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»Corruption is like Nokia. It connects people.«

It was one of those sentences that you remember that best and concisely best describe the challenge we face everywhere, in the West, the East, the North and the South, and it is called the fight against corruption.

On behalf of the EICE Institute, I attended a two-day expert seminar on ethics in the business world at the end of January 2017, held in Kiev, Ukraine, under the auspices of the OECD, EBRD, UN DP and the Ukrainian Business Ombudsman.

The prevention of corruption, adherence to ethical principles and the establishment of business compliance systems in both the public and private sectors were the main topics. Given the colorful group of participants who came from Eastern Europe and Central Asia, we heard very interesting experiences, approaches, problems and examples of good practice in detecting and preventing corruption.

It often seems to us that certain matters are happening only to us, that there is no progress, or that we cannot learn anything from our colleagues from Eastern countries. On the contrary, many interesting views were heard. But let's go in order.

We started the seminar with a presentation of the results extensive OECD research on business ethics in Central Europe and Central Asia. Governments, various economic associations and companies participated in the survey.

In the responses of governments or. of its anti-corruption bodies, it is interesting that at the level of everyone everyone is aware of the problems and phenomena that lead to corruption, actively face them, solve them, there are obligations to report possible corruption and bribery in business with business entities. Nevertheless, it can be concluded that the fight against bribery and corruption is still ineffective, either due to the excessive number of authorities, agencies dealing with it in each country, or due to lack of implementation and control, mistrust and conflict of interest.

Even more interesting were the responses of the business environment (business associations or companies), which cited legal uncertainty and selective application of the law by law enforcement and the judiciary, insufficient development and a competitive environment, and third, poor protection of property rights as the most important risks to business integrity.

One of the biggest risks for companies is the risk in relations with tax authorities, then with politicians and representatives of the judiciary, in the case of obtaining various permits and in public procurement. On the other hand, business associations identified the most risks in relations with politics, in the field of obtaining various permits, doing business with state-owned companies and in public procurement.

And what measures are most often introduced by companies to prevent abuse, evasion, corruption? These include codes of conduct, assessing the integrity of business partners, internal training, a confidential telephone number for reporting irregularities, and special departments for business ethics and compliance. As an example of the judgment of business partners, cases from the telecommunications and energy sectors were presented.

Business associations are also active in promoting ethics and business compliance, including United National Global Impact , which operates in many countries through national networks, including v Sloveniji. It is a global initiative for social responsibility and sustainable development of economic operators.

The continuation of the program offered many examples of good practice from the public and private sectors, as well as experience in ways of reporting corruption cases in companies and in promoting the compliance system in companies.

Many international organizations are active in this field, including the OECD with its recommendations on corporate governance of state-owned enterprises.

The lecture of the Deputy Head of the Coordination Center for Corporate Governance in the state or publicly owned in Lithuania (SoE - state-owned enterprises in MoE - municipality-owned enterprises). The Center regularly prepares reports on the operations of these companies and, among other things, takes care of establishing integrity.

The main principles for ensuring integrity in state-owned enterprises are disclosure and transparency, good corporate governance, clear anti-corruption rules, and internal control and compliance measures. The principle of disclosure and transparency applies to both state and public companies and for their observance are e.g. passed a law on charitable deeds that clearly defines what is and what is not allowed. Particular attention was paid to public procurement, which takes place exclusively through the e-portal, where the holders of these tenders must publish all documentation related to the tenders, including the annual public procurement plan.

It is also worth mentioning an interesting tool for measuring and evaluating the practice of corporate governance and compliance in the state or. public companies, ie i.e. an index containing as many as 18 performance indicators (pp. 9 - 18, Annually 2015 report ).

More about the Lithuanian model is available at this link .

The next interesting examples from practice were related to risks, internal rules of compliance in the private sector. A representative of the American Chamber of Commerce in Ukraine said that when admitting new members to the chamber, they also assess their integrity, and all members are obliged to respect the code of conduct and the guidelines defined in it, which put members' commitment first. to comply with regulations in the country and expect them not to resort to illicit practices (incitement to violate regulations, bribery, unfair business practices, corrupt practices and the like). Such an uncompromising stance and zero tolerance for corruption were (were) the only logical steps for Ukraine on the path to stability, democracy, development and foreign investment.

ISO standards

One of the tools for businesses is also the new ISO 37001 standard , which "sets out requirements and provides instructions for defining, implementing, maintaining, inspecting and improving the anti-bribery system". As such, it is a mandatory standard, which means that its implementation can be verified (audited) and certified for it, and this can only be ensured by specially trained assessors or accredited companies that have acquired specific knowledge in this field. The assessment is made in terms of "acts of good faith" and cannot be considered as granting immunity in the event of a formal investigation under national law, but prosecutors or judges could examine such audit reports in these proceedings to determine the situation of the company under investigation.

However, this does not apply to the ISO 19600 standard, which defines a management system for the field of compliance, which is considered only as a guideline and the use of which cannot be assessed or. to be certified for it.

Therefore, it is advisable that companies, including in Slovenia, first become fully acquainted with these standards and start their introduction with experienced experts.

Corruption reporting - cases from Panama, Colombia, Ontario, Canada, Ukraine

These countries are making additional efforts to prevent corruption through very concrete actions. Thus, Panama and Colombia introduced the high-level reporting mechanism (HLRM), where under the auspices of the President of Colombia, as the highest authority, a secretariat for transparency has been established and in the initial, pilot phase the area with the highest risk of corruption has been selected, and where the largest investor, i.e. in the field of public procurement in the construction sector. This mechanism has been established as an alternative to the lengthy and costly legal process of resolving disputes, as a way of cooperation between government, the private sector and society as a whole, with trust and respect for confidentiality among all involved being crucial. In Panama, however, they opted for a pilot project in the field of health and social care, as their state institution manages the largest public budget and has been the target of criticism and accusations of corrupt practices. In order to establish transparency in operations and appropriate corporate governance and restore the reputation of the institution, they opted for this mechanism.

In Canada and Ukraine opted for the ombudsman model. Thus, in the Province of Ontario in Canada , irregularities in the functioning of provincial authorities, local communities, public schools and universities, etc. can be reported through this independent body. Among the examples of reports of irregularities and abuses presented at the seminar were e.g. a lottery in the province of Ontario with a concession to organize games of chance, a municipal real estate appraisal service, which is then the basis for determining the amount of real estate tax, and a public electricity distribution service. All cases have been dealt with and resolved by the Ombudsman for the benefit of consumers - citizens, and he regularly informs the public about his work through annual reports, special reports on investigations, which are available at this link .

Another example comes from Ukraine , where corruption has been a major problem for the entire country and society, threatening the country's development, foreign investment and, last but not least, international credit ratings. That is why a Business Ombudsman Council was set up, financially supported by many countries and The EBRD and whose main objectives are the fight against corruption and other unfair practices, improving the investment attractiveness of Ukraine and promoting a culture of public services through the prism of honesty and accountability. Appropriate legislation has been adopted for the operation of this institute, which provides that a legal or natural person or individual entrepreneur may file a complaint against government agencies, state-owned enterprises or companies that are predominantly state-owned and against local, municipal authorities. Each report is reviewed and its justification and urgency assessed, analyzes and investigations are carried out, and finally, optional recommendations are made for the future actions of public, state bodies. In addition to regular annual reports, they also publish specific, sectoral or systemic reports and recommendations. In 2016, they received 868 applications, of which almost half were related to tax matters, a fifth due to the actions of supervisory institutions and a tenth due to the unclear legislative framework. Two thirds of the applications were filed by small and medium-sized enterprises, which would otherwise be deterred from taking action by the costs of legal and court proceedings. 542 cases were resolved, but what is most impressive is the fact that the state authorities complied with as many as 87% of all the Ombudsman's recommendations.

To conclude

The expert seminar brought together representatives of many countries, which differ greatly in size, level of development, standard of living, culture, values, but all share common efforts to combat fraud and corruption. This exists both in the private-public sector relationship and in the private-private sector relationship. It was with the latter that many participants pointed out the biggest problems, the biggest phenomena of corruption, which, however, remain hidden from view. That is why it is all the more important for the state, international organizations and professional institutions in the field of business ethics and compliance to work together to co-create an appropriate legal framework to promote ethics and integrity, promotion and education.

Barbara Krajnc