Student Led Seminar: Business Ethics Presented by Paul Hoey, Vimala Subbrarayan, Simon Thompson, Muhammad Tala & Lisa Warne

Today’s Seminar An introduction to corruption and UK company responsibilities An introduction to corruption and UK company responsibilities Case study & breakout 1: What is corruption? Case study & breakout 1: What is corruption? Case study & breakout 2: How should we respond to corruption? Case study & breakout 2: How should we respond to corruption?

Corruption Backhanders Sweetners Baksheesh La mordida Priority service fee Commission Consultancy fee Introduction fee Graft

Some examples of alleged corruption BAE Systems and Al Yamamah I and II Coca-Cola and Pepsi water extraction in India

The UK Law Anti-terrorism, Crime and Security Act “Bribery can be defined broadly as the receiving or offering of an undue reward by or to any holder of public office or private employee designed to influence them in the exercise of their duty, and to incline them to act contrary to the known rules of honesty and integrity” (Trade Partners UK) Any payment, or offer of payment (whether in money or in kind) to a person or company overseas with a view to influencing that person’s decisions or actions or securing an improper commercial advantage would constitute a criminal offence in the UK. It contains no clear definition of what bribery or corruption is though!

The UK Law If you are the director of a UK company whose employee bribes an individual overseas, both you and they could end up in prison! If you are the director of a UK company whose employee bribes an individual overseas, both you and they could end up in prison!

Case Study 1 Scenario 1: A local government inspector has just approached the HR manager and made it clear that he would expect to find an envelope containing Rs. 200 (about £3.50) when he inspects the employment register each month. Scenario 1: A local government inspector has just approached the HR manager and made it clear that he would expect to find an envelope containing Rs. 200 (about £3.50) when he inspects the employment register each month. A UK company has just open an office in Chennai, India and they are just setting up the business. Scenario 2: A telecoms engineer on an ‘informal’ site survey suggests that the 6 month waiting time for a high- speed connection could be reduced by arranging a date with him for a fee of Rs. 5,000 (about £90). Scenario 2: A telecoms engineer on an ‘informal’ site survey suggests that the 6 month waiting time for a high- speed connection could be reduced by arranging a date with him for a fee of Rs. 5,000 (about £90). Scenario 3: The HR manager is approached by a member of staff from a competitor. He says he would be happy to join the business if he received a bonus of Rs. 2,000 (about £350). Scenario 3: The HR manager is approached by a member of staff from a competitor. He says he would be happy to join the business if he received a bonus of Rs. 2,000 (about £350). Which, if any, of these scenarios appears to be corrupt?

Case Study 2 Scenario 1 background: Local government officers (even very senior ones) receive almost no salary in India. They obtain the posts through family connections or by ‘buying’ the position from their line manager, who has often done the same. They either make a one-off payment to their ‘sponsor’ or make a monthly payment. Scenario 1 background: Local government officers (even very senior ones) receive almost no salary in India. They obtain the posts through family connections or by ‘buying’ the position from their line manager, who has often done the same. They either make a one-off payment to their ‘sponsor’ or make a monthly payment. Scenario 2 background: High-speed connections are in great demand in Chennai. The local government is trying to co-ordinate expansion by area, to avoid unnecessary and repeated digging up of the roads. They are aware that telecoms engineers from the state run company (VNSL) are offering this ‘service’ and have threatened (in the local English press) to make spot checks on VNSL or businesses. They have done nothing up to now. Scenario 2 background: High-speed connections are in great demand in Chennai. The local government is trying to co-ordinate expansion by area, to avoid unnecessary and repeated digging up of the roads. They are aware that telecoms engineers from the state run company (VNSL) are offering this ‘service’ and have threatened (in the local English press) to make spot checks on VNSL or businesses. They have done nothing up to now. As a board of directors of the UK company, how do you react to these approaches?

Summary These are real scenarios that happened less than 5 years ago. These are real scenarios that happened less than 5 years ago. The company concerned decided to pay the local government inspector, but refused to pay the VNSL engineer. The company concerned decided to pay the local government inspector, but refused to pay the VNSL engineer. Not easy, is it? Not easy, is it?

Some advice Hire good local managers Hire good local managers Hire a good local lawyer Hire a good local lawyer Make sure you know what is happening – the site should be visited frequently or have a senior UK manager located there Make sure you know what is happening – the site should be visited frequently or have a senior UK manager located there