South Korea’s renewed focus on anti-corruption

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Seoul has been a site of massive protests following the revelations of President Park Geun-hye’s controversial ties to her friend, Choi Soon-sil, accused of trying to extort Korean companies and using undue influence to solicit business donations for a non-profit fund she controlled. This rather bizarre corruption scandal has brought renewed attention to Korea’s cozy relationships between politicians and business. The headlines may obscure, however, the progress that South Korea is making toward limiting corruption in business. In particular, the new laws.

The South Korean government first enacted anti-corruption laws in the late 1990s. In 1998, South Korea enacted the Preventing Bribery of Foreign Public Officials in International Business Transactions Act (FBPA), the South Korean version of the U.S. Foreign Corrupt Practices Act (FCPA). It was implemented as part of South Korea’s commitment to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business TransactionsRead More...

Private sector in Ukraine makes strides toward curbing corruption

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When one thinks about Ukraine in the context of corruption, the picture typically does not look rosy. The headlines about corrupt oligarchy and continued graft easily come to mind – including recent revelations about the riches disclosed by top officials in their asset declarations. This wealth stands in stark contrast with the financial condition of most ordinary Ukrainians, causing public outcry. Not surprisingly, Ukraine was ranked 130th out of 167 in the latest Transparency International’s Corruption Perceptions Index.

Yet, an overly pessimistic view of Ukraine’s anti-corruption prospects runs the risk of overlooking important positive developments. Last week I attended a conference in Kyiv organized by CIPE and its partner, the Ukrainian Corporate Governance Professional Association (UGCPA), with support from the American Chamber of Commerce in Ukraine and the Commercial Law Development Program (CLDP) of the U.S. Department of Commerce. This event, which gathered over 150 participants, shed a spotlight on an often underappreciated aspect of Ukraine’s anti-corruption efforts: what the private sector is doing to limit the opportunities of corruption in how businesses operate.  Read More...

Maximizing Your Code of Conduct

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Many employees often have the attitude that their company’s code of conduct is merely a policy when in reality the code should serve as the foundation of any given organization, capturing its unique values and culture. A code of conduct should be more than just a document but an experience that inspires employees to adhere to a code while also respecting the reality of workforce trends.

The best codes align with an organization’s message and are an authentic expression of the workplaces’ culture. As a result, codes should incorporate the organization’s mission and values throughout the document in order to develop a message that is meaningful to employees. Additionally, a code developed with the full backing of key constituents (i.e. board, senior leadership, global partners, etc.) will resonate strongly among employees. A high-impact message or letter from the CEO/leader can go a long way in inspiring a workforce to embrace and actively engage with a code of conduct or ethics.  Read More...

The Firtash Case Exposes Challenges of Extraterritorial Reach of the FCPA

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November 6-12, 2016 is Corporate Compliance & Ethics Week. Now in its 12th year, Corporate Compliance & Ethics Week continues to shine a spotlight on the importance of ethics and compliance in every workplace.

One year ago, Deputy Attorney General Sally Quillian Yates issued a memorandum entitled “Individual Accountability for Corporate Wrongdoing,” also known as the “Yates Memo.” It recommends that prosecutors focus on potentially culpable individuals from the inception of an investigation. The Yates Memo suggests that “because a corporation only acts through individuals, investigating the conduct of individuals is the most efficient and effective way to determine the facts and extent of any corporate misconduct.” The Yates Memo, along with the Department of Justice (DOJ) and Securities and Exchange Commission’s (SEC) expansive approach to extraterritorial jurisdiction, constitute a new trend in FCPA enforcement. You might expect that these two developments would make it easier to bring FCPA violators to justice in the United States.  Read More...

Pakistan: One of the Least Reliable Countries For Business: 2016 FM Global Resilience Index

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In a recently released 2016 FM Global Resilience Index, which ranks the resilience of 130 countries to supply chain disruption, Pakistan ranked 117.

Why is resilience important in business, especially in developing countries like Pakistan? Resilience is the ability to withstand disruption and rebound quickly when necessary. It is especially vital for global companies doing business in a fluid, borderless manner, facing unknown risks in developing markets.

Before exploring new business avenues, companies and business owners consider various factors. The index identifies nine key drivers of resilience including: political risk, the quality of infrastructure, exposure to natural hazard, and commitment to risk management. These drivers are aggregated into three broad factors – economic, risk quality and supply chain – which, in turn, combine to form the index. The quality of supply chains depends on the quality of the local suppliers, the infrastructure quality and how well a country controls them, in addition to managing corruption.  Read More...

Stemming the corrupt flows of looted antiquities

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In 2015, the world watched in horror as ISIS militants seized and then proceeded to destroy the ancient Syrian site of Palmyra. These cultural heritage crimes did not stop with the destruction of symbolic and historical structures. ISIS soon engaged in vast looting of antiquities, which helps line the group’s coffers. In response, the UN Security Council adopted Resolution 2199 condemning the destruction of cultural property in Iraq and Syria, specifically noting the role that cultural looting plays in terrorist financing. Recognizing that commercial demand for antiquities is the main driver for cultural looting, the UN called upon all nations to stem the illicit trade of antiquities being removed from these countries.

Unfortunately, here in the United States, as in other countries from which the demand stems for ill-gotten antiquities, there is a lack of legislation effectively curtailing this illicit trade. Not hindered by current international and domestic legal frameworks to protect cultural property, contemporary looting continues to occur on a large scale and is exacerbated by the growing interconnectedness of the global economy. The internet further allows antiquities of minor commercial value that would have gone unnoticed by museums and auction houses to be purchased by more casual consumers.

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Combating Corruption in West Africa

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For a market to exist, you must have demand and supply, or someone willing to buy and someone willing to sell goods or services. For corruption to exist, you must have someone willing to bribe and someone willing to take a bribe. I am going to discuss how, in West Africa, the demand side of corruption (public sector) and the supply side of corruption (private sector) operates. The public sector has fostered a system where the private sector is forced to partake in corruption in order to be successful. As a result, the steady demands for bribers from the public sector has created an atmosphere within the private sector that creates pressure for corruption as a way to get ahead.

In Guinea, Sierra Leone, Nigeria, the Ivory Coast, Liberia, and Ghana, which have an abundance of natural resources, businesses in the private sector often are forced to look for ways to buy political favors so that, among many bidders, they are the ones granted access to these resources.  Read More...

Andrea Franzoso on Exposing Corruption in one of Italy’s top Transportation Companies

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On CIPE’s Democracy that Delivers podcast this week, Italian whistleblower Andrea Franzoso talks about the difficult decision he made to expose corruption in his company and the impact this had on his personal and professional life. Franzoso discusses how he came across evidence of wrongdoing by the company’s president, the reaction to his revelations internally, and his eventual decision to take his findings to the police. His story is both inspiring and troubling as he shares the professional and personal cost of his decision. The conversation also covers what companies and governments can do to better protect whistleblowers and encourage a culture of accountability and transparency.

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Survey Shows Compliance is Working

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Compliance is a key component in the foundation and success of any organization. As a result, more organizations have begun to invest in compliance training programs, with the goal to create a better workplace that is equipped to take action to prevent and address misconduct. According to a recent survey from the Society of Corporate Compliance and Ethics (SCCE), investment in compliance training yields a positive return. The SCCE survey found that 83% of compliance professionals reported that their programs were able to prevent misconduct at least once within the last two years, while 46% of professionals said that their programs managed to stop problems before they occurred within the same two year period. The results of the survey demonstrate that compliance training programs are most effective when they are centered on empowering employees to take action when they see misconduct.

Ben DiPietro, editor and reporter with Risk & Compliance Journal, highlights the success compliance training programs have had in finding and fixing misconduct in the workplace in a recent blog in the Wall Street Journal: http://blogs.wsj.com/riskandcompliance/2016/10/05/the-morning-risk-report-survey-shows-compliance-is-working/

Amol Nadkarni is a Program Assistant with Global Programs at CIPE.  Read More...

Don’t Sweat the Petty Stuff? The True Costs of Petty Corruption

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In many developing countries, petty corruption is rampant to the degree of being deemed “everyday,” “cultural,” or even “survival” corruption. Small, usually frequent payments most often paid to lower level officials, petty corruption can seem negligible to an economy in comparison to grand corruption or state capture cases. However, the cumulative impact of corruption is costly to education systems, health services, and the business environment. In a lecture to participants at the 2016 School on Integrity hosted by Transparency International Lithuania, Director of U4 Anti-Corruption Resource Centre Boris Divjak calculated the true costs of petty corruption on democratic, economic, and social institutions.

Where central and local governments fail to deliver on public goods and services, citizens are left to pay extra for basic services such as school education, health services, and legal processes such as registering and operating a business. In situations where the good or service is imperatively needed, paying a bribe, facilitation payment, tip, or however it may be construed, does seem like a survival mechanism.  Read More...