Anti-Corruption Compliance in Kenya

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Transparency International’s Corruption Perceptions Index ranks Kenya in a distant 136th place. That low ranking confirms the sentiment often encountered in Nairobi: corruption is widespread in many aspects of life, from bribing a policeman to avoid charges for alleged traffic violations to graft at the highest levels of government, as poignantly described by a British journalist Michela Wrong in her book about Kenyan whistleblower John Githongo, It’s Our Turn to Eat.

Not surprisingly, many segments of the Kenyan society are fed up with the status quo and ready for change. That includes many companies in the private sector that see their growth potential and competitiveness stifled by the highly corrupt environment. Such companies are not waiting for the government to clean up its act and instead are taking the initiative to limit corruption through setting up or strengthening internal compliance procedures.

Long-time CIPE partner Kenya Association of Manufacturers (KAM), KPMG, and the British High Commission recently published four case studies of companies that are committed to integrity and have made significant progress in translating that commitment into daily operations.  Read More...

A Guide for Anti-Corruption Compliance: The New Imperative in Global Value Chains

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In many countries, fighting corruption seems to be an impossible battle, especially for mid-sized companies with limited resources. While there is a broad global consensus that corruption suppresses competition and innovation, thus hampering entrepreneurship and economic growth opportunities, countering it presents a challenging task due to resistance to reform in corruption-tainted business environments. In many cases anti-corruption rules and regulations may be weak or unevenly enforced, government-led steps to fight corruption remain insufficient or ineffective, and bribes are a widely accepted part of doing business.

Yet businesses committed to anti-corruption are not helpless. They can lead by example by improving their own safeguards against corruption and act together to create a movement for integrity that makes clean business conduct the norm, not the exception.

In today’s globalized world, where international value chains stretch across borders and continents, anti-corruption compliance provides a vital competitive advantage. Ethical companies tend to have higher valuations, are more attractive to potential investors and employees, and are more likely to be engaged in long-term arrangements with their business partners.  Read More...

Reducing Third-Party Company Risks in Emerging Markets

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As the world’s multinational companies seek profits in new, high-risk markets, they inevitably start depending on local businesses – third parties – to operate. Such partnerships bring with them both the promise of mutual growth and, for the multinational, responsibility for the behavior of its new local partner. That’s because aggressively applied laws such as the U.S. Foreign Corrupt Practices Act (FCPA) hold the multinationals responsible for third parties’ behavior.

Of the estimated 106 companies currently under investigation for FCPA-related violations, a significant number of them are related to suspected third party wrongdoing – assuming that past settlements made public are a reliable guide. So, how to reduce the corruption risks presented by doing business with third parties in developing countries where bribery is an accepted practice? CIPE is working on finding answers. So, too, is one of the world’s leading risk management firms,  SAI Global, which recently presented a webinar and offered a few tips on how to construct an anti-corruption training program for third parties.    Read more…

Introducing Corporate Compliance Trends, a Website for Anti-Corruption Compliance in Emerging and Frontier Markets

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The need for anti-corruption compliance programs in companies of all sizes in global value chains has never been greater. Since 2006, the U.S. government has settled or prosecuted nearly 300 corruption cases against companies from around the world, including many where the corrupt conduct originated from multinational corporations’ suppliers, vendors, and agents. The average cost of resolving these enforcement actions now tops $80 million.

Beyond the U.S. Foreign Corrupt Practices Act (FCPA) and the UK Bribery Act, new anti-corruption laws with international reach are hitting the books, such as Brazil’s Clean Companies Act, introduced earlier this year. Similarly, many international bodies, including the Organisation for Economic Co-operation and Development (OECD) and the International Chamber of Commerce, have introduced conventions and norms meant to combat bribery of foreign officials. Few doubt that this growing global trend toward rooting corruption out of international business conduct is here to stay.

Still, as a recent study found, the number of global companies with anti-corruption policies has increased by only 1 percent over the past two years, and a sizable minority of these companies have yet to implement even the most basic of compliance programs.  Read More...

How Effective Are Helplines at Enabling Compliance Reporting?

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helplinesWhistleblowers can be one of the most effective ways for companies to find out about and address potential ethical and legal violations, making them an important part of any anti-corruption compliance effort.

Recently, the Society of Corporate Compliance and Ethics (SCCE) conducted a survey on helpline calls and incidents reports. The survey, based on 677 responses from compliance and ethics professionals around the world, revealed that over the last two years employees are reported to have grown more likely to come forward and raise concerns both through whistleblower helplines and directly to management and/or compliance officers. Read more…

Citizens Work Together to Fight Corruption in Lebanon

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A lab technician went to the office of a public official to renew her work contract with a municipal laboratory in northern Lebanon. Several days after submitting her request, the official’s secretary invited her to come to his office. Hoping to finally receive his signature on her contract renewal, the young woman arrived at the office only to find that he wanted to get her alone behind closed doors, where he allegedly proceeded to make verbal and physical sexual advances on her.

She fled the scene and tried to see if she could get her contract renewed through another government department, which only referred her back to the same official. Having no other alternative, the young woman went back to the official’s office in January 2014, but this time she was prepared with a hidden camera to capture his behavior on video.

In the mountains of Chouf, residents of Brih and neighboring villages were displaced during the 1975-1990 Lebanese civil war.  Read More...

How Youth Are Working to Solve Global Problems

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Youth around the world are agents of change. They are political and economic leaders and participants in their communities, and have many thoughts on how to shape their nation’s future.

As part of celebrating such individuals on International Youth Day, two recent CIPE-Atlas Corps Think Tank LINKS alumni – Fayyaz Yaseen from Pakistan and Iryna Fedets from Ukraine – analyzed two issues young people care about in their communities: youth unemployment and anti-corruption. In this week’s Economic Reform Feature Service articles, the two authors explore how to bring about democratic and economic reform changes in their respective countries.

In Fayyaz Yaseen’s piece, Youth Unemployment in Pakistan: An Account of Issues and Possible Solutions, he discusses that:

  • Almost half of Pakistan’s labor force is unemployed. The situation is particularly dire for youth. A number of government programs have been introduced to address unemployment but they have not yielded the required results.
  • Various factors are contributing to youth unemployment, including a lack of education, skills, and experience.
  Read More...

The Challenge of Anti-Corruption Compliance for Emerging and Frontier Market Firms

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“Among a people generally corrupt, liberty cannot long exist.” - Edmund Burke

Until recently, corruption has been accepted and treated as a cultural norm in countries across the world. Increasingly, thanks to the efforts of organizations like Transparency International (TI) and a range of business groups, nonprofits, and government initiatives, the private sector is now openly talking about corruption. But to make significant progress, not just multinationals but also domestic companies in emerging and frontier markets need to believe in the business case for anti-corruption compliance.

As a community we are at a crossroads, as a wide range of actors have not only come to realize the destructive nature of corruption but are putting their heads together to create the conditions necessary to combat it.

TI-USA’s new report on Verification of Corporate Anti-Corruption Programs, the project of extensive research and consultation, marks an important step towards a unified vision of what successful anti-corruption compliance programs should look like.  Read More...

Fighting Corruption is Key for Growth in Africa

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Yesterday was the first day of the inaugural U.S.-Africa Leaders Summit in Washington, DC. Representatives from CIPE’s partners in Africa – including association and chamber leaders from CIPE’s KnowHow mentorship program  – in addition to 200 other government, private sector, and civil society leaders from Africa attended the summit’s Civil Society Forum.

With seven of the world’s fastest growing economies and a fast-rising middle-class, no one can doubt the potential for economic prosperity in Africa. What’s questionable, however, is how African nations will achieve this prosperity. And the answer should be through inclusive democracies. Global initiatives like the Open Government Partnerships are already building momentum towards open governments that empower citizens in Africa.

Moreover, as Secretary Kerry and Vice President Biden noted in their remarks yesterday, sustainable economic growth can only come from accountable and transparent societies that address corruption. For more African nations to take advantage of opportunities and accelerate growth, governments, civil society, and the business community must confront corruption.  Read More...

Welcome to Corporate Compliance Trends

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The need for anti-corruption compliance programs in companies of all sizes in global value chains has never been greater. Since 2006, the U.S. government has settled or prosecuted nearly 300 corruption cases against companies from around the world, including many where the corrupt conduct originated from multinational corporations’ suppliers, vendors, and agents. The average cost of resolving these enforcement actions now tops $80 million.

Beyond the U.S. Foreign Corrupt Practices Act (FCPA) and the UK Bribery Act, new anti-corruption laws with international reach are hitting the books, such as Brazil’s Clean Companies Act, introduced earlier this year. Similarly, many international bodies, including the Organisation for Economic Co-operation and Development (OECD) and the International Chamber of Commerce, have introduced conventions and norms meant to combat bribery of foreign officials. Few doubt that this growing global trend toward rooting corruption out of international business conduct is here to stay.

Still, as a recent study found, the number of global companies with anti-corruption policies has increased by only 1 percent over the past two years, and a sizable minority of these companies have yet to implement even the most basic of compliance programs. Nearly 60 percent of global companies surveyed said they never train third parties despite the fact that many compliance actions have resulted from conduct by agents or intermediaries.

While governments and international organizations set anti-corruption rules and standards, and while law enforcement agencies around the world aggressively pursue potential violations, many companies simply lack sufficient practical knowledge on how to comply with these new global norms. Understanding what effective anti-corruption compliance looks like and how to set up internal compliance programs that mitigate the risk of corruption is an especially daunting challenge for firms operating in emerging and frontier markets, where the Center for International Private Enterprise (CIPE) has worked since 1983 with local partners such as chambers of commerce, business associations, and economic think tanks.

To share our experiences from supporting private sector-focused anti-corruption programs in high-risk countries around the globe, and to help advance international best practices on anti-corruption compliance in these countries, CIPE is launching this new website, Corporate Compliance Trends. Read more…