1. Discuss the outcome of the OECD Convention on Combating Bribery of Foreign Public Officials in International Business transactions.
When trying to understand the Convention, it is important to first understand The Organization for Economic Co-operation and Development (OECD). The mission of the OECD is “to promote policies that will improve the economic and social well-being of people around the world.”[2] An international economic organization, the OECD consists of 34 countries. Founded in 1961 with the intent to stimulate economic progress and world trade, the OECD defines itself as a forum of countries committed to democracy and the market economy, providing a platform to compare policy experiences, seeking answers to common problems, identifying good practices, and coordinating domestic and international policies of its members.[3]
The outcome of the OECD Convention on Combating Bribery of Foreign Public Officials in International Business transactions was that it defined key terms and developed a “legal framework for addressing bribery” around the world.[4] Launched in 1999, the OECD Convention on Combating Bribery has been ratified by all “30 members of the OECD and by a growing number of nonmembers as well.”[5] While the OECD is not a legal body and cannot force laws on its member countries the Convention does require the member countries establish the bribery of foreign public officials as a criminal offence under their laws; and to ensure that the attempt and conspiracy to bribe foreign public officials shall be criminalized to the same extent as the bribery of national public officials.[6]
It is important to note that, while the Convention is intended to deter bribery and it does criminalize offering and/or paying bribes, it does not criminalize soliciting and/or accepting bribes.[7] Additionally, the Convention “covers only the bribery of foreign officials and not private-to-private corruption.” Perhaps most controversially, the Convention “allows ‘small facilitation payments’ to low-ranking officials.”[8]
The Convention works by including monitoring provisions based on a “peer review system common within the OECD framework. The OECD Working Group on Bribery in International Business Transactions reviews the implementing legislation of all the countries that have ratified the Convention.”[9] In a secondary phase, the Working Group on Bribery in International Transactions “examines the structures in place to ensure that the legislation is effective.”[10] Additionally, the OECD encourages “a greater role for non-governmental organizations (NGOs), such as Transparency International, in the monitoring of the Convention.”[11]
2. Which parameters are useful for companies seeking to develop their own internal systems for combating corruption?
The International Anti-Corruption Conference held in Prague in 2001 concluded that:
1. Businesses have an important role to play in improving corporate governance. Good corporate governance is a critical arm in the fight against corruption. It goes beyond the appointment of directors and reaches deeply into the internal workings of companies and into the way companies manage their diverse relationships with the societies in which they operate.
2. Making good corporate governance and anti-corruption practice meaningful and effective in large multinationals with thousands of employees straddling dozens of companies is a major management challenge. In relation to corruption, the current challenges for business include: the definition of corruption and the codification of business standards, practices and procedures that help make this definition meaningful for the day-to-day running of a business; and to ally itself with the broader efforts in the fight against corruption (by governments and civil society).
3. There is a need to build successful partnerships to improve governance standards. These partnerships will involve business, multilateral agencies, civil society and governments.
4. Some of the most telling problems with privatization or restructuring experiences can be traced to a lack of sound regulatory structures and governance practices. This allowed unwise or dishonest business practices to flourish.[12]
Taking the conclusions at their word that ‘businesses have an important role to play in improving corporate governance’, an examination of General Electric and their efforts to fight corruption and bribery seemed appropriate. General Electric (GE) was ranked at the number one spot by the Global 100 as the ‘most sustainable company’ in the world.[13] As the most sustainable, it made sense to look and see how GE approached the issue of corruption. In 2008 GE signed up for the United Nations Global Compact (UNGC). The UNGC’s mission is both as a “policy platform and a practical framework for companies that are committed to sustainability and responsible business practices. As a multi-stakeholder leadership initiative, it seeks to align business operations and strategies with 10 universally accepted principles in the areas of human rights, labor, environment and anti-corruption and to catalyze actions in support of broader UN goals.”[14]
Not only did GE sign up for the UNGC in 2008, that same year, GE Foundation “funded a three-year grant to the Foundation for the Global Compact, which aims to enhance understanding of human rights dilemmas for responsible business, thereby contributing to global thought leadership and best practice especially in emerging markets. This project, Human Rights Dilemmas for Multi-national Corporations (MNCs) in Emerging Markets, will produce extensively researched, in-depth case studies of human rights dilemmas considered from the perspective of different stakeholders, as well as a set of practical solutions to these dilemmas from different stakeholder viewpoints.”[15] In developing its own internal controls, GE, a leader in sustainability and corporate responsibility, made the decision as early as 2008 to follow international and universal principles to fight corruption and bribery. GE knows, as the world becomes ever more globalized, the need for global conventions, rules, codes and laws will only become more necessary and important. It is no longer enough to focus exclusively on the corruption or wrongdoing near at hand.
3. Identify and discuss the commonwealth corporate governance principles.
Businessdictionary.com defines corporate governance as “The framework of rules and practices by which a board of directors ensures accountability, fairness, and transparency in a company's relationship with its all stakeholders (financiers, customers, management, employees, government, and the community).”[16] Deborah Leipziger author of The Corporate Responcibility Code Book asserts that corporate governance is “a theme that is inherently linked to corporate responsibility.”[17] She goes on to say that “as corporate responsibility drills deeper into companies, the linkages between corporate governance and corporate responsibility are becoming more pronounced. As managers develop mechanisms for embedding social and environmental issues into the structure and ‘DNA’ of companies they will need to interface with issues of corporate governance.”[18] It is Ms. Leipziger’s opinion that, to institutionalize corporate responsibility, companies will need to consider issues of corporate governance, including:
- What are the responcibilities of the board of directors in terms of social and environmental issues?
- How can the company develop reporting that makes it more accountable?[19]
Toward encouraging good governance of corporations, The Commonwealth Business Council (CBC) and the Commonwealth Association for Corporate Governance published the Principles for Corporate Governance in the Commonwealth: Towards Global Competitiveness and Economic Accountability. The publication lists fifteen principles that a board of a corporation should do. They are:
- Principle 1 – exercise leadership, enterprise, integrity and judgment in directing the corporation so as to achieve continuing prosperity for the corporation and to act in the best interest of the business enterprise in a manner based on transparency, accountability and responsibility;
- Principle 2 – ensure that through a managed and effective process board appointments are made that provide a mix of proficient directors, each of whom is able to add value and to bring independent judgment to bear on the decision-making process;
- Principle 3 – determine the corporation’s purpose and values, determine the strategy to achieve its purpose and to implement its values in order to ensure that it survives and thrives, and ensure that procedures and practices are in place that protect the corporation’s assets and reputation;
- Principle 4 – monitor and evaluate the implementation of strategies, policies, management performance criteria and business plans;
- Principle 5 – ensure that the corporation complies with all relevant laws, regulations and codes of best business practice;
- Principle 6 – ensure that the corporation communicates with shareholders and other stakeholders effectively;
- Principle 7 – serve the legitimate interests of the shareholders of the corporation and account to them fully;
- Principle 8 – identify the corporation’s internal and external stakeholders and agree a policy, or policies, determining how the corporation should relate to them;
- Principle 9 – ensure that no one person or a block of persons has unfettered power and that there is an appropriate balance of power and authority on the board which is, inter alia, usually reflected by separating the roles of the chief executive officer and Chairman, and by having a balance between executive and non-executive directors;
- Principle 10 – regularly review processes and procedures to ensure the effectiveness of its internal systems of control, so that its decision-making capability and the accuracy of its reporting and financial results are maintained at a high level at all times;
- Principle 11 – regularly assess its performance and effectiveness as a whole, and that of the individual directors, including the chief executive officer;
- Principle 12 – appoint the chief executive officer and at least participate in the appointment of senior management, ensure the motivation and protection of intellectual capital intrinsic to the corporation, ensure that there is adequate training in the corporation for management and employees, and a succession plan for senior management;
- Principle 13 – ensure that all technology and systems used in the corporation are adequate to properly run the business and for it to remain a meaningful competitor;
- Principle 14 – identify key risk areas and key performance indicators of the business enterprise and monitor these factors;
- Principle 15 – ensure annually that the corporation will continue as a going concern for its next fiscal year.[20]
[1] http://www.thebusinessage.com/2009/09/08/oecd-forecasts-social-benefits-from-recession/[2] http://www.oecd.org/pages/0,3417,en_36734052_36734103_1_1_1_1_1,00.html[3] http://www.oecd.org/pages/0,3417,en_36734052_36734103_1_1_1_1_1,00.html[4] Leipziger, Deborah. The Corporate Responsibility Code Book. Sheffield: Greenleaf Publishing Limited, 2003. Page 331.[5] Ibid. Page 332.[6] International Monetary Fund (2001) OECD Convention on Combating Bribery of Foreign Public Offcials in International Business Transactions (prepared by the Policy Development and Review Department; approved by J. Boorman; Washington, DC: IMF, 18 September 2001).[7] Leipziger, Deborah. The Corporate Responsibility Code Book. Sheffield: Greenleaf Publishing Limited, 2003. Page 332.[8] Ibid. page 332.[9] Leipziger, Deborah. The Corporate Responsibility Code Book. Sheffield: Greenleaf Publishing Limited, 2003. Page 332.[10] Ibid.[11] Ibid. Transparency International Canada Inc. (1998) ‘The Convention against Corruption in International Business Transactions: Checklist for Monotoring Implementation of OECD Convention’, www.transparency.ca, accessed 2011.[12] https://docs.google.com/viewer?a=v&q=cache:3oULbN4m6DgJ:iacconference.org/documents/10th_iacc_workshop_Corporate_Governance_An_antidote_to_corruption.doc+General+electric+against+corruption&hl=en&gl=us&pid=bl&srcid=ADGEESiPtnnddXFUFYrAxEOXp7-zkziSBfwLmCZHaGrmVrfp_0v_1k29XAZramOLZoxM6hhaSNy6IirLStiZeISilKDpnHjzF3RvdKAgbZqIbO3oHnFgZdVXS1lkxGgDfnmX1TKgtmB5&sig=AHIEtbQMCSQwxrIW9fyNmgSEUAYLb3LhGg[13] http://www.global100.org/annual-reviews/2010-global-100-list.html[14] http://www.ge.com/citizenship/reporting/un-global-compact.htmlhttp://www.unglobalcompact.org/[15] http://www.ge.com/citizenship/reporting/un-global-compact.html[16] http://www.businessdictionary.com/definition/corporate-governance.html[17] Leipziger, Deborah. The Corporate Responsibility Code Book. Sheffield: Greenleaf Publishing Limited, 2003. Page 363.[18] Ibid. Page 363.[19] Ibid. page 363.[20] http://www.ecseonline.com/PDF/CACG%20Guidelines%20-%20Principles%20for%20Corporate%20Governance%20in%20the%20Commonwealth.pdf
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