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Corporate Compliance Trends

~ Anti-Corruption Compliance in Emerging & Frontier Markets

Tag Archives: corporate governance

CG Fund: New Investment Tool to Boost Governance Standard

02 Friday Feb 2018

Posted by Amol Nadkarni in Global

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anti-corruption, corporate governance, good governance

Most people now accept that good governance is a basis for long-term business success and sustainability. When it comes to investing in stocks, firms with good governance should be seen as relatively safe bets. Wouldn’t it be great if there were funds that handpicked stocks with such desirable qualifications for you?

Thailand’s investment community took a proactive role by introducing mutual funds that limit its investment portfolio to stocks of companies with proven track records of high governance standards and established internal graft-prevention mechanisms.

Some 11 asset management companies, controlling over 90% of the domestic market share, made a joint announcement in August 2017 that they will separately introduce the so-called corporate governance or “CG funds.” So far, 10 funds have been set up, raising over THB 4 billion orUS$125 million from investors.

One unique element of the Thai CG funds is that all 11 asset management companies agreed to contribute 40% of their fund management fees to organizations that promote corporate governance and anti-corruption.  Read More...

Albanian Ponzi Schemes as an Extreme Case for Strong Corporate Governance

30 Tuesday Jan 2018

Posted by CIPE Staff in Global

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anti-corruption, anti-corruption campaign, corporate governance

Photo Credit: Robert Nagle, Vlore, Money Lenders,1997

At their height in November 1996, a series of Albanian “Ponzi” schemes held money equal to almost half of the country’s total GDP. The schemes were fronted by a series of companies and charitable foundations that sprung up in newly capitalist Albania and offered monthly interest rates on deposits. Over half of the population rushed to invest in the schemes, some of which promised to triple an investor’s money in three months. The government itself ran advertisements for the schemes on state-run television. According to one observer, the country smelled and sounded like a slaughterhouse because of all the farmers selling off their livestock to invest in the schemes. It seemed as if everybody could get rich quick.

The collapse was predictably swift. On November 19th, 1996, the first scheme collapsed when it could no longer bring in enough deposits to pay previous depositors.  Read More...

Lessons for Corporate Compliance from Improvisation

09 Thursday Feb 2017

Posted by Anna Kompanek in Global

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anti-corruption compliance, corporate culture, corporate governance

Photo Credit: Heather (via Flickr)

Recently I listened to a webinar focused on a somewhat unexpected topic: what can improvisation teach us about ethical behavior? The webinar was hosted by NYSE Governance Services, the leading governance, compliance and education solutions provider for companies and their boards, and Second City Works, the B2B side of The Second City, the world’s leading comedy theatre and school of improvisation. The speakers were Kelly Leonard, longtime creative executive for The Second City, and Heather Caruso, adjunct professor of behavioral science at the University of Chicago’s Booth School of Business.

I am a big fan of Mike Birbiglia, a comedian whose new movie, Don’t Think Twice, explores the life of a New York-based improv group. I am also always intrigued by how behavioral insights can be applied in compliance. In this webinar, Leonard and Caruso recognize that many people feel trapped by their patterns of behavior, both in personal and professional life.  Read More...

Improving Corporate Governance in Ukraine’s State-Owned Enterprises

03 Friday Feb 2017

Posted by Guest in Global

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anti-corruption, corporate governance, corrruption, law, ukraine

This blog was originally published on the Center for International Private Enterprise’s (CIPE) Development Blog.

On May 1, 2016, the law, On Introduction of Amendments to Certain Legislative Acts of Ukraine Regarding Protection of Investors’ Rights (No. 289-VIII), came into effect. It introduced a number of new aspects to Ukrainian corporate law including the right to shareholder derivative actions, direct payment of dividends to shareholders, and –perhaps the most relevant to reducing corruption and privatizing state owned enterprises– the establishment of independent directors.

In many developed economies, independent directors serve as a source for ongoing advice for senior management, set the strategic direction for the company, and provide investors (both public and private) confidence that their interests are represented through additional oversight, strategy development, and the scrutiny of major decisions undertaken by management. In state owned enterprises and family owned firms, independent directors serve as additional checks on the company from the perspective of the public or nonvoting family members, respectively, among other functions key to the long-term sustainability of such enterprises.  Read More...

Transparency International Releases 2016 Corruption Perceptions Index

27 Friday Jan 2017

Posted by Amol Nadkarni in Global

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anti-corruption, compliance, corporate governance, corruption, ethics

Photo Credit: Transparency International

The interplay of corruption and inequality feed off each other to form a destructive cycle between corruption, unequal distribution of power in a society and unequal distribution of wealth. This is the main conclusion from the recently published Transparency International’s (TI) 2016 Corruption Perceptions Index (CPI), which highlights the connection between corruption and inequality.

TI’s CPI Index scores and ranks countries based on how corrupt a country’s public sector is perceived to be. The composite index uses a combination of surveys and assessments of corruption by a variety of independent institutions specializing in business climate analysis. Each country is scored on a scale of 0-100, with a 0 indicating highly corrupt and a 100 representing very clean.

Of the 176 countries covered in the 2016 CPI, over 120 scored a 50 or below, with the global average at an alarming 43. Less than a third of the countries managed to score above the midpoint.  Read More...

Can Corruption Act as a Barrier to Entry in the Private Sector

19 Tuesday Jul 2016

Posted by Muhammad Talib Uz Zaman in Asia

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business ethics, corporate governance, scorecard

Talib-Blog-Pic

This blog post was originally published by Accountability Lab. Posted on CCTrends with permission.

“Power doesn’t corrupt people, people corrupt power.” – William Gaddis

Corruption, defined as exploitation of entrusted power for private benefit is, unfortunately,  prevalent in Pakistan. It can take many forms, including bribery, graft, theft and extortion. In the corporate sector, its presence reduces business credibility when professionals misuse their positions for personal gain. Corruption has not only been identified as one of the most significant constraints to private sector development but is also becoming a leading problem for people all around the world.

Engagement in corruption depends heavily on the costs and risks involved, and these vary from region to region. Corruption in business is an economic issue, and it will linger as long as the gains from unethical behavior surpass the anticipated losses that are, in turn, closely linked to the probability of being caught.  Read More...

Ukraine Needs to Privatize its State-Owned Companies — But Rushing It Would Repeat the Mistakes of the Past

20 Wednesday Apr 2016

Posted by CIPE Staff in Eurasia

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corporate governance, corruption, privatization, ukraine

Storied aviation company Antonov, makers of the world's largest cargo plane, is in no position to be privatized.

Storied aviation company Antonov, makers of the world’s largest cargo plane, is in no position to be privatized.

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…

You’re the new compliance chief. Now what?

23 Wednesday Mar 2016

Posted by Guest in Global

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anticorruption, chief compliance officers, corporate governance

Screen+Shot+2016-03-18+at+9.45.48+AMThis blog first appeared in The FCPA Blog on March 18, 2016. It is posted here with permission.

By Worth MacMurray

Heads up: The six-month anniversary in your new position will arrive in a flash.

If you were hired as part of your organization’s response to a serious corruption allegation, you may still be in fire-fighting mode at this point, but starting to emerge for air.

If you were hired to design and implement your organization’s first compliance program, and basically to create your own role, you may be starting to encounter some obstacles.

Regardless of the circumstances of your hiring, you’ll arrive at the six-month point having likely accomplished more and laid better groundwork for the future if you ponder the following — both before you assume office and during your first few weeks on the job.

1. Manage your own expectations. The CCO role can be engaging and satisfying, particularly if one enjoys applying a variety of skills to challenging situations and issues.  Read More...

Compliance Q&A with Joe Murphy: Low Cost Compliance

17 Tuesday Nov 2015

Posted by Laura Van Voorhees in Global

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anti-corruption, compliance, corporate governance

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.

  • Why did you decide to write A Compliance & Ethics Program on a Dollar a Day?

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…

A Ray of Hope on Health Care from an Unlikely Source

12 Monday May 2014

Posted by Maiko Nakagaki in Global

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anti-corruption, corporate governance, democratic governance, egypt, governance, health care, institutions, MENA, Middle East and North Africa, transparency

SAM_3681

Health care professionals in Egypt conduct a stakeholder analysis to help spell out governance principles for Egyptian hospitals.

A hip replacement in the United States, paid for out-of-pocket (i.e., without health insurance), would cost anywhere from $11,000 to $125,000, depending on what hospital you go to, according to a 2013 survey of 100 hospitals featured on National Public Radio.  And that was among the hospitals that, when asked, could actually produce a quote – 40 of the 100 hospitals surveyed couldn’t quote a price at all.

Those fortunate enough to have insurance don’t need to worry about price-shopping.  When I go to my primary care physician, I pay a $20 co-pay.  (Under our previous insurance, provided by my wife’s former employer, it was $10.  Why the difference?  Who knows?)  I have no idea how much my insurance company pays the doctor.  I suppose I could find out, but… honestly?  There’s really no compelling reason for me to do so.   Read More...

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