GLOBAL - The World Forum on Governance has published its final version of the Prague Declaration on Governance and Anti-Corruption.

The declaration's 10 principles - on bribery, personal financial disclosures and conflicts, the law enforcement system, open government, corporations, investors, campaign finance, lobbying, whistleblowers and NGOs and media - aim to spell out a practical, measurable and accountable framework to guide implementation.

The principle on investors states that investors should "fully integrate" risk analysis of country and company corruption into their investment decisions.

It says: "Shareholders investing for the long term should monitor portfolio company boards to test for dynamic and sustained policies and practices aimed at preventing corruption.

"Investors should also expect and advocate for optimal anti-corruption strategies at companies in which they invest. Where company boards are deemed as failing to adopt and implement best practices, investors should not hesitate to exercise market ownership tools such as dialogue, engagement and voting to achieve remedies."

The statement adds: "Executive compensation incentives should be explicitly designed to prevent corruption, and investors should be prepared to vote out board members who fail to include corruption as an element of risk management and pay."

The declaration is a result of the first World Forum on Governance, representing governments, business, investors, media and non-governmental advocacy groups from around the world, which convened in Prague in November 2011 to analyse the link between governance and corruption and to find practical solutions that can begin improving the situation.

The conference established that corruption - the abuse of entrusted authority for improper gain - is a significant contributing factor in the worldwide governance crisis that cuts across cultural variations and levels of economic development and modernisation.

It found that the key to reinvigorating trust in democracy and the market economy hinges on securing good governance that is both effective and honest.

Corruption, both in the traditional narrow variety and a newer and much broader form, is a primary obstacle to achieving this aim.

Corruption in the narrow sense consists of conduct that is now widely recognised to be illegal - for example, in the form of bribes large and small, shaking down large corporations and average citizens alike.

By contrast, corruption broadly defined often consists of conduct that is legal - for example, in the form of special interest influence through hidden financial relationships, campaign contributions and lobbying to influence government officials to divert resources to benefit the well-connected at the expense of the public interest.

Topics