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What Beats Corruption?

LONDON – Corruption is a global scourge, sometimes becoming so deeply ingrained in countries that combating it seems impossible. In January, Transparency International released its annual Corruption Perceptions Index, noting that the problem “remains a blight around the world.”

The International Monetary Fund, for example, has just warned Ukraine that its $40 billion financial bailout could be cut off, owing to fears that corrupt officials will steal or squander the funds. And, during his recent visit to Mexico, Pope Francis called on the country’s leaders – several of whom (including the president and his wife) are embroiled in conflict-of-interest scandals – to fight endemic corruption.

But change is possible, as we have seen in the world of corporate governance in the last couple of years. Not even a decade ago, companies were run from “black box” rooms controlled by a few people whose authority seemed untouchable. Shareholder activists who thought otherwise were regarded as a nuisance – so many dreamy do-gooders who would never change anything. The only thing that would ever matter, “realists” argued, was return on investment, regardless of the cost to people, the planet, or economies.

The realists were wrong. Since the beginning of the year, Berkshire Hathaway’s Warren Buffett and JPMorgan Chase CEO Jamie Dimon have been holding meetings with other business leaders to discuss possible improvements in corporate governance. On February 1, Laurence Fink, the chief executive of investment firm BlackRock, wrote a letter to some of the world’s largest companies in which he issued a stern warning against short-termism and demanded that companies lay out clear strategic plans.