Making “clean business” your choice

Doing “clean business” that is corruption-free is a choice and one which directors can, and must, make to protect their organisations from reputation damage, financial costs and legal liabilities.

So warned Dr Bandid Nijathaworn, president and CEO of the Thai Institute of Directors, when addressing a forum at Company Directors’ national conference on Hamilton Island last week.

He said corruption had become a difficult problem, which impeded competition, skewed the playing field, destroyed innovation and harmed the creation of value in an economy.

He noted that anti-corruption enforcement had come a long way and that many developed and developing countries were stepping up their efforts to address it and were introducing anti-corruption laws.

Among them were China, where president Xi Jinping’s campaign against corruption was growing into one of the broadest in the country’s modern history, and Brazil, where the rigorous Clean Companies Act came into effect in January 2014.  Changes have also been proposed to the UK’s Bribery Act 2010 which could see regulators getting tougher on companies which fail to prevent their staff committing financial crimes.

International initiatives included the G20 Anti-Corruption Working Group, the Organization of Economic Cooperation and Development’s Convention on Combating Bribery of Foreign Public Officials and the United Nations’ Convention Against Corruption.

Nijathaworn urged directors to ensure the conduct of their organisations was consistent with the regulations of different countries. “These are converging into one principle and evolving into more demanding standards for companies,” he said.

He also cautioned that enforcement of anti-corruption was being supported by greater cooperation between countries around the world.

“Directors need to understand that the public also expects companies to have special responsibilities and to tackle this problem. This is because companies are seen as being on the supply side of the corruption equation,” he added.

“In addition, there are increased expectations from stakeholders, including shareholders and investors, for boards to have a clear stand on corruption, especially in countries which have very active anti-corruption policies.”

Nijathaworn’s advice to the boards of Australian organisations operating on a regional or global basis was to:

  • Set a clear tone from the top of how the company is going to do business.
  • Ensure they are updated on the latest corruption policies and regulations, especially in the jurisdictions the company operates in.
  • Understand the steps management is taking to ensure the company is fully aware of the regulations.
  • Ensure clear policies are in place on how the company will handle corruption.
  • Ensure there are adequate internal procedures in place to prevent corruption and bribery.
  • Ensure these are supported by regular reviews of the code of conduct and the procurement, supply chain and other policies.

During the forum, the Australian Institute of Company Directors’ general manager of policy and advocacy Rob Elliott FAICD warned that Australia was coming under pressure because it still allowed so-called facilitation payments. Also known as "grease payments", these are low value payments designed to persuade government officials to do a task that they are already obligated to do.

“It is an area where many countries – particularly the UK, US and Canada – look at Australia and describe our regulatory settings and definitions as being out of step and not world best practice. It’s an area we will have to address pretty quickly,” he said.

Nijathaworn added: “Facilitation payments are risky because you don’t know what you are getting into. They are also complicated because different laws in different countries have different definitions of what they are.

“There are two ways you can tackle them: You can study the law and take your approach on a country by country basis, or you can take the standard and safer approach and just not allow them.”

Cyber attack large 28 May