Key Takeaways from the Society of Corporate Compliance and Ethic’s Annual Institute



Once a year compliance professionals from around the globe gather to discuss developments in anti-corruption, complianceCBM_5227 and ethics at the Society of Corporate Compliance and Ethic’s Annual Institute (SCCE). CIPE’s Frank Brown, Value Chain andAnti-Corruption Program Team Leader, and Anna Kompanek, Director of Multiregional Programs, presented at the SCCE’s 14th annual gathering with a workshop titled Carrots Before Sticks: Motivating Mid-Sized Businesses in Emerging Markets to Launch Compliance Programs. Leading experts across a variety of industries discussed recent developments in compliance, ethics, and enforcement and share practical advice and insights based on their experience.

Following the conference, Professor Ryan Meade, Director of Regulatory Compliance Studies at the Loyola University Chicago School of Law, identified ten key takeaways from the event in an engaging webinar. He identified ten key takeaways from the last year made by compliance professionals. Those points include the recent Yates Memo issued by the U.S. Department of Justice; the importance of effective compliance training; rising concerns involving e-discovery and IT security; compliance hiring trends; and the importance of due diligence with regard to foreign transactions, mergers & acquisitions, and vendor and contract management. Here, we take a closer look at the takeaways most relevant to international SMEs (small and medium enterprises) engaged in international supply chains. Read more…

Benchmarking Public Procurement


, ,

Did you know that public procurement — goods and services bought by governments — accounts for around one-fifth of benchmarking-procurementglobal GDP? Or that in most high-income economies public procurement takes up a third of total public spending, and in developing countries even more – about half?

These figures represent a significant share of national wealth. If channeled properly, public procurement provides indispensable benefits to a society, such as infrastructure, hospitals, and schools. Yet, if squandered, public procurement can set back the economy and contribute to massive corruption. In fact, the Organisation for Economic Co-Operation and Development (OECD) estimates that corruption drains 20-25 percent of procurement budgets globally, which amounts to staggering $2 trillion per year. Read more…

Compliance Q&A with Joe Murphy: Low Cost Compliance


, ,

Joe Picture

Joe Murphy is the Director of Public Policy at the Society of Corporate Compliance of Ethics (SCCE) and Editor in Chief of Compliance and Ethics Professional, SCCE’s magazine. Murphy is the co-founder of Integrity Interactive, an online compliance training firm acquired by SAI Global in 2013.  Murphy has over 35 years of compliance experience, including designing a compliance program for a global telecommunications company.  He is the author of 501 Ideas for Your Compliance & Ethics Program and co-author of Building a Career in Compliance and Ethics. Murphy is the recipient of Health Care Compliance Association’s (HCCA’s) 2005 Compliance Person of the Year Award and a Certified Compliance and Ethics Professional (CCEP). Murphy co-authored the HCCA and SCCE Codes of Ethics.

CIPE’s Laura Van Voorhees discusses with Joe Murphy low-cost compliance measures for emerging markets.

I had heard someone say one time too many that “the smaller companies just weren’t able to afford compliance programs.”  I knew from my own experience that this was ridiculous, and I thought writing a paper showing how inexpensive it could be would address this.  The truth for any company, large or small, is that money doesn’t do it.  If a company wants to act ethically and legally it takes something even harder to get than money; it takes real management commitment.  And that is not a matter of dollars and cents, but a matter of taking this seriously.

The paper has turned out to be popular; in fact, SCCE has had it translated into 6 other languages besides English.

  • Smaller businesses sometimes hesitate to implement compliance programs because they believe that they are expensive. How do you respond to their concerns?

Read more…

It Isn’t Rocket Science: NASA Shares Supply Chain Management Lessons


, , , ,

NASA launch

Photo: NASA

With international value chains becoming more sprawling and complex, the idea of risk management in such behemoth structures may cause compliance practitioners to break out in a cold sweat. That’s especially true when corporate corruption scandals make headlines across the world, denting stock prices and ruining hard-won reputations.  It is hard to think of an organization whose failures are more public than the National Aeronautics and Space Administration (NASA). The age-old fascination of space fuels big-budget Hollywood films such as The Martian and the new Star Wars movie. New global economic powers like China and India are launching ever more ambitious space programs.

As the world’s largest space agency, NASA is watched with fascination, as a pioneer and, for Americans at least, a source of national pride. Given that its missions often push the boundaries of what is possible, its operations also entail a high risk of failure. Despite this high level of public scrutiny — or rather, because of it — NASA cultivates a culture of transparency and openness among the entire organization, particularly among its leadership. It is only through maximum transparency and information sharing that potentially fatal flaws can be quickly uncovered and remedied before they become mission critical. Furthermore, 100 percent of NASA’s space missions and 80 percent of all science missions involve international collaboration; thus, NASA’s value chains are truly international.

At a recent talk hosted by the World Bank Group, Dr. Edward Hoffman, NASA’s Chief Knowledge Officer, spoke about how NASA addresses supply chain management challenges in the constant pursuit of excellence. Among these thoughts were some key lessons for the anti-corruption compliance world: Read more…

Compliance Q&A with Ounsougan Joel Ameyou


, ,

Joel Ameyou is a corporate lawyer, who comes from Lome, Togo in West Africa where he serves as the Chief Compliance Auditor for the Togo Revenue Ounsougan Joel AmeyouAuthority. Prior to working in the public sector, he worked as a Legal Assistant for Tax and Laws, Ecobank and Cabinet Sylvia Aquereburu, one of the leading legal firms in the West Africa Economic and Monetary Union (WAEMU) where, as legal advisor and compliance manager, he led them to become the first ISO-certified legal firm in Togo.

CIPE’s Stephanie Bandyk discusses with Joel Ameyou the challenges and opportunities for combating corruption in Togo.

  • Could you briefly describe the rationale for the current anti-corruption initiatives in the Togo Revenue Authority (RA)? What has served as the main motivation or impetus?

Togo is a French-speaking country and our fiscal system is designed after France’s fiscal system – customs, tax administration, and property administration are all different institutions. Because of the economic recession, the government decided to put all these trade institutions together into one – the Revenue Authority. Corruption and ethics are not the only issues facing Togo. Togo lacks a culture of performance. We – the public administration – didn’t have a culture of management focused on results previously. We do not have this practice of auditing, meaning a culture of accountability. In order to try to infuse a culture of accountability in the administration, the government decided to put the Togo Revenue Authority in place.

Global Financial Integrity reported that in 2012 US $991.2 billion left developing countries in illicit financial flows (IFFs). More than US $18 billion is reported in illicit financial flows from Togo, one of the smallest countries in Africa as far as size is concerned, from 2003 through 2012, putting it at the top of the list if it were to consider IFFs/GDP. This situation is the result of the existing tax havens, tax evasion, and money laundering through misleading invoicing in trade transactions, etc.

The current reform is not only a remedy for the lack of transparency and accountability in public administration. It is also the ambition of the Government of Togo, like some other developing countries, to mobilize enough resources internally to finance its own development in the context of restricted international donor funding due to the international financial crisis.

Putting in place the semi-autonomous Revenue Authority is a clear response to poor corporate administration and political governance. Thanks to the political motivation for the reform, it was voted unanimously in the parliament and granted sufficient administrative and financial autonomy. It liberates the Revenue Authority from some undue political influences. Read more…

Carrots Before Sticks


, ,


This post originally appeared on the SCCE Compliance & Ethics blog.

I was truly honored to attend this year’s Compliance and Ethics Institute (CEI) in Las Vegas, and to present with my colleague Frank Brown, CIPE’s experience with motivating mid-sized businesses in emerging markets to launch compliance programs. Our session was one of the opening ones scheduled at 9am on Sunday morning (did I mention we were in Vegas?) so it was abundantly clear to us that everyone who attended was truly dedicated to the cause!

As we’ve heard throughout the event, emerging markets pose many compliance risks, especially in the area of anti-corruption. Local enforcement may be lax and bribery remains common in business transactions. What is more, under laws such as the U.S. Foreign Corrupt Practices Act or the UK Bribery Act, it is not just the behavior of a company’s own employees but also the conduct of it suppliers, agents, and other business partners that’s of concern. Read more…

Kenya’s Renewed Commitment to Fight Corruption Needs the Private Sector


, ,


When I visited Nairobi a few weeks ago, the signs of President Obama’s recent visit to attend the Global Entrepreneurship Summit were still clearly visible all around – from welcome posters to the spruced-up cityscape. I was in Kenya to work with CIPE’s partner organization, Kenya Association of Manufacturers (KAM), on a training-of-trainers workshop devoted to anti-corruption compliance and practical ways in which mid-sized companies in particular can implement robust compliance programs. The topic is quite timely.

Corruption remains a key problems in Kenya, affecting both the country’s democratic and economic development prospects. It was one of the leading issued discussed during President Obama’s visit, which resulted in an agreement signed between the Kenyan government and the U.S. to introduce new anti-graft measures. The 29-point deal stipulates, among other things, that Kenya will step up investigations into corruption cases, increased U.S. assistance and advice to Kenyan anti-corruption agencies and advice on relevant legislation, and international commitments by Kenya to join the Egmont Group of Financial Intelligence Units and the Extractive Industries Transparency Initiative (EITI).

At the same time, profound challenges persist. Within days of Obama’s visit, Kenya’s Office of the Auditor-General released a troubling report that brought to light some uncomfortable numbers. According to the report, only 26% of money spent and collected by the government has been fully approved in an audit for 2013-2014. The health department alone failed to account for 22 billion Kenyan shillings ($216 million) worth of spending. What is more, over 12,000 false names were discovered on the government payroll. Read more…

Anti-Corruption Compliance for the Oil and Gas Industry in Indonesia


, , , , , , ,

Photo: The Times

Photo: The Times

Corruption costs a lot of money for citizens around the globe. The World Economic Forum and the World Bank estimates that corruption reduces global GDP by 5% ($2.6 trillion) per year with over $1 trillion paid in bribes. For businesses, corruption makes up 10% of the total cost of doing business and up to 25% of the cost of procurement contracts in emerging markets. This phenomenon is felt by the private sector in Indonesia.

According to Transparency International’s Corruption Perceptions Index 2014, which measures the perceived levels of public sector corruption, Indonesia was ranked 107th most corrupt nation out of 175 countries. While the government has been taking steps to improve the situation (for example in 2003, Corruption Eradication Commission, or KPK, was formed to combat political corruption), fighting corruption remains difficult and bribes are a widely accept part of doing business. And this is certainly the case for mid-sized companies in the oil and gas sector.  Read More...

How Do Leading Multinationals Successfully Reduce Risk in Emerging Markets?


, , , , , , ,

Foreign direct investment in emerging markets -- like this Volskwagen plant in Brazil -- can be lucrative, but also carries risks. (Photo: Volkswagen AG)

Foreign direct investment in emerging markets — like this Volskwagen plant in Brazil — can be lucrative, but also carries risks. (Photo: Volkswagen AG)

Emerging market countries are absorbing more investment than ever before, much of it from large multinationals. More than $886 billion in foreign direct investment (FDI) flowed into developing and transition countries in 2013, an all-time high. And businesses will continue expanding operations into emerging economies as the annual consumption in these markets is expected reach $30 trillion. At the same time, however, the losses companies are incurring in these markets continue to grow. Due to complex regulatory frameworks, multinationals often face multiple risks in these countries, including bribery and fraud. How can companies operate ethically to avoid risks and make the most profit?

FTI Consulting recently surveyed 150 risk and compliance executives from North American and European-based multinational companies with operations in emerging economies in their latest report, What Companies Do Right (and Wrong) in Emerging Markets. According to the report, many multinationals have experienced significant losses in emerging economies due to three reasons: problems with regulation, bribery and fraud, and reputational issues. Regulatory issues are the most frequent cases of profit loss. Bribery and fraud issues are the most expensive. And reputational issues often make a bad situation worse. The most damaging and costly cases happen when two or more of these risks converge.

The companies that suffer the greatest losses are those that under-invest in or insufficiently focus on their projects and subsidiaries in these markets. On the other hand, the firms that flourish in these economies protect themselves against risks by taking the following steps. Read more…

Corruption Q&A with Sarah Chayes



Sarah Chayes photo

Photo by Kaveh Sardari

Sarah Chayes’ recent book, Thieves of State: Why Corruption Threatens Global Security, makes a powerful case connecting severe corruption to a variety of security crises currently plaguing the world, from the expansion of Boko Haram in Nigeria and ISIS in Iraq to the Arab Spring Revolutions. At a time when some anti-corruption thought leaders are arguing that freedom from corruption should be a basic human right and others are advocating for the creation of an international anti-corruption court, Chayes’ book adds another dimension, by using corruption as a lens through which to understand the root causes of many of today’s security challenges. Chayes is a senior associate in the Democracy and Rule of Law and South Asia Programs at the Carnegie Endowment for International Peace. She lived for a decade in Afghanistan, reporting the fall of the Taliban for NPR, staying on as an entrepreneur who founded a manufacturing cooperative in the former Taliban stronghold, and working as a special adviser to the chairman of the United States Joint Chiefs of Staff.

Chayes spoke to CIPE’s Value Chain Lead Frank Brown about her work studying corruption and security.

  • How would you describe the impact of your book in anti-corruption circles worldwide? Are you surprised by the reaction in any way?

The response within anti-corruption circles could not be more positive. In both style and content, “Thieves” is an unusual – and I hope gripping – take on the topic, and so has perhaps been a refreshing addition to the debate for many who have worked in this field for some time.

More broadly, the book appeared at a – sadly – propitious moment, as the crises in Ukraine and Iraq were forcing increased focus on the corruption issue, and in particular in a security context. So I have gotten more outreach from government and the private sector than ever before, and from unexpected quarters.

However, I continue to be startled that elements of the argument that seem so obvious to me are still facing stiff headwinds inside government. In particular, the link between corruption and violent extremism. While the U.S. government has been emphasizing corruption with respect to, say, Ukraine, as soon as there is a whiff of terrorism in the air the instinct is to support and facilitate the corrupt government — whose practices are often fueling the terrorists’ recruiting drives. Examples include close collaborations with the governments of Algeria, Bahrain, Cameroon, Chad, Egypt, Ethiopia, and so on.

Another obvious issue that seems hard for many government – and non-profit – practitioners to metabolize is that humanitarian and development assistance represents a significant revenue stream for corrupt elites. The Nigerians have an expression for the connected implementing partners that capture such a significant portion of development assistance: GONGOs, for “government-organized non-government organizations.” Read more…