Best practice for anti corruption
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Transcript of Best practice for anti corruption
MCRB/Spectrum training on anti-corruption, 23 September 2014
(Presentation slides provided by Transparency International)
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Building an effective anti-corruption programme
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Transparency International’s Business Integrity Toolkit is a user-friendly six step
process for building an effective anti-corruption programme: COMMIT, ASSESS,
PLAN, ACT, MONITOR, and REPORT.
An effective anti-corruption programme requires oversight, leadership and
support from the Board of Directors (or equivalent) and senior management.
Establishing such a programme is not a one-time event but an ongoing process.
For each step in the process, Transparency International provides a suite of tools
that are available at no cost and are flexible enough to be tailored for their own
purposes.
Transparency International may work with individual companies or a group of
private sector participants to establish a plan of action.
Business Integrity Toolkit – six steps for building
an effective anti-corruption programme
Transparency International's Business Integrity Toolkit is a user-friendly six step process for
building an effective corporate anti-corruption programme.
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1. Commit to an anti-corruption
programme ‘from the top’
4. Act on the plan
5. Monitor controls and progress
6. Report internally and externally on
the programme
3. Plan the anti-corruption programme
2. Assess the current status and risk
environment
COMMIT: Commit to an anti-corruption
programme ‘from the top’
1. Commit to an anti-corruption
programme ‘from the top’
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Companies should adopt an anti-
corruption programme as an
expression of core values of
integrity and responsibility as well
as to effectively counter
corruption.
An effective programme requires
oversight, leadership and
support from the Board of
Directors (or equivalent) and
senior management.
The commitment should be
expressed formally through a
written statement published
internally and externally.
COMMIT: What is expected from business?
The owners/shareholders, chairman or Chief Executive Officer publishes a statement of the
organisation’s commitment to anti-corruption business principles, e.g.:
“The enterprise shall prohibit corruption in any form whether direct or indirect.”
“The enterprise shall commit to implementing a programme to counter corruption.”
The commitment is communicated and adopted throughout the organisation in operational
(e.g. procurement) and key support (e.g. Finance & Controlling) departments, as well as to external
stakeholders worldwide.
Sufficient resources are allocated to ensure implementation or review of the anti-corruption
programme, which may include the setup of an independent, cross-functional project team.
Commitment from the business’s senior management should be renewed on a periodic and
regular basis (e.g. yearly).
A “culture of integrity” is fostered from the top down.
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COMMIT: Business Principles for Countering
Bribery
6 * The focus of the Business Principles lies on bribery as a core corruption risk. Other corruption risks include fraud, insider trading,
collusion, undue influence (for more information, please refer to TI’s Global Corruption Report 2009 – Corruption and the Private Sector).
The Business Principles for Countering Bribery are
the cornerstone of Transparency International’s private
sector anti-corruption activities.*
The Business Principles provide practical guidelines
(including a tailored version for SMEs – see Burmese
translation) regarding
Scope: which areas should be addressed at a
minimum, and
Implementation: the minimum implementation
requirements.
The Business Principles apply both to bribery of
public officials and to business-to-business
transactions.
The Business Principles are not only relevant in
the Commit phase, but apply throughout all other
phases of the Business Integrity Toolkit.
• Bribes
• Gifts
• Hospitality and Entertainment
• Business Travel Expenses for Customers
• Facilitation Payments
• Favours
• Contract payment terms
• Conflicts of Interest
• Political Contributions, Sponsorship and Charitable
Donations
Developing the scope of your business
principles for countering bribery:
• Thandar is involved in a bid for a new
government contract. Part-way through the
negotiations, she has been asked by a
government minister to make a charitable
donation.
Charitable donations
“I’ve been requested by a government
minister to make a substantial donation
to a local schools charity. What do you
think? It’s not a large amount for us and
will be good for our image. Should we
do it?”
Ask yourself: “Is the Minister in a position to
make a decision about our company?” If he
is, we shouldn’t make the donation.
• Charitable donations should be made against
criteria established in the company’s
charitable donations policy
• Avoid making charitable and ad hoc
contributions from the marketing budget
• Seek help from your legal department (if you
have one)9
What’s the right answer?
• Handouts:
– Extract from Coca Cola Code of Business
Conduct (in Burmese)
– Coca-Cola Anti-Bribery Policy (Global) (in
English)
– Max Myanmar Anti-corruption policy (English
and Burmese)
COMMIT: Examples of Codes of
conduct/anti-bribery policies
ASSESS: Assess the current status and risk
environment
2. Assess the current status and
risk environment
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Before a business develops and
implements its anti-corruption
programme, it conducts a risk
assessment.
The aim of the risk assessment
is to identify areas of greatest
inherent risk (for example
along geographic or functional
lines) and evaluate the
effectiveness of existing risk-
mitigating measures.
As a result, the business can
prioritize and allocate
resources appropriately to the
areas of greatest risk.
ASSESS: What is expected from business?
The risk assessment identifies inherent risks of corruption by :
industry,
the countries in which the business operates, and
business-specific corruption risks, such as the procurement processes, interaction with
public officials, utilization of intermediaries, political contributions, facilitation payments etc.
Also, the risk assessment evaluates the effectiveness of existing risk-mitigating measures to
determine the residual risks of corruption in the business.
Finally, the risk assessment takes into consideration:
changes in the legal environment,
new or increased risk exposure,
technological developments (e.g. continuous auditing), or
past experience (e.g. internal audit reports, incidents).
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ASSESS: Tools from Transparency International
Tools Helps business…
Anti-Bribery Checklist … to carry out a high-level assessment of their anti-
corruption approach.
Corruption Perceptions
Index
... to understand the perceived level of corruption in a
particular country among public officials and politicians.
Bribe Payers Index … to assess the likelihood of companies from the
world’s wealthiest and most economically influential
countries to bribe abroad.
Global Corruption
Barometer
… to assess general public attitudes towards, and
experience of, corruption in dozens of countries around
the world.
National Integrity System
assessment
… to understand the anti-corruption provisions and
capacities in a particular country.
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Lower Bound Upper Bound
1 Belgium 8.8 2.00 8.5 9.0
1 Canada 8.8 1.80 8.5 9.0
3 Netherlands 8.7 1.98 8.4 8.9
3 Switzerland 8.7 1.98 8.4 8.9
5 Germany 8.6 2.14 8.4 8.8
5 Japan 8.6 2.11 8.3 8.8
5 United Kingdom 8.6 2.10 8.4 8.7
8 Australia 8.5 2.23 8.2 8.7
9 France 8.1 2.48 7.9 8.3
9 Singapore 8.1 2.60 7.8 8.4
9 United States 8.1 2.43 7.9 8.3
12 Spain 7.9 2.49 7.6 8.1
13 Hong Kong 7.6 2.67 7.3 7.9
14 South Africa 7.5 2.78 7.1 8.0
14 South Korea 7.5 2.79 7.1 7.8
14 Taiwan 7.5 2.76 7.1 7.8
17 Brazil 7.4 2.78 7.0 7.7
17 Italy 7.4 2.89 7.1 7.7
19 India 6.8 3.31 6.4 7.3
20 Mexico 6.6 2.97 6.1 7.2
21 China 6.5 3.35 6.2 6.8
22 Russia 5.9 3.66 5.2 6.6
Confidence Interval 95%Rank Country/Territory
BPI
2008
Standard
Deviation
PLAN: Plan the anti-corruption programme
3. Plan the anti-corruption
programme
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After completing its risk
assessment, a business lays the
foundation by developing a
plan of action.
Policies and procedures are
developed defining the scope
and activities of the anti-
corruption programme.
The policies and procedures
should be available throughout
the organization and be issued
in the main languages of all
employees.
PLAN: Scope and implementation requirements
of the programme
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Scope of the Programme Implementation Requirements
The programme should address the most
prevalent forms of corruption relevant to the
business, but at a minimum should cover the
following areas:
The following requirements should be met at
a minimum when implementing the
programme:
Corruption inside the business Examples: Fraud, Conflicts of Interest, Insider Trading
Corruption in the supply chain Examples: Bribery, Extortion
Corruption in the market environment Example: Collusion
Corruption in society Example: Undue influence
Laundering the proceeds of corruption Example: Money Laundering
Organisation, roles and responsibilities
Business relationships with
Subsidiaries and other entities
Joint ventures and consortia
Agents and intermediaries
Contractors and suppliers
Human Resources
Training
Raising concerns and seeking guidance
Communication
Internal controls, monitoring and record
keeping
PLAN: What is expected from business?
Detailed policies, processes, training materials and guidance that form the basis for the detailed
implementation in step 4 (ACT) are drafted (or reviewed):
Who is responsible for ensuring compliance with and monitoring the programme (e.g.
compliance officer, internal audit)?
Do existing policies need to be adapted (e.g. employee incentive structures)?
What monitoring controls are needed?
How will suggestions and complaints be handled?
How will the programme be communicated to internal and external stakeholders?
To what extent will external assurance and reporting be used?
What recordkeeping systems need to be put in place?
The policies and procedures should be reviewed and approved by management, employee
representatives and (if appropriate) external stakeholders.
The detailed implementation plan (including objectives, resources and timetable) must be drafted
and approved by all relevant parties before proceeding to step 4.
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ACT: Act on the plan
4. Act on the plan
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After planning an anti-corruption
programme, the written words
need to be translated into
visible actions.
This is a key step in the overall
framework, as it is Transparency
International’s experience that
while many businesses have
well planned programmes they
fall short on effective
implementation.
Controls must be tempered in
consideration of the
trustworthiness and
competence of stakeholders.
ACT: What is expected from business?
The policies and procedures need to be integrated into the organisational structures:
Implement policies and procedures (e.g. internal checks and balances)
Develop supporting systems (IT, etc.)
Communicate the programme (e.g. CEO announcement, workshops, newsletter)
Identify ‘local champions’ to support the implementation
Deliver training (face-to-face, self-study etc.)
Provide supporting tools and guidance (e.g. self-assessment survey for high-risk
departments)
Address concerns and issues (e.g. hotline, FAQ)
Furthermore, the capacity of internal functions needs to be reviewed and (if necessary)
strengthened (e.g. building an international law repository):
Support functions (legal, finance, internal audit, human resources etc.)
Operational functions (procurement and supply chain management, marketing, sales etc.)
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• Make it real
• Online for less exposed
employees and face to
face for exposed ones
• Identify and practice
practical strategiese.g. Handling demands for facilitation
payments: One day down at the Tax
Office…….(acted out scenario)
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Training
• Not pay the ‘service fee’
• Give full details of the incident to his company, so that
they can try to avoid this situation in future – for
example:
– Send employees to the tax office in pairs
– Ask senior managers to elevate the problem to a
higher level of the Ministry
– Raise it in local business forums to see if other
companies are experiencing the same problem and
whether a joint solution can be found (‘collective
action’)
• Should he also:
– report the incident to the local police?
– Complete an Inland Revenue feedback form.
In this situation, what should he do?
ACT: Tools from Transparency International
Tools Helps business…
Anti-Bribery Guidance
for Transactions
… with guidance for anti-corruption due diligence in
mergers, acquisitions and investments.
Resisting Extortions and
Solicitations in
International Transactions
… to establish training on how to respond to an
inappropriate demand by a client, business partner or
public authority in the most efficient and ethical way.
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MONITOR: Monitor controls and progress
5. Monitor controls and
progress
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Implementing an anti-corruption
programme is not a one-time
event; it needs to be followed up
through regular periodic
evaluation (monitoring).
Monitoring ensures that
strengths and weaknesses are
identified and that the
programme is continuously
improved to remain effective
and up-to-date (change
management activities).
Internal and external
monitoring must be undertaken.
MONITOR: What is expected from business?
Responsibility for the monitoring of the overall anti-corruption programme needs to be assigned
clearly and resources made available.
The progress of the overall programme needs to be continuously monitored (e.g. internal
employee self-evaluations, automated controls monitoring).
The management of the company (e.g. Board of Directors, Audit Committee) must review the
results of internal and external reviews and ensure that required changes are implemented in an
appropriate and prompt manner.
In addition to internal monitoring and traditional external auditing processes, external independent
assurance should be considered to provide further security to management and stakeholders
regarding the effectiveness of the anti-corruption programme.
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MONITOR: Tools from Transparency International
Tools Helps business…
Self-Evaluation Tool … to determine where they stand with their anti-
corruption programme and identify improvements,
based on an easy-to-use checklist that comprises an in-
depth and extensive range of more than 240 indicators.
Framework for Voluntary
Independent Assurance
of Corporate anti-
corruption Programmes
… to strengthen and lend greater credibility to their
anti-corruption programmes through the use of voluntary
independent assurance.
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REPORT: Report internally and externally on
the programme
6. Report internally and
externally on the programme
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Reporting on the anti-corruption
programme demonstrates the
sincerity of the company’s
commitment and demonstrates
how values and polices are
being translated into action.
Reporting not only reassures
internal and external
stakeholders that the business is
operating properly but can also
act as a deterrent to those
intending to bribe or solicit bribes.
REPORT: Why reporting on anti-corruption?
Reporting on anti-corruption is an important way for a business to demonstrate that it is
living up to its anti-corruption commitments
Benefits:
There are three major
benefits from reporting on
anti-corruption:
Please note:
The first two categories apply to individual
business (independent of their size), whereas
the third category outlines benefits also for the
overall community.
Reporting on anti-corruption raises
awareness among employees and
provides a means of control and
discipline for the management.
Reporting on anti-corruption establishes
a common language to measure,
compare, discuss and improve anti-
corruption activities and practices.
Reporting on anti-corruption positively
influences a business’s reputation in the
marketplace and society.
Increased internal
integrity and
transparency
Common
information basis
Enhanced
reputation
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REPORT: What is expected from business?
Information about the programme needs to be regularly communicated to relevant internal and
external stakeholders, e.g.:
how the programme is being implemented,
employee perceptions and attitudes to the company’s anti-corruption stance and
performance,
numbers of inquires or issues raised through help and whistle-blowing channels,
numbers and types of violations detected as well as corrective action undertaken,
sanctions applied and transactions abandoned because of corruption incidents etc.
Implementation experiences should be discussed with external stakeholders and peer groups to
share good (and bad) practices and learn from each other (e.g. through participation in voluntary
anti-corruption initiatives).
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REPORT: Tools from Transparency International
Tools Helps business…
Anti-corruption
Reporting Guidance
… to report on the anti-corruption programme by
providing a comprehensive set of 22 Reporting
Elements which can be used to provide information in a
mainly descriptive manner.
Transparency in
Corporate Reporting
… to assess the extent to which some 500 leading
global companies report on the strategy, policies and
management systems they have in place for combating
bribery and corruption.
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