Tuesday, December 05, 2006
Tweet[IWS] Conference Board: RESISTING CORRUPTION: Ethics & Compliance Benchmarking [5 December 2006]
IWS Documented News Service
_______________________________
Institute for Workplace Studies----------------- Professor Samuel B. Bacharach
School of Industrial & Labor Relations-------- Director, Institute for Workplace Studies
Cornell University
16 East 34th Street, 4th floor---------------------- Stuart Basefsky
New York, NY 10016 -------------------------------Director, IWS News Bureau
________________________________________________________________________
Conference Board
Building a Culture of Compliance is the Key Driver in Widespread Use of Anti-Corruption Programs [5 December 2006]
http://www.conference-board.org/utilities/pressDetail.cfm?press_ID=3019
The commitment of senior corporate management leadership and personal convictions are the most important drivers in company decisions to strengthen anti-corruption programs, according to a report released today by The Conference Board.
The report is based on a mid-2006 survey of 165 multinational companies conducted by The Conference Board in collaboration with the Ethics and Compliance Officer Association (ECOA).
According to Ronald E. Berenbeim, a Principal Researcher at The Conference Board and author of the report, "The responding companies rarely cited a business case, like the cost of doing business or brand equity, as the key reason for establishing or enhancing the scope of their anti-corruption systems. Instead, they believe that it is part of a larger effort to build a culture of compliance within the company one that is rooted as much in the company's system of values and beliefs as in the need to respond to the developing global legal and regulatory regime that is transferring much of the anti-corruption prevention, detection, and enforcement burden to the companies."
Thirty three percent of those surveyed say senior management leadership and conviction is the single most important factor in their company's decision to develop an anti-corruption program.
Companies now, as in a similar 2000 survey by The Conference Board, seldom cite a bottom-line rationale for anti-corruption programs. Instead, they cite legal (e.g., General home country prohibitions were picked as the single most important factor by 27 percent of the participating companies while 7 percent accorded Sarbanes-Oxley Section 404 (2002) this designation) or ethical (bribery is wrong 13 percent) considerations as justifications for investing in anti-corruption initiatives.
According to Berenbeim, "Company anti-corruption practices and procedures have become significantly more widespread, detailed and sophisticated since the 2000 report. In some companies, reported incidents of corrupt activity have actually increased, but this is attributed to better reporting systems rather than an increase in corruption. And there is a growing recognition among U.S. companies of the need to adopt an ethics-based approach that emphasizes adherence to broad principles rather than narrow compliance to specific rules."
Significantly more respondents (two-thirds) say that their company has a formal anti-corruption program in the current survey than in the 2000 survey (half). Company anti-corruption statements are also more detailed and precise than they have been in the past. For example, descriptions and labeling of corrupt practices and discussion of structures and procedures that support the company's anti-corruption policy are today much more common than six years ago.
Anti-corruption programs are subject to high levels of review. More than three-quarters of the survey participants report or, in some cases, have dual reporting relationships to a C-Suite executive, board member or board committee.
Chief legal officers are much more likely to be involved in all phases of the program (development, implementation, monitoring) than they were in the past. In addition, companies are now more likely to seek outside assistance in some aspect of their anti-corruption program. Nearly one-third (32%) used outside counsel compared to the 21% that did so in 2000, and 18% used a consultant. The 2000 survey did not ask if companies used consultants.
More than 40% of the survey participants do business in China, Brazil, Mexico, and India, countries that are at high risk for corrupt practices in business. According to 36% of the companies active in China, that country poses "the greatest overall challenge to the company's operations because of the level of corruption."
Facilitation Payments Becoming More Restrictive
Facilitation payments (a fee paid to an individual who performs no necessary services) may be the most vexatious anti-corruption policy issue. Sometimes called "grease money" for accelerating the performance of a contract, facilitation payments are a complex corruption problem for which policy solutions are difficult to formulate, implement, and monitor. By definition, any company, whether or not it has a formal anti-corruption program, has a facilitation payment policy. Even no policy is a policy of sorts.
In recent years, the trend has been for companies to become more restrictive in the policies that allow employees to make these payments. In 2000, 19% of the surveyed companies said that within the last three years their policy has become more restrictive. In 2006, 27 companies moved in this direction.
The most common reason given for the institution of more restrictive facilitation policies was the company's involvement in some kind of global anti-bribery network such as Transparency International or the International Chamber of Commerce Significantly more companies now say that hotlines or helplines can be effective (40% compared with 18% in 2000). But the highest number of companies (11) cited whistleblowing programs as the anti-corruption measure that was ineffective.
Commenting on the more positive 2006 response to whistleblowing systems, Berenbeim says: "There was a significant increase since the 2000 report in the percentage of company respondents that believe that hotlines can be effective, but they still have lower positives and higher negatives than the other program components. The skepticism may relate to whether or not they can be useful throughout the entire company. This wariness isn't limited to operations in other countries; there can also be issues in certain functional divisions and newly acquired home country companies. And sometimes people tell us other information conduits (e.g., German Works Councils) do a better job of accomplishing the same purpose."
Other than Internet posting, company sharing of information regarding anti-corruption programs and disclosure of corrupt practices (even in sustainability reports) are rare.
To view a break down of survey results on the top reason companies develop an anti-corruption program, go to the following URL --
http://www.conference-board.org/pdf_free/1397table.pdf
Source: Resisting Corruption: An Ethics and Compliance Benchmarking Survey Research Report #1397-06-RR, The Conference Board
< http://www.conference-board.org/publications/describe.cfm?id=1239> Read this report
For further information contact:
Ronald E. Berenbeim
(1) 212 339 0352
< mailto:ronald.berenbeim@conference-board.org> ronald.berenbeim@conference-board.org
______________________________
This information is provided to subscribers, friends, faculty, students and alumni of the School of Industrial & Labor Relations (ILR). It is a service of the Institute for Workplace Studies (IWS) in New York City. Stuart Basefsky is responsible for the selection of the contents which is intended to keep researchers, companies, workers, and governments aware of the latest information related to ILR disciplines as it becomes available for the purposes of research, understanding and debate. The content does not reflect the opinions or positions of Cornell University, the School of Industrial & Labor Relations, or that of Mr. Basefsky and should not be construed as such. The service is unique in that it provides the original source documentation, via links, behind the news and research of the day. Use of the information provided is unrestricted. However, it is requested that users acknowledge that the information was found via the IWS Documented News Service.
Stuart Basefsky
Director, IWS News Bureau
Institute for Workplace Studies
Cornell/ILR School
16 E. 34th Street, 4th Floor
New York, NY 10016
Telephone: (607) 255-2703
Fax: (607) 255-9641
E-mail: smb6@cornell.edu
****************************************
_______________________________
Institute for Workplace Studies----------------- Professor Samuel B. Bacharach
School of Industrial & Labor Relations-------- Director, Institute for Workplace Studies
Cornell University
16 East 34th Street, 4th floor---------------------- Stuart Basefsky
New York, NY 10016 -------------------------------Director, IWS News Bureau
________________________________________________________________________
Conference Board
Building a Culture of Compliance is the Key Driver in Widespread Use of Anti-Corruption Programs [5 December 2006]
http://www.conference-board.org/utilities/pressDetail.cfm?press_ID=3019
The commitment of senior corporate management leadership and personal convictions are the most important drivers in company decisions to strengthen anti-corruption programs, according to a report released today by The Conference Board.
The report is based on a mid-2006 survey of 165 multinational companies conducted by The Conference Board in collaboration with the Ethics and Compliance Officer Association (ECOA).
According to Ronald E. Berenbeim, a Principal Researcher at The Conference Board and author of the report, "The responding companies rarely cited a business case, like the cost of doing business or brand equity, as the key reason for establishing or enhancing the scope of their anti-corruption systems. Instead, they believe that it is part of a larger effort to build a culture of compliance within the company one that is rooted as much in the company's system of values and beliefs as in the need to respond to the developing global legal and regulatory regime that is transferring much of the anti-corruption prevention, detection, and enforcement burden to the companies."
Thirty three percent of those surveyed say senior management leadership and conviction is the single most important factor in their company's decision to develop an anti-corruption program.
Companies now, as in a similar 2000 survey by The Conference Board, seldom cite a bottom-line rationale for anti-corruption programs. Instead, they cite legal (e.g., General home country prohibitions were picked as the single most important factor by 27 percent of the participating companies while 7 percent accorded Sarbanes-Oxley Section 404 (2002) this designation) or ethical (bribery is wrong 13 percent) considerations as justifications for investing in anti-corruption initiatives.
According to Berenbeim, "Company anti-corruption practices and procedures have become significantly more widespread, detailed and sophisticated since the 2000 report. In some companies, reported incidents of corrupt activity have actually increased, but this is attributed to better reporting systems rather than an increase in corruption. And there is a growing recognition among U.S. companies of the need to adopt an ethics-based approach that emphasizes adherence to broad principles rather than narrow compliance to specific rules."
Significantly more respondents (two-thirds) say that their company has a formal anti-corruption program in the current survey than in the 2000 survey (half). Company anti-corruption statements are also more detailed and precise than they have been in the past. For example, descriptions and labeling of corrupt practices and discussion of structures and procedures that support the company's anti-corruption policy are today much more common than six years ago.
Anti-corruption programs are subject to high levels of review. More than three-quarters of the survey participants report or, in some cases, have dual reporting relationships to a C-Suite executive, board member or board committee.
Chief legal officers are much more likely to be involved in all phases of the program (development, implementation, monitoring) than they were in the past. In addition, companies are now more likely to seek outside assistance in some aspect of their anti-corruption program. Nearly one-third (32%) used outside counsel compared to the 21% that did so in 2000, and 18% used a consultant. The 2000 survey did not ask if companies used consultants.
More than 40% of the survey participants do business in China, Brazil, Mexico, and India, countries that are at high risk for corrupt practices in business. According to 36% of the companies active in China, that country poses "the greatest overall challenge to the company's operations because of the level of corruption."
Facilitation Payments Becoming More Restrictive
Facilitation payments (a fee paid to an individual who performs no necessary services) may be the most vexatious anti-corruption policy issue. Sometimes called "grease money" for accelerating the performance of a contract, facilitation payments are a complex corruption problem for which policy solutions are difficult to formulate, implement, and monitor. By definition, any company, whether or not it has a formal anti-corruption program, has a facilitation payment policy. Even no policy is a policy of sorts.
In recent years, the trend has been for companies to become more restrictive in the policies that allow employees to make these payments. In 2000, 19% of the surveyed companies said that within the last three years their policy has become more restrictive. In 2006, 27 companies moved in this direction.
The most common reason given for the institution of more restrictive facilitation policies was the company's involvement in some kind of global anti-bribery network such as Transparency International or the International Chamber of Commerce Significantly more companies now say that hotlines or helplines can be effective (40% compared with 18% in 2000). But the highest number of companies (11) cited whistleblowing programs as the anti-corruption measure that was ineffective.
Commenting on the more positive 2006 response to whistleblowing systems, Berenbeim says: "There was a significant increase since the 2000 report in the percentage of company respondents that believe that hotlines can be effective, but they still have lower positives and higher negatives than the other program components. The skepticism may relate to whether or not they can be useful throughout the entire company. This wariness isn't limited to operations in other countries; there can also be issues in certain functional divisions and newly acquired home country companies. And sometimes people tell us other information conduits (e.g., German Works Councils) do a better job of accomplishing the same purpose."
Other than Internet posting, company sharing of information regarding anti-corruption programs and disclosure of corrupt practices (even in sustainability reports) are rare.
To view a break down of survey results on the top reason companies develop an anti-corruption program, go to the following URL --
http://www.conference-board.org/pdf_free/1397table.pdf
Source: Resisting Corruption: An Ethics and Compliance Benchmarking Survey Research Report #1397-06-RR, The Conference Board
< http://www.conference-board.org/publications/describe.cfm?id=1239> Read this report
For further information contact:
Ronald E. Berenbeim
(1) 212 339 0352
< mailto:ronald.berenbeim@conference-board.org> ronald.berenbeim@conference-board.org
______________________________
This information is provided to subscribers, friends, faculty, students and alumni of the School of Industrial & Labor Relations (ILR). It is a service of the Institute for Workplace Studies (IWS) in New York City. Stuart Basefsky is responsible for the selection of the contents which is intended to keep researchers, companies, workers, and governments aware of the latest information related to ILR disciplines as it becomes available for the purposes of research, understanding and debate. The content does not reflect the opinions or positions of Cornell University, the School of Industrial & Labor Relations, or that of Mr. Basefsky and should not be construed as such. The service is unique in that it provides the original source documentation, via links, behind the news and research of the day. Use of the information provided is unrestricted. However, it is requested that users acknowledge that the information was found via the IWS Documented News Service.
Stuart Basefsky
Director, IWS News Bureau
Institute for Workplace Studies
Cornell/ILR School
16 E. 34th Street, 4th Floor
New York, NY 10016
Telephone: (607) 255-2703
Fax: (607) 255-9641
E-mail: smb6@cornell.edu
****************************************
# posted by SBasefsky : 11:05 AM
