Compliance is essential to avoiding corruption in value chains but it is still not the primary focus for many business owners, especially in emerging markets. As Director of Public Policy at the Society of Corporate Compliance and Ethics Corporate Joe Murphy explains, “Making sure your people do the right thing may just not seem as exciting or essential as running and growing the business.” The reality is, however, that compliance can have a major impact on many primary functions of a business.
Compliance and Ethics Week was first observed in 2005 by the Health Care Compliance Association and the Society of Corporate Compliance and Ethics in the U.S. to highlight the importance of compliance and ethics in their member organizations. A decade later, the week has gained momentum, and is now celebrated by companies across the globe including Emirates National Oil Company, and Velia Consulting Limited in Ghana – to name a few. Celebratory activities included slogan and mascot contests, recognizing compliance champions within the organization who have contributed to company compliance efforts, and launching updated codes of ethics and business conduct.
In celebration of Corporate Compliance and Ethics Week – November 1-7– CIPE Pakistan and Washington based think-tank Accountability Lab hosted a panel discussion in Karachi on compliance practices in third party businesses. Companies and vendors from different sectors including pharmaceutical, oil and gas, shipping, fast moving consumer goods, packaging and distribution, electric appliances, and textile and apparel joined the conversation. Participants discussed the variety of challenges facing businesses including: How do companies ensure that third party practices uphold the same business standards as the contracting company? How do you know that you are doing business with an ethical organization? How do you overcome challenges related to enforcement? How can training help support better compliance practices?
CIPE Pakistan started its value chains compliance initiative in 2014 in partnership with the Overseas Investors Chamber of Commerce and Industry (OICCI), and conducted a number of activities that included awareness-raising sessions, training programs for compliance staff, surveys on local knowledge of anti-corruption compliance, and the translation of CIPE’s Anti-Corruption Compliance Guidebook into Urdu. A recent survey conducted by CIPE Pakistan revealed key challenges for companies operating in the country include a lack of awareness and training about compliance for vendors, non-existence of compliance departments in many companies, and confusion about the separate duties of an audit versus a compliance department.
CIPE Pakistan Country Director Moin M. Fudda, who moderated the discussion, emphasized the need for greater awareness of ethical business practices, especially among vendors. Deputy Secretary General of OICCI Moin Mohajir also briefed the group on the role of OICCI in this initiative and stressed that more discussions on compliance issues are needed in Pakistan. Accountability Lab Ambassador Fayyaz Yaseen highlighted some of the Lab’s initiatives that have increased accountability awareness including public officials listening to local concerns, identifying best practices, and engaging diverse stakeholders in support of accountability. Accountability Lab believes that lack of accountability among decision-makers leads to mistrust and perpetuates corruption and other abuses. By emphasizing the accountability of those in power, resources are used more efficiently and citizen expectations for government performance improve.
The discussion also benefited from lessons learned by the private sector compliance managers in Pakistan. Saadia Ahsan, Performance and Contract Manager of United Energy Pakistan, shared her views on corruption and bribery concerning third parties. “Compliance starts with true intention,” Ahsan said. “Without compliance explained in [a] code of conduct, business whether small or large cannot survive in this [competitive market].” Mirza Mohsin Baig, Head of Procurement at the General Tire and Rubber Company of Pakistan, supported this statement and added that, “Compliance is easy to say but difficult to do.” He elaborated that due diligence and background checks are especially important when working with third party vendors.
Shariq Zaidi, Partner Assurance Ernst & Young Pakistan explained the importance of employees knowing how to apply compliance and ethics programs to real challenges that they confront on the job. This requires creating an effective training program that utilizes adult learning concepts such as problem solving and interactive sessions. Zaidi also encouraged companies to maintain and update their training programs regularly and avoid defaulting to checkbox-style training approaches.
Mohammed Hanif Ajari, Director Supply Chain and Company Secretary Getz Pharma, emphasized the importance of senior staff modeling ethical businesses practices. Ajari explained that a big challenge in Pakistan is that many companies do not have legal contracts with employees. He stressed that people, profit, and planning contribute to a viable business: compliance programs need to support these aspects of business operations.
These compliance themes – modeling ethical leadership, fostering ethical intentions, ensuring broader understanding of compliance, and screening third party vendors – are challenges that businesses confront globally. Businesses that have made their 2015 Compliance and Ethics Week Celebrations public have chosen to focus on many of these issues through panel discussions, creative activities, and even online games. While these actions signify a commitment to decreasing corruption that should be celebrated, businesses do not have to wait to celebrate compliance just once a year – these activities can be used throughout the year to make sure compliance is accessible to all staff.
Muhammad Talib Uz Zaman, Program Officer CIPE Pakistan, CCEP-I