1. Presentation on Mechanisms for Reducing Corruption through Private Sector Monitoring and Enforcement by Essa Faal / Thomas F. McInerney General Counsel and Head of Research and Publications International Development Law Institute (IDLO) 1

2. 2 Anti-corruption compliance What is compliance? Compliance is defined as the act of complying with wish, request, or demand. Since all countries have some laws against bribery, the private sector has a compliance obligation. Must recognize that no system could eliminate the risk of violating the law—focus on minimizing risk Policy question: how much risk of law violation is too much 2

3. 3 Developing a model of compliance Business Principles for Countering Bribery (subsequently called the Partnering Against Corruption Initiative of the World Economic Forum ) These are a series of principles that provide the structure for firm anti-bribery compliance 3

4. 4 Structure of Business Principles Two main types of principles comprise this model –First, articulation, implementation, and communication of norms, and, –Second, monitoring, enforcement, and remedial measures.

5. 5 Normative elements An enterprise wishing to adopt the Principles should develop a Programme reflecting its size, business sector and locations of operation, which should clearly and in reasonable detail, articulate values, policies and procedures to be used to prevent bribery from occurring in all activities under its effective control.

6. 6 Normative elements (cont). The Programme should be consistent with all laws relevant to preventing or combating bribery and corruption in the jurisdictions in which the enterprise operates, particularly those that are directly relevant to specific business practices.

7. 7 Normative Elements (cont.) The Principles require an enterprise to prohibit bribery in all its forms from occurring directly or indirectly, or by or through that enterprise. The enterprise should therefore determine which forms of bribery pose the greatest risks and develop an anti-bribery Programme accordingly.

8. 8 Establish policies The Programme should prohibit the offer, gift, or acceptance of a bribe or “kickback” on any portion of a contract payment or the use of other routes or channels to provide unlawful benefits to: - agents; - contractors, suppliers or employees of any contractors or suppliers; or - government officials, their relatives or associates.

9. 9 Establish Policies (cont.) The Programme should develop procedures for preventing facilitating payments and for resisting attempts at extortion.

10. 10 Oversight The Board of Directors or other body with ultimate responsibility for the enterprise should adopt the Principles, endorse a company-specific anti-bribery policy and provide leadership and active support for management’s implementation of an anti-bribery Programme. The policy should make it clear that no employee will suffer demotion, penalty, or other adverse consequences for not paying bribes even when the enterprise may lose business as a result of such employee’s refusal to do so.

11. 11 Oversight (cont.) The Chief Executive Officer is responsible for developing and implementing the Programme and ensuring that the Programme is carried out consistently and with clear lines of supervision for overseeing its implementation.

12. 12 Monitoring Enterprises should review their internal control systems to ensure that the Programme requires it to maintain accurate books and records such that all financial transactions are properly and fairly recorded in appropriate books of account available for inspection. The enterprise should ensure that it maintains no off-the- books accounts.

13. 13 Monitoring (cont.) Feedback mechanisms and other internal procedures supporting the continuous improvement of the Programme should be established.

14. 14 Implementation The enterprise shall not channel improper payments through an agent. It should ensure that: - Agents conform to the requirements of its Programme; - Agents are hired only for bona fide business purposes; - Compensation paid to agents is appropriate and justifiable remuneration for the services rendered. The enterprise should undertake adequate due diligence with respect to any such agent before hiring and adequately and fully document any relationship with such an agent.

15. 15 Dissemination of system The enterprise should communicate the Programme internally and provide the resources to support the Programme. The enterprise should develop and maintain human resources and industrial relations practices, which lead to hiring, retention and advancement of individuals capable of furthering the objectives of the Programme. This should be undertaken in full co- operation with its trade unions and other representative bodies for employees.

16. 16 Communication The enterprise should provide secure and accessible communications channels through which employees, business partners and third parties are encouraged to communicate and seek advice on any aspect of the Programme in confidence and without risk of reprisal. This will include suggested improvements to the Programme or complaints about alleged violations of the Programme. The enterprise should, where appropriate, apply sanctions to employees, suppliers or business partners for violations of its Programme and, in cases involving violations of relevant law, refer such matters to the authorities.

17. 17 Enforcement The senior management of the enterprise should monitor the Programme and periodically review the Programme’s suitability, adequacy and effectiveness and implement improvements as appropriate. Senior management should periodically report to the Board the results of its Programme review and any developments affecting the Programme.

18. 18 Other guidance The US approach of the Organizational Sentencing Guidelines has been taken as a benchmark for private sector compliance in a variety of fields. Under this approach, the adoption of a suitable compliance program may entitle an entity to a reduced sentence in the case of a criminal conviction. Rather than mandate every aspect of a corporate compliance plan, the OSGs offers a seven-level framework which establishes the minimum components of a plan.