Bailing Out Businesses And Maintaining Compliance: Can We Do Both?

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Congress and the Trump administration face a daunting feat to negotiate a second stimulus package to revive the world’s biggest economy. If lawmakers proceed with pumping more public funds into the hands of consumers and businesses, they must proactively limit opportunities—even incentives—for exploitation. But they can’t do this alone: The business community must pull its weight in preventing private sector corruption.

We don’t have to look far to see the potential for corruption fueled by the CARES Act and other stimulus measures. There are numerous examples of questionable bailouts and loans connected to the Trump family and others in the administration, marred by a lack of transparency at the outset and little accountability after the fact. Federal oversight has been fainthearted, haphazard and underresourced. When asked who would hold the Treasury Department accountable for the distribution of stimulus funds, Trump responded, “I’ll be the oversight.”

Public sector corruption inevitably spills into the private sector. The void created by a lack of leadership and oversight from the U.S. administration—coupled with shrinking corporate budgets, chaotic operational changes and reduced capacity—can lead to a dangerous and shortsighted dismissal of the need to prioritize anti-corruption compliance efforts. The business community must remain attentive to the many ways corruption can proliferate during crises and should implement safeguards at the outset.

The danger of inadequate oversight goes beyond corruption’s devastating effects on communities and individuals: In the scramble to regain ground on the economic front, we risk backsliding on the progress made over decades in the fight against financial crime. Top-performing companies have consistently demonstrated for years that corporate governance and economic health can’t be decoupled. Ultimately, what’s at stake is preserving a socioeconomic order grounded in the rule of law—a fundamental principle of democracy the United States badly needs to revive.

The business community’s unique role in protecting this order shouldn’t be overlooked. At a minimum, companies should acknowledge and address the risks associated with reduced budgets and avoid inadvertent complicity in illicit activity. These efforts are more complicated than usual: The ongoing global reshuffling of supply chains demands heightened sensitivity when verifying the integrity of new business partners and weighing region-specific risks. Where the need for operational capital becomes overwhelming, closely held corporations should carefully vet attractive but opaque financing offers from obscure sources. Companies will eventually be asked to open their books following the infusion of extraordinary amounts of taxpayer funds into the economy, amplifying the need for vigilance now, rather than pushing it off as some vague future priority.

Corporate voices are persuasive in unison. Companies should use their collective clout to urge the government to impartially execute its oversight responsibilities. Everybody loses when the unscrupulous exploit their connections to drain public coffers. Companies that play by the rules should not tolerate selective application of those rules to others. Just as an independent media plays a leading role in keeping government honest, the private sector has a powerful voice to denounce cronyism, kickbacks and cover-ups.

Finally, we need to concede that back-to-normal is not just around the corner. Long-entrenched expectations of a globalizing economy may need to be reevaluated. Corruption risks that well-governed companies have been addressing in distant markets may grow more immediate if operations are moved closer to home. We are undergoing a disorienting shift in social, economic and political relations. Maintaining anti-corruption “best practices” in the public and private sectors is an important baseline, and we should rely on proven tactics.

But we also need to be ready to understand and address—ethically—the unpredictable realignments the pandemic will continue to impose. Even if the lack of public sector oversight, transparency and ethics continues with the next stimulus package, corporations must consider how they will remain resolute and committed to anti-corruption.

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