Pushing Corruption and Money Laundering into Reverse Momentum

Echoes from the Corporate Governance Arena

Abstract

In this article, the author emphasizes how corruption and money laundering have caused incalculable economic damage to society. The two problems are intricately linked and very difficult to separate. The board of directors should introduce an enhanced corporate governance mechanism(s) alongside other countermeasures in order to minimize weaknesses in the current system. In exercising their corporate function(s), aside from other committees, the board should focus more on the audit committees. It is very important that the board uses the services of competent non-executive directors (NEDs) on the audit committees. NEDs should monitor the authenticity of audit reports and minimize the occurrence of fictitious financial reports that aid fraud. Efforts at whistle-blowing should be encouraged with rewards by the board for curtailing fraud through such brave conduct. Fictitious and vexatious reports should not go unpunished. The time is ripe for boards to focus on corporate ethics and make sure that they are practised across the entity from ‘the top to the shop floor’. The corporate culture should be seen to nurture the best behaviour in people. This approach has very strong potential to minimize fraudulent and dishonest behaviours that translate into corruption and, by implication, money laundering.

Keywords: corruption; money laundering; board of directors; whistle-blowers; non-executive directors; corporate ethics