Analytics Could Bolster Anti-corruption Crackdown


Although corruption isn't as problematic in western nations as it is in some developing countries, institutionalism and cronyism are still issues that we face in political and business spheres. Indeed all over the world, corruption is said to cost economies more than $2.5 billion a year, so addressing it is important.

But that's no easy task.

Credit: iStock
Credit: iStock

A new initiative is looking to target the practice, though, by making those at the top responsible for any corruption that takes place down their particular food chain.

Announced in the UK by British Prime Minister David Cameron last month at the country's anti-corruption summit, the UK will soon implement a system whereby companies that do not adequately prevent corruption perpetrated by their employees, will face criminal charges. It's hoped that by making those at the top and the entity they represent, responsible for what goes on in their business, it will encourage more safeguards and oversight to prevent it happening.

While this comes at a time when the UK itself is facing questions about its operation of tax havens through places like the Virgin Islands, on surface at least, this idea makes a lot of sense. The question is though, how do you go about making it a reality?

How do you stop corruption at all levels of a business, without putting someone in a position that is easily corruptible because of their enterprise-wide oversight?

Sundeep Tengur, banking fraud and financial crime specialist at SAS (sponsor of this site), believes that a technological solution is the way forward. Funnily enough, it's analytics which he feels could form the basis of an unbiased anti-corruption tool, which could really cut into the amount of fraud and business malpractice all over the world.

“The reason many organizations struggle to combat fraud, is either because they have not yet implemented robust technology systems and processes, or because they have only implemented simple rules-based solutions that can be easily circumvented by increasingly sophisticated fraudsters,” he said in a news release.

However implementing that sort of system is no simple task. Companies would need to begin collecting all sorts of data to make an analytical anti-corruption system viable. They'd need to know a lot about their employees and how they worked, which may mean crossing some privacy hurdles. While there is an on-going debate about how much privacy employees have in the workplace, nobody wants to feel like someone is looking over their shoulder.

That may be the difficult balance that must be struck though: providing enough oversight that corruption is not only difficult to achieve, but is also discouraged, whilst still providing enough personal freedom for employees that they can operate at the best of their abilities.

What sort of datasets do you think would be perfect for helping to weed out corruption and make it much harder for employees to commit various types of fraud in the workplace?

Jon Martindale, Technology Journalist

Jon Martindale is a technology journalist and hardware reviewer, having been covering new developments in the field for most of his professional career. In that time he's tested the latest and greatest releases from the big hardware companies of the world, as well as writing about new software releases, industry movements,and Internet activism.

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Re: Analytics may help
  • 6/30/2016 11:04:57 AM
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@PredictableChaos, that's a nice story. One would hope that other companies would be just as firm.

Possible data
  • 6/30/2016 10:57:52 AM
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Here in the Philippines, public servants are required to submit a Statement of Assets, Liabilities, and Net Worth (SALN) yearly. That's already a lot of financial data to work with. Couple that data with household income data and you'd have many variables that might fit into a model. Unfortunately, the bigger problem is that our internal revenue system is still not databased properly.

Re: Analytics may help
  • 6/29/2016 8:43:55 PM
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@Kq4ym, you're spot on by referring to incentives as the focal point in combating corruption. Incentives need not only be restricted to monetary benefits.

Re: Analytics may help
  • 6/29/2016 3:40:44 PM
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It still seems to me that it's almost impossible to eliminate all corruption and dishonesty, as the tendency seems to be part of our wiring over millenia. If there's enough incentive and the social ethics to allow for cheating it will be done.

Re: Analytics may help
  • 6/28/2016 12:13:05 PM
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I hear what you're saying about good boundaries and keeping things professional, Jim... but the fact is customers do more business with vendors they like, which is a personal response not a professional one. Professional courtesies and personal warmth will win more business than just courtesy, low prices, fast fulfillment, etc.

Re: Analytics may help
  • 6/28/2016 11:53:09 AM
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@jamescon, the level of acceptable cheating seems to vary by type of institutions. Banks are great targets. There seems to be little remorse from benefiting from a bank's error. An array of twisted reasons apply to them. The bottom line is ethics is applied when beneficial, either personal gain or likelihood of getting caught.

Re: Analytics may help
  • 6/28/2016 8:51:22 AM
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@rbaz. That's a great point about ethics being a "field" for experts. We learn right and wrong from any number of sources, parents, teachers, clergy, reading, etc. We look at a situation and recognize whether there is something wrong with it. It's like that first impulse when you were a kid and you considered whether to steal candy. Most of us walked away. Others knew it was wrong but justified it using some perverse logic.

Why do we need ethics experts? Not to tell us what is right or wrong but to tell us what we can get away with. Maybe they would tell the kid that it isn't stealing if the sales clerk isn't looking and the store doesn't have cameras. Then again, I suppose there are those who are taught that institutional cheating -- maybe also the corruption  that Cameron was discussing -- is ok.

I've had a couple discussions lately with people who mentioned how what we in the US call cheating in the US educational system is accepted practice in some nations. That means getting the answers to an exam ahead of time or copying someone else's paper. The justification is that it's the test score that counts, not whether you honestly learned the material.

Maybe attitudes like that are what allows someone like a shipping clerk to set aside one case of booze for personal use or for a police officer to accept a bribe from a motorist.

Re: Analytics may help
  • 6/28/2016 12:03:50 AM
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Jamescon, it cuts both ways. If you have a service provider who you have strong personal relationships with, you are liable to get better service, advice, etc.

Re: Analytics may help
  • 6/27/2016 7:57:49 PM
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It's also about the expanding science of behavioral economics and how humans make decisions. So it's not always some b-school professor Mumbo Jumbo without anything empirical backing it.

Re: Analytics may help
  • 6/27/2016 6:43:49 PM
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@Jamescon, companies and institutions set these rules and guidelines for employees in order to foster an ethical business environment, but not every situation can be covered ahead of time and put in a manual. The grey areas which do arise or devised/created are the problem. We navigate them with self serving logic.  

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