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.
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...
By Andrew Wilson
Joining business and civil society leaders around the world to explain why tackling corruption matters, CIPE’s acting Executive Director Andrew Wilson stresses the need to make business part of the solution. CIPE is one of the many organizations contributing to the Anti-Corruption Manifesto to world leaders organized by Transparency International in the lead up to the Anti-Corruption Summit, London, 2016.
Writing on Medium, CIPE’s acting Executive Director Andrew Wilson asks: with technological change and trade deals making it easier than ever to enter the global marketplace, how can we ensure robust compliance with anti-corruption, labor, environmental, and corporate governance standards?
By Eric Hontz
The stakes for reforming Ukraine’s state-owned companies are high: these companies are the lifeblood of a corrupt, sclerotic crony capitalist system that scares away potential investors, drives off international donors, and robs the Ukrainian government of legitimacy. But privatizing them as quickly as possible is not the solution.
Even after mass privatization in Ukraine in the 1990s, the government still owns a large portfolio of companies in a variety of sectors – from heavy industry to banking — that employ over 900,000 employees, far more than any private firm. Reforming these state-owned enterprises (SOEs) has been a slow process and remains incomplete due to weak corporate governance, unmotivated management, and a near-total lack of transparency. None of these problems will be solved by simply speeding up the process.
The demand for rapid privatization is a familiar tune. Western “expert” advice in the early 1990s led to a huge transfer of wealth from the former Soviet Union to a handful of connected insiders, particularly in Russia: first through voucher privatization and later through the disastrously corrupt loans-for-shares schemes in the run-up to Russia’s 1996 election.
To get an idea of the scale involved, a 1993 paper by several Western economists who worked directly on the voucher privatization program estimated that most of the Russian Federation’s civilian industrial base – nearly every plant, factory, and mine in the country – was effectively sold off to insiders for between $5 and $10 billion, less than it would have cost to buy a single mid-sized Fortune 500 company (and roughly equal to the market capitalization of Whole Foods today). Still, at the time they regarded this program as a great success.
Unfortunately, the corrupt and predatory “oligarch” elite, created practically overnight, proved to be more interested in asset-stripping than in transforming their new firms into firms that could compete on world markets. What followed was the largest peacetime economic collapse of any country in recorded history. The sheer volume of banditry surrounding state assets during the 1990s led many average citizens in post-Soviet countries to believe that lower standards of living and a complete lack of justice were a natural part of living under democracy. Read more…
Once a year compliance professionals from around the globe gather to discuss developments in anti-corruption, compliance 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…
Ethics is an increasingly important component of doing business for both small and medium sized enterprises to multinational corporations in today’s globalized world. The Center for International Private Enterprise (CIPE) has long been an active advocate for better business practices with its focus on anti-corruption initiatives and promoting corporate social responsibility.
Ethisphere Institute, a global leader in defining and advancing the standards of ethical business practices, recognized CIPE leaders and partners for their contributions to advancing business ethics. Ethisphere magazine listed CIPE’s Executive Director John D. Sullivan and Michael Hershman, member of CIPE’s board of directors, as the top 100 most influential individuals in business ethics in 2014. Mr. Hershman is an internationally recognized expert on matters relating to transparency, accountability, governance, litigation, and security. Dr. Sullivan is the author of numerous publications on the transition to democracy, corporate governance, anti-corruption, and market-oriented democratic development. Under his leadership, CIPE developed a number of innovative approaches that link democratic development to market reforms in the areas of combating corruption, promoting corporate governance, building the capacity of business associations, supporting the informal sector, and assisting women and youth entrepreneurs. Read More...
Earlier this month, the Organisation for Economic Co-operation and Development (OECD) released the most comprehensive report ever compiled on the bribery of foreign officials. The report looked at 427 such cases since 1999 in 17 countries. Some of the results were surprising. Fifty-three percent of the cases of bribery took place with the knowledge or consent of corporate managers and executives. Other findings were predictable. The energy, mining, and construction industries are most likely to be corrupt. To put the report’s findings in perspective, CIPE’s Frank Brown spoke with Drago Kos, a Slovenian national who is the Chairman of the OECD’s Working Group on Bribery in International Business Transactions. He is an authority on worldwide corruption issues and trends, not only in the 41 countries that are a party to the OECD Anti-Bribery Convention, but also in Eastern Europe and Afghanistan.
What does this report tell us that previous such surveys, studies, and analyses have not? Read More...
By Stephanie Bandyk
Corruption is a destructive tax on business that hampers entrepreneurship and economic development. In the last two decades significant progress has been made in making the fight against corruption a top priority for governments and businesses worldwide.
Yet many challenges remain, including spreading best practices in anti-corruption compliance beyond large companies to smaller firms in global value chains. The launch of CIPE’s new guide on anti-corruption compliance for mid-sized companies in emerging markets, held yesterday in Washington, DC, at the OpenGov Hub, focused on ways to boost third party compliance in difficult environments. Read more…
CIPE partner the Lebanese Transparency Association (LTA) recently wrapped up a banner month in its fight against corruption in Lebanon. CIPE’s partnership with LTA dates back over ten years, and since 2012 CIPE has been supporting LTA through a grant from the U.S. Department of State’s Middle East Partnership Initiative (MEPI) to strengthen the rule of law in Lebanon. Our approach has been not only to raise public awareness, but also to empower citizens to exercise their rights. This effort has been consolidated primarily through the Lebanese Advocacy and Legal Advice Center (LALAC) and the Lebanese Anti-Bribery Network (LABN), both of which are housed and managed by LTA.
LALAC operates centers in Beirut, Bekaa, and Nabatieh, which are staffed by attorneys and legal assistants who field complaints of corruption from citizens across Lebanon. Through LALAC, citizens can report corruption by calling the LALAC hotline, writing a letter or e-mail, or visiting one of three centers in person. Read More...