effects of extraterritorial anti-bribery and corruption legislation (e.g. UK Bribery Act and the US, Foreign and Corrupt Practices Act), which are influencing how multinational and local companies are operating in domestic and overseas markets; acknowledging that no company is immune to the risk of bribery and corruption. It was also highlighted during the discussion, that the legislation in Sri Lanka pertaining to bribery and corruption is mainly targeted at the public sector; however, there is an appetite to expand enforcement to the private sector.

The role of values and culture in managing bribery and corruption risk was also explored during the discussion, with broad acknowledgment that having the right management focus and tone is critical to mitigating the risks, with some advocating a zero-tolerance approach. To get ahead of the shifts in bribery and corruption risk, the panel also acknowledged that businesses need to adapt their business model, as well as the control systems that they have in place to prevent and detect bribery and corruption. Ultimately, a business’s reputation is critical to its long term success, and any allegation of bribery or corruption can inflict irrevocable damage, which is a likely outcome if the risk is not managed effectively.

According to Transparency International’s Corruption Perception Index (CPI), Sri Lanka’s ranking has shifted from 83rd position in 2015 to 95th position in 2016. This change in ranking in the CPI indicates the there is an opportunity for the business community, regulators and enforcement agencies to do more to combat bribery and corruption in Sri Lanka.