Corruption and Ethics

Week 11
Corruption and
ethics
Dr Zhibo Qiu
King’s Business School
Global Business 2023/24

Corruption
Corruption
• Video – https://www.youtube.com/watch?v=2dUz3KnJd8g
• The abuse of power for private gains – individuals, business organisations, and institutions
• Types
• Bribery
• Embezzlement
• Nepotism and cronyism
• Kickbacks
• Conflict of interest
• Fraud
• Money laundering
• Other types of abuse of power
• Selective enforcement of law, harassment, intimidation, etc.
4
What are the costs of corruption?
• Video https://www.youtube.com/watch?v=JUjGUpg2I0k
• Country-level
• Economic costs
• Loss of public trust
• Social inequality
• Firm-level
• Increased operating costs
• Reputation damage
• Legal and regulatory risks
5
Compared to political lobbying
6
How to combat corruption?
• Anti-corruption campaigns and legal reforms.
• International organisations and treaties.
• International and national anti-corruption courts
• International aid and development assistance.
• Capability building programmes
• Corporate governance and compliance programs.
7
Other business ethics
Business ethics
• Labour rights and working conditions
• Environmental sustainability
• Supply chain ethics

• child labour, forced labour, and unethical sourcing practices
• Data privacy and cybersecurity
• Artificial Intelligence
• Minority rights
• Corporate governance and transparency

9
How to promote business ethics (1)
• Establish and update its code of conduct
• Align it with legal and regulatory requirements
• Reflect on the company’s values and commitment to integrity.
• Implement ethics training and awareness programs on compliance and corporate governance.
• Create a culture of ethical conduct within the business organisation by promoting open discussions and
sharing best practices.
• Strengthen whistle-blower mechanisms:

• A confidential reporting system to notify unethical behaviour, misconduct, or violations of the code of
conduct.
• Conduct regular audits and compliance reviews.

10
How to promote business ethics (2)
• Conduct scenario planning and risk management:
• Identify areas of potential risks or vulnerability to unethical behaviour and take proactive or corrective
actions.
• Raise leadership awareness on ethics. (Beer, 2021)
• Promote transparency and ensure accountability.
• Engage with external stakeholders to drive positive social impact.
Ø Business integrity as a strategic response to ethical challenges (Malan, Talyor, Tunkel, & Kurtz, 2022)
11
Critics on business ethics
• Tokenism
• Superficial displays of ethical behaviour, such as greenwashing or diversity initiatives, without a
genuine commitment to ethical principles.
• Lack of enforcement
• Ineffective regulatory frameworks to hold businesses accountable for unethical behaviour.
• Short-termism
• Unethical decision-making and harm to stakeholders in the long run.
• At the expense of consumers.
• Debate on who owns social issues: government vs. corporations.
The trial of business ethics (Vaccaro and Kusky, 2011)

12
Break
Case study – The UK’s Kleptocracy problem
The Kleptocracy problem
• https://youtu.be/aDWULDbgDfo
• In a kleptocratic system, government officials, politicians, or ruling elites use their positions of authority
to enrich themselves and their associates through corrupt practices, such as bribery, kickbacks,
embezzlement, and nepotism.
• “Rule of thieves”
• Sometimes, these kleptocrats move to other countries.

• Russian and Eurasian autocrats in the UK.
15
Business and politics in the UK
16
“Our shell companies hide their money, our private schools educate their children, our
lawyers defend their reputations, our financial markets fund their companies, and our
banks launder their money.
It’s absurd to talk about the threat that dictators pose to our democracy without acknowledging
how without our assistance they wouldn’t be a threat at all. It’s like condemning a war without
mentioning you supplied the weapons, or criticising a party that took place in your own house.”
17
18
Group discussion - Problem
• Discuss the following questions:
• What are the ethical issues involved in this case?

• What are the stakeholders involved in this case?
19
Group discussion - Solution
• Discuss the following questions:
• How could UK firms and the UK government address these ethical issues?
• Consider both market and nonmarket strategies.
20
Questions?
Dr Zhibo Qiu
Lau China Institute
King’s College London
[email protected]
https://www.kcl.ac.uk/people/zhibo-qiu
© 2020 King’s College London. All rights reserved

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Week 11

Global Business 2023/24

• Supply chain ethics

• Data privacy and cybersecurity

• Corporate governance and transparency

• Strengthen whistle-blower mechanisms:

• Conduct regular audits and compliance reviews.

• Raise leadership awareness on ethics. (Beer, 2021)

• Promote transparency and ensure accountability.

• Engage with external stakeholders to drive positive social impact.

• Debate on who owns social issues: government vs. corporations.

The trial of business ethics (Vaccaro and Kusky, 2011)

• Sometimes, these kleptocrats move to other countries.

• What are the ethical issues involved in this case?

© 2020 King’s College London. All rights reserved

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