Good corporate governance is not enough just to make rules that corruption is prohibited. Companies need systems that make abuse of authority harder to commit and easier to detect. Separation of duties is one of the foundations. The person requesting payment should not simultaneously be the party approving and disbursing the payment. Layered approvals, transaction recording, internal audits, and independent inspections can also help reduce opportunities for abuse.
Company culture is also very determining. If leaders allow conflicts of interest, gifts from vendors, or manipulation of reports as long as they benefit the company, written rules will not mean much. Therefore, companies need to have safe reporting mechanisms, protection for whistleblowers, conflict of interest policies, and checks for unusual transactions. Transparency and accountability must run from the lowest level to the highest management. Strong governance not only protects a company from financial losses, but also maintains the reputation and trust of customers, investors, employees and business partners.
