GOING BLUE: WHAT DOES THIS MEAN TO KENYAN COMPANIES?

1. Introduction

Corruption is a cancer in any nation’s bloodstream. It is complex, manifests in various forms, spreads across all sectors and if left unchecked, has the capability of ultimately crippling the economy and destroying the nation. Its impact transcends economic harm thus undermining human rights, weakening democracy, eroding the rule of law, and ultimately jeopardizing national security.^[1] Therefore, addressing corruption requires a multifaceted approach that considers its far-reaching implications across legal, political, economic, and social spheres and across all sectors, both public and private.

In the Kenyan context, the focus of corruption either legally, institutionally or administratively is notably in the public sector and hardly thought about in the private sector, which is equally affected. This is the basis and soul of the Going Blue Agenda; a private sector anti-corruption conversation propelled by various private entities both individually and collectively in forums such as the Blue Company Project.

The Going Blue Agenda is not only an anti-corruption conversation but also a manifestation of the broader Environmental, Social and Governance (ESG) discourse. Within the ESG framework, corruption risks are generally factored into the overarching category of corporate governance, that is the “G” in ESG alongside other factors related to corporate structure, board composition and power allocation. Furthermore, corporate integrity is fundamental to ethical ESG performance and reporting which are key to the realization of the ESG Agenda.^[2]

As an introduction to a wider series on the Going Blue Agenda, this article shall endeavour to introduce the Going Blue Agenda, explain how the current legal framework supports this conversation and why your business should consider going blue.

• Kenyan Law on Anti-Corruption

Before 2016, our key legislations on corruption being the Anti-Corruption and Economic Crimes Act (Cap. 65) and the Ethics And Anti-Corruption Commission Act (Cap.7H) focused on curbing corruption perpetrated in the public sector by state and public officers. This is of no surprise seeing that the Ethics and Anti-Corruption Commission (EACC) was established by Parliament to give effect to Article 79 of the Constitution that enforces Chapter 6 on Leadership and Integrity; an article wholly dedicated to provide for the responsibilities and conduct of state officers and holders of public office on matters leadership and integrity. As seen above, EACC’s efforts on promoting best practices in integrity and anti-corruption was initially focused on the public sector.

With the enactment of the Bribery Act in 2017, now referred to as the Anti-Bribery Act (Cap. 79B), the mandate of EACC was broadened to encompass the private sector within the anti-corruption framework. The Anti-Bribery Act addresses the prevention, investigation, and punishment of bribery involving the public, public officers and both public and private entities, thereby extending the fight against corruption across all sectors in the following ways:

1. Under Section 9, both public and private entities shall put in place procedures appropriate to its size, scale and to the nature of its operation, for the prevention of bribery and corruption with the assistance of the EACC. Failure to do so by a private entity amounts to an offence.

• Under Section 10, 16 and 18, a private entity may commit the offence of Bribery and is liable for prosecution and punishment.

• Under Section 12, the Cabinet Secretary responsible for matters relating to justice (currently the Attorney General) and the EACC are required to publish guidelines to assist both private and public entities in the preparation of anti-bribery procedures and also assist in their implementation.

• Under Section 14, persons in a public or private entity have the duty to report to the EACC within a period of twenty-four hours any knowledge or suspicion of instances of bribery.
• Overview of the Going Blue Agenda and its manifestations

As stated above, the corruption conversation needs to apply in all spheres-legal, political, social and economic. In the economic sphere, various private entities have fronted the promotion of anti-corruption practices in the business environment.

Internationally, one such manifestation is the Partnering Against Corruption Initiative (PACI) ^[3] founded in 2004 by CEOs from the member companies of the World Economic Forum to promote a transparent, accountable, and sustainable business environment in the private sector using a multi-stakeholder approach, recognizing sector-specific corruption risks and emphasizing on tangible actions to tackle systemic corruption and business integrity issues across industries globally. 

Another manifestation is the United Nations Global Compact ^[4]; a worldwide voluntary corporate sustainability initiative, with over 25,000 companies in over 160 countries that seeks to engage companies to align their strategies and operations with the universal principles on human rights, labour, environment and anti-corruption. Its participants are companies of diverse sizes and sectors, mainly multinational corporations (MNCs), leading national companies, and small and medium-sized enterprises. The initiative provides programmes, content and guidelines to signatory companies to enable them integrate the 10 Universal principles in their decision-making and ownership practices and holds them accountable by using specific and measurable set targets.

Bringing the Agenda closer to home, is the Blue Company Project^[5]; an East African voluntary initiative founded in 2019 by Mr. Nizar Juma in partnership with the United Nations Office on Drugs and Crime (UNODC) and volunteer CEOs of private sector institutions. Its aim being to create conversation and action on curbing corruption in the private sector ultimately creating corruption-free industry environments and promoting transparency, accountability and integrity in the sector and all levels of the society. With over 500 currently certified companies in the East Africa from diverse sectors such as Banking and Finance, Health, Education and Training, Automative, Tourism, Legal and other Professions, the network continues to grow. The Project not only influences the sector and market but also the current legal framework as a major sponsor to legislative amendments that extend the fight against corruption to private entities. The most notable win in legislative influence is the Anti-Bribery Act provisions for compulsory formation and implementation of bribery prevention procedures by private entities.

• Why companies are Going Blue

Going Blue is a necessity. Corruption should be a material concern for all corporations and industry sectors as it substantially affects the value and future prospects of a company. Corruption in the private sector leads to:

1. increase in the cost of business and massive financial losses as resources are diverted to fund corruption,
2. legal risks due to the criminal and civil liability attracted by corrupt practices which further aggravates the financial losses;
3. reputational damage on exposed corrupt entities leading to decline in investments due to lack of trust by investors for fear of the imminent loss of their investments;
4. erosion of ESG priorities leading to dishonest reporting of ESG performance metrics and targets thus a danger to the realization of the ESG Agenda;
5. security risks of businesses including and not limited to data security breaches and terrorist attacks thus a risk to clients and employees as well; and
6.  ultimately insolvency and death of businesses thus affecting the welfare of surrounding communities and the economy.

The benefits of Going Blue therefore speak for themselves and notable advantages include:

1. Promotes an all-rounded approach to the ESG Agenda in the corporate space as corruption risks are factored into investment analyses, decision-making processes and overall corporate governance structures. Most of the discussed networks provide uniform standards and frameworks to guide their members in their governance practices, especially in their efforts to combat bribery and corruption. The guidelines outline the specific topics to be reported, the metrics to be utilized, the key indicators and the frequency and format for reporting thus ensuring action rather than mere commitments. 

• Partnership, network and collaboration with like-minded companies encourages and facilitates network group purchasing within the said networks at discounted rates to promote trading within the membership. Ultimately, it is easier and safer to do business with companies that share core business values such as integrity and transparency.

• Competitive advantage- investors and clients prefer working with respectable brands. Going blue therefore means that the firm or company is respectable and has the public interest at heart thus securing investments and company brand.

• Motivation within the staff thus building the company’s brand and reputation- employees in corrupt-free environments are likely to be motivated as their upward mobility is pegged on their work rather than biases and corrupt practices. This will in turn benefit the company and business.

• Joining of platforms that support the Agenda ultimately creates the numbers required to promote private sector participation in the anti-corruption campaign where various sectors will speak on the sector and industry specific challenges thus enabling a broad perspective in our legal, policy and administrative frameworks; and

• The bigger picture of the Project is that once many companies go blue, the Agenda will influence the private sector business environment, human resource practices, procurement processes and the law thus leading to corruption-free industry environments and promoting transparency, accountability and integrity in the sector and all levels of the society. This will in turn enable your business retain profits, brand and reputation, investments and even security of your business.
• Conclusion

The Going Blue Agenda represents a commendable effort to unite like-minded private sector entities in developing and implementing robust anti-corruption policies within their operations. By “going blue,” firms not only strengthen their own ethical practices but also contribute to tackling a systemic issue that diverts critical revenue into corrupt channels. With strong backing of the Anti-Bribery Act, bribery is addressed across both private and public sectors, holding accountable all perpetrators whether individuals or corporate entities. Furthermore, membership in initiatives such as the Blue Company Project provides additional safeguards in the anti-corruption campaign due to their strict frameworks and adherence requirements.

However, while the Anti-Bribery Act marks a significant step towards facilitating private sector engagement and participation in combating corruption, it is crucial to recognize that bribery is only one form of corruption. There is need for the government and stakeholders to consider legislative reforms, including a possible amendment to the EACC Act to extend the Commission’s mandate to include consultations with the Private Sector and investigate complaints in the private sector. Such measures would ensure a comprehensive framework to address both current and emerging forms of corruption, enhancing private sector engagement backed by the law.

Furthermore, the Going Blue Agenda is a key pillar in ensuring that the often ignored ‘G’ in ESG is catered to and that Sustainable Development Goal 16 on “Promotion of peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels” is attained as the agenda directly leads to accountable and inclusive institutions.

Therefore, as you Go Green consider Going Blue too; for the future of your company and business is pegged on this.

[1] “National Ethics and Corruption Survey (NECS), 2023: Evidence From Households In Kenya” accessed at https://eacc.go.ke/en/default/wp-content/uploads/2024/03/EACC-NATIONAL-SURVEY-REPORT-2023.pdf

[2] World Economic Forum, “ Investing in Integrity in an Increasingly Complex World: The Role of Anti-Corruption amid the ESG Revolution(Community Paper; June 2022) accessed at https://www3.weforum.org/docs/WEF_Investing_in_Integrity_GFC_2022.pdf

[3] World Economic Forum, “Partnering Against Corruption Initiative”accessed at https://www.weforum.org/communities/partnering-against-corruption-initiative/

[4] The United Nations Global Compact website accessed at https://unglobalcompact.org/what-is-gc

[5] The Blue Company Project website accessed at https://the-bluecompany.org/