Student Led Seminar:Student Led Seminar:Business EthicsBusiness Ethics

Presented by Presented by Paul Hoey, Vimala Subbrarayan, Paul Hoey, Vimala Subbrarayan, Simon Thompson, Muhammad Simon Thompson, Muhammad

Tala & Lisa WarneTala & Lisa Warne

Today’s SeminarToday’s Seminar

An introduction to corruption and UK An introduction to corruption and UK company responsibilitiescompany responsibilities

Case study & breakout 1: What is Case study & breakout 1: What is corruption?corruption?

Case study & breakout 2: How should Case study & breakout 2: How should we respond to corruption?we respond to corruption?

CorruptionCorruptionBackhanders

Sweetners

Baksheesh

La mordida

Priority service fee

Commission

Consultancy fee

Introduction fee

Graft

Some examples of alleged corruptionSome examples of alleged corruption

BAE Systems and Al BAE Systems and Al Yamamah I and IIYamamah I and II

Coca-Cola and Coca-Cola and Pepsi water Pepsi water extraction in Indiaextraction in India

The UK LawThe UK Law

Anti-terrorism, Crime and Security Act 2001Anti-terrorism, Crime and Security Act 2001..

“Bribery can be defined broadly as the receiving or offering of an undue reward by or to any holder of public office or private employee designed to influence them in the exercise of their duty, and to incline them to act contrary to the known rules of honesty and integrity”(Trade Partners UK)

Any payment, or offer of payment (whether in money or in kind) to a person or company overseas with a view to

influencing that person’s decisions or actions or securing an improper commercial advantage would constitute a criminal

offence in the UK.

It contains no clear definition of what bribery or corruption is though!

The UK LawThe UK Law

If you are the director of a UK If you are the director of a UK company whose employee bribes an company whose employee bribes an individual overseas, both you and individual overseas, both you and they could end up in prison!they could end up in prison!

Case Study 1Case Study 1

Scenario 1:Scenario 1: A local government inspector has just A local government inspector has just approached the HR manager and made it clear that he approached the HR manager and made it clear that he would expect to find an envelope containing Rs. 200 (about would expect to find an envelope containing Rs. 200 (about £3.50) when he inspects the employment register each £3.50) when he inspects the employment register each month.month.

A UK company has just open an office in Chennai, India and they are just setting up the business.

Scenario 2:Scenario 2: A telecoms engineer on an ‘informal’ site A telecoms engineer on an ‘informal’ site survey suggests that the 6 month waiting time for a high-survey suggests that the 6 month waiting time for a high-speed connection could be reduced by arranging a date speed connection could be reduced by arranging a date with him for a fee of Rs. 5,000 (about £90).with him for a fee of Rs. 5,000 (about £90).

Scenario 3:Scenario 3: The HR manager is approached by a member of The HR manager is approached by a member of staff from a competitor. He says he would be happy to join staff from a competitor. He says he would be happy to join the business if he received a bonus of Rs. 2,000 (about the business if he received a bonus of Rs. 2,000 (about £350).£350).

Which, if any, of these scenarios appears to be corrupt?

Case Study 2Case Study 2 Scenario 1 background:Scenario 1 background: Local government officers (even Local government officers (even

very senior ones) receive almost no salary in India. They very senior ones) receive almost no salary in India. They obtain the posts through family connections or by ‘buying’ obtain the posts through family connections or by ‘buying’ the position from their line manager, who has often done the position from their line manager, who has often done the same. They either make a one-off payment to their the same. They either make a one-off payment to their ‘sponsor’ or make a monthly payment.‘sponsor’ or make a monthly payment.

Scenario 2 background:Scenario 2 background: High-speed connections are in High-speed connections are in great demand in Chennai. The local government is trying to great demand in Chennai. The local government is trying to co-ordinate expansion by area, to avoid unnecessary and co-ordinate expansion by area, to avoid unnecessary and repeated digging up of the roads. They are aware that repeated digging up of the roads. They are aware that telecoms engineers from the state run company (VNSL) are telecoms engineers from the state run company (VNSL) are offering this ‘service’ and have threatened (in the local offering this ‘service’ and have threatened (in the local English press) to make spot checks on VNSL or businesses. English press) to make spot checks on VNSL or businesses. They have done nothing up to now.They have done nothing up to now.

As a board of directors of the UK company, how do you react to these approaches?

SummarySummary

These are real scenarios that happened These are real scenarios that happened less than 5 years ago. less than 5 years ago.

The company concerned decided to pay the local The company concerned decided to pay the local government inspector, but refused to pay the VNSL government inspector, but refused to pay the VNSL engineer. engineer.

Not easy, is it? Not easy, is it?

Some adviceSome advice

Hire good local managersHire good local managers Hire a good local lawyerHire a good local lawyer Make sure you know what is Make sure you know what is

happening – the site should be happening – the site should be visited frequently or have a senior UK visited frequently or have a senior UK manager located theremanager located there