HomeOpinionInteractive feedback :Corruption very bad for businesses

Interactive feedback :Corruption very bad for businesses

By Kevin Shadwell

  • HAVING been involved as a supplier to all sectors of the Zimbabwean economy, including mining, over the last 35 years, it has been noticed that corruption in all forms, in all sectors and at all levels has increased exponentially, especially in the last 15-20 years. This article looks briefly at why corruption takes hold, who it affects, and how, perhaps, to overcome it.

Corruption takes all forms, from monetary reward to provision of “favours” for family or friends, or even job providing and promotion, however, it all really comes down to bettering one’s financial position.

The most common form is suppliers inflating the price of goods/services and paying a “commission” from this to the purchaser. An additional form is also to give a “commission” to the stores and accounts personnel for quick/early processing of payment.

There are several reasons why corruption rears its ugly head varying from personal greed to financial need and opportunistic behaviour. In all cases, and no matter, the reason, both the supplier of goods/services and the purchaser are responsible as there has to be collusion and agreement on how to extract maximum value from any transaction.

Whilst those entities or individuals profit from these illicit transactions many other parties are disenfranchised and they primarily consist of the shareholders of the purchasing company, who are invariably paying a lot more for the product/service than they should be, hence this higher cost eats into profits.

This in-turn has a direct effect on the employees of that company since their livelihoods are greatly dependent on the profits of the company. It is also extremely difficult to gain new investment, since investors want a good return on their investment, as they do not want hidden and unwanted leakages of profits.

How do commercial entities like mines, and other large corporates overcome this scourge? There are various actions and policies which can be put into place.

  • Firstly, have a very strong policy of anti-corruption with heavy penalties for offenders, including prosecution;
  • Have a strong loss-control department that reports only to the shareholders/board or most senior management;
  • Have a “tip-off” system or sub-contract an independent “tip-off” agency to allow employees, suppliers, and other parties to make reports on corruption and corrupt deals;
  • Have lifestyle audits of staff and suppliers;
  • Continually do price checks on regularly purchased items;
  • Have supply contracts, including price rulings with reliable and regularly audited suppliers;
  • Only purchase products/services from authorised manufacturers or distributors;
  • As far as possible use local suppliers since they are easily traceable and regular visits to them can be made, by loss control;
  • Continually check your creditors to see who is being paid well and timeously and who is not;
  • Report corrupt individuals and companies to your industry association; and
  • Screen new employees very closely and check their references.

In closing, it must be said that this “cancer” will eventually kill its host if not dealt with and removed with precision. Let us all act with integrity as it is this trait that we will be most remembered by.

Shadwell was born, bred and educated in Bulawayo. He is a business owner and shareholder in various supply companies from chemical products through to engineering supplies to all sectors. He has been working in the commercial sector since 1986, mostly sales and marketing, but progressed into senior management/directorship in 1995.

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