BSR Conference 2012: Fast Forward / October 23-26 / New York

Tackling Bribery and Corruption Risks in Global Supply Chains

One-Hour Conversation Session / October 26, 2012

Speakers

  • Jermyn Brooks, Chair, Transparency International
  • Travis Winslow, Director, Ethics and Corporate Compliance, Carnival Corporation & plc
  • Angie Farrag, Manager, Advisory Services, BSR (Moderator)

Highlights

  • Businesses are often hesitant to implement and enforce anti-corruption policies by themselves. Forming industry coalitions drives adoption of policies and collective bargaining.
  • Recent anti-corruption conventions by the UN and OECD have driven adoption and enforcement of anti-corruption policies and regulations.
  • The UN estimates that in many parts of the world corruption adds 10 percent to the cost of doing business.

Memorable Quotes

“You can have the right policies in place, but you are still at risk of buying into problems through your suppliers. It needs to be something that is really recognized throughout the company, with everyone you are working with and all your agents.” —Angie Farrag, BSR

“Transparency is the basis for creating trust.” —Jermyn Brooks, Transparency International

“Having a policy is great, but if you don’t monitor performance and have training, awareness, and top-level commitment, your structure will collapse entirely.” —Travis Winslow, Carnival Corporation & PLC

Overview

Farrag opened the session by introducing the panelists. She explained that the session would focus on how businesses can collaborate to tackle bribery and corruption and that the panelists would discuss examples of initiatives and what businesses can do to scale and drive impact.

Farrag began the discussion by asking Brooks to comment about why bribery and corruption regulations, such as the U.K. Bribery Act of 2010, have recently increased. Brooks said it all starts with knowledge about and an understanding of the harm that corruption is causing. Two recent anti-bribery conventions released by the Organisation for Economic Co-operation and Development (OECD) and the UN have set benchmarks for anti-corruption and have been widely nationalized by member countries. The OECD convention focuses on bribery of public officials, while the UN convention is more comprehensive. Companies are now looking at bribery and corruption as problems they must address in every country they operate in. All this activity has led to increased enforcement. Currently the United States and Germany pursue more anti-corruption cases than other countries.

The moderator then asked Winslow to comment from a business perspective about how the new regulations have helped companies design programs and whether they will help steer businesses in the right direction. Winslow responded by saying he believes that they do. He has spent a lot of time interpreting the Foreign Corrupt Practices Act (FCPA) of 1977 and determining the difference between a bribe and a facilitating payment. The new regulations have cleared up a lot of gray areas and have made facilitating payments illegal. Enforcing the regulations can be difficult, but they help companies to clarify their policies. In addition, media coverage of bribery and corruption has led to smarter shareholders and customers, which pushes companies to comply. There are also business reasons to comply: Investigations are extremely expensive and lead to loss of goodwill among shareholders and customers.

In response to Farrag’s question about good reporting on bribery and corruption policies, Brooks commented that transparency means companies must face up to the issues. Reporting displays a public commitment to compliance, but companies must also look at how they implement and monitor policies. It’s very easy to issue a policy statement, but it’s much harder to implement and monitor a policy. Reporting forces a company to develop management systems around anti-corruption and bribery.

Farrag then asked both panelists to discuss potential pitfalls as the Global Reporting Initiative (GRI) and International Organization for Standardization (ISO) develop policies around bribery. Brooks commented that while GRI is a comprehensive set of measures covering all environmental, social, and governance (ESG) areas, the UN Global Compact policy is also comprehensive. It’s important that groups don’t try to recreate the wheel; it might be better to focus on existing policies.

Winslow noted that reporting can be very frightening for companies, as they don’t want to be singled out. Developing a standard approach to public reporting would help address this fear.

Farrag then turned the conversation to specific cases and asked the panelists to highlight a few. Brooks discussed the Siemens case. As a result of numerous questionable payments, Siemens had to completely change the way they look at their internal relationships with partners and had to cancel all their contracts and renegotiate them. This process forced them to become much more transparent about procurement.

The moderator then asked the panelists to comment on integrating policies into a company. Winslow noted that putting a policy in place is easy, but the challenge is monitoring and enforcing it. Having top-level commitment is very important; compliance takes time and money and can be seen as stifling business. Internal collaboration is key. All major stakeholders in the program need to understand the company policy and be on board.

Brooks then turned the conversation to industry collaboration. By collaborating with competitors, companies can more effectively implement their policies and avoid the trap of paying bribes or losing contracts. Many collaborative networks, such as the Maritime Anti-Corruption Network (MACN) and the Extractives Industry Transparency Initiative (EITI), now exist. Winslow expanded on the MACN, a group of maritime companies with similar commitments and challenges that operate in ports around the world. The coalition has allowed them to take collective action against corruption hot spots and build connections with governments. He said that both approaches have been very effective.

Farrag then closed the session with a quick wrap-up and very short Q&A period.



Thank You, Sponsors

Executive Sponsors

Cisco Hitachi PwC Target UL Responsible Sourcing

Associate Sponsors

Anheuser-Busch InBev

Supporting Sponsors

Adobe AT&T ExxonMobil Green Mountain Coffee Roasters, Inc.

Participating Sponsors

American Express Baker & McKenzie LLP Best Buy BNY Mellon Ford Hyatt Hotels Corporation The Walt Disney Company UPS Vale

Contributing Sponsors

Chevron icix Levi Strauss & Co.

Convening Media

Bloomberg Business Week Weber Shandwick

Marketing and Media

3BL Media BEF Caixin Media Corporate Knights Globescan GreenBiz Group Inc. Hemlock Responsible-Investor Sina Stanford Social Innovation Review (SSIR) Tomorrow Partners