Newsletters May 4, 2016

Update Spring 16

Is corporate governance effective?

According to the OECD, good corporate governance is the means by which economic efficiency, sustainable growth and financial stability can be supported. It facilitates access to capital for long term investments and helps ensure that shareholders and other stakeholders are treated fairly.

While corporate governance rules and practices have improved in many countries over the last decade, there is still much to be done. As the VW case shows, when the board is not on top of what is really going on, the consequences are far reaching.

In the last five years Toshiba, Tesco and VW have all dealt with expensive and highly damaging scandals, begging the question are boards sometimes asleep at the wheel? Are the corporate goals balanced with the need to manage risk and protect reputation?

While boards do have a fiduciary duty to deliver returns to shareholders, long-term sustainable success involves more than producing favourable quarterly returns.

Real sustainability needs the key components of effective board practice to be firmly in place, namely the underlying principles of all good governance: accountability, transparency, probity and a focus on the long-term.

GoodCorporation is increasingly being asked to advise on effective governance practices as well as ethical conduct and responsible business management.

If you would like to talk to us about testing, strengthening and embedding effective corporate governance, please get in touch.

Michael Littlechild

From Safe Harbour to Privacy Shield

Following the European Commission’s decision to overturn the framework through which the personal data of EU citizens is protected when transferred to US organisations, there have been protracted negotiations to provide a viable alternative.

A replacement framework has now been announced, known as the EU-US Privacy Shield. The new arrangements aim to impose stronger obligations on US companies to protect personal data and ensure greater enforcement measures by US authorities. It also aims to provide increased rights of address to EU citizens.

However, as the Privacy Shield is yet to come into force and guidelines as to how companies should proceed have not been produced, how should organisations respond? Doing nothing and waiting for the details to be announced is not recommended.

The goodblog lists a number of steps for consideration, including incorporating model clauses into contracts, establishing an approved set of binding corporate rules or employing anonymisation techniques. Companies can also use our Data Protection Framework to assess provision.

Our next Business Ethics Debate will look at enforcement and non-compliance risks in light of both the forthcoming Privacy Shield and the General Data Protection Regulation. Jonathan Bamford from the Information Commissioner’s Office will be speaking. If you are interested in receiving an invitation to this debate which is taking place at the House of Lords on May 26, please contact us.

In Brief...

Are sports governing bodies doomed to fail?

GoodCorporation launched its Sports Governance Framework at our January Business Ethics debate.

Shaila-Ann Rao, former CEO of Sportfive International led the debate with the suggestion that sports governing bodies are doomed to fail.

Weak governance structures, lack of corporate expertise, a glorification of the sporting ideal and a lack of courage to challenge wrong-doing were all cited as reasons why sports governance is beset by problems.

Stronger governance is badly needed in many sporting bodies. Codes of ethics must be adopted, with effective compliance teams in place to ensure enforcement. Integrity is vital in sport and a greater commitment to this is needed to ensure fair play at all levels.

Click here to read the debate summary in full.

Managing Sales Agents

Greater scrutiny of agents and third parties has been an undoubted consequence of the UK Bribery Act.

Companies are being sold a range of options for checking and counter checking. However much of it will be a waste of time if organisations fail to undertake due diligence in proportion to risk.

The best companies are moving to eliminate the use of sales agents. However, some are stuck and feel they cannot survive without them. The goodblog explores what needs to be done when agents are an avoidable necessity and discusses how they should be managed and paid.

Combating corruption: the global context

Robert Barrington, Executive Director of Transparency International UK opened our business ethics debate with a summary of the global landscape.

Legislation is being strengthened; countries are under pressure to be open and transparent about public data; the discourse around corrupt political systems and regimes is becoming more vocal; social media is proving to be a game changer for anti-corruption campaigners.

Yet enforcement remains weak; individuals and organisations are not being held properly to account. The playing field is far from level.

Click here to read in full.

Newsletters February 8, 2016

Winter 2015/6

GoodCorporation launches Sports Governance Framework

Corruption scandals are hardly new to sport: cycling, horse racing, cricket, snooker, motor racing and even the Olympics have all had some pretty serious issues to deal with. Allegations of bribe-paying at Fifa rumbled on for years before any arrests were made. Hot on the heels of Fifa, the IAAF and tennis now find themselves under the spotlight.

To help governing bodies ensure that they have strong governance policies and procedures in place, GoodCorporation is launching a Sports Governance Framework which will enable sports organisations to evaluate how well their practices are working.

The framework covers the governance structures, risk assessments and due diligence checks necessary to ensure that good management is in place and that the integrity of sport is protected through proactive measures to prevent misconduct such as corrupt betting, doping and other forms of cheating.

Our framework will be launched at our next Business Ethics Debate at the House of Lords on February 11 when Shaila-Ann Rao, former CEO of Sportfive International will lead a discussion entitled Governance in Sport: what does good look like?

Big businesses big risks: how should global companies tackle the problem?

Our first Business Ethics Debate in Geneva looked at the risks faced by large organisations and how industries can work together to mitigate risks and raise standards.
The discussion was introduced by Antti Heinonen, chairman of the Banknote Ethics Initiative (BnEI) and a former director of the European Central Bank. Born out of a need to raise standards across the industry following several scandals, BnEI is a membership scheme which requires prescribed standards of ethical behaviour for participating organisations. Accredited members undergo an independent assurance that standards of behaviour meet the BnEI Code of Ethical Practice.
To date the scheme has been endorsed by 29 central banks. Canadian Bank Note is the ninth organisation to have undertaken the accreditation process.
While this scheme is gaining real traction in the banknote industry, there are relatively few successful schemes in other sectors. The debate explored reasons for and against as well as the possible need for a catalyst to make the need for change a top priority. Click here to read the debate summary in full.

Human Rights, Reporting and the Modern Slavery Act

Legislation such as the Modern Slavery Act and the forthcoming EU Non-Financial Reporting Directive are driving human rights issues up the corporate agenda, but are businesses doing enough to minimise human rights abuses and will the Modern Slavery Act make a difference?

Frances House, deputy executive director of the Institute for Human Rights and Business introduced our debate on this subject. The debate explored the strengths and weaknesses of the Act and there was a broad sense of optimism that the response of corporates would make a difference.

Given that reporting is now mandatory for organisations conducting business in the UK with a turnover in excess of £36m, what should a good statement look like and how can a company be assured of its content?

As with the Bribery Act, there is recognition that no organisation can make firm guarantees; the issue once again relates to the adequacy of the procedures taken to understand the risks and to tackle the problem effectively.

Good statements should cover six key areas:

An analysis of the organisation’s structure, business and supply chain.
Policies in relation to slavery and human trafficking
Slavery and human trafficking due diligence processes
Steps taken to manage and mitigate the risk
The risk of slavery and human trafficking in the supply chain
Measurement of effectiveness of these steps to mitigate
Training and communication on these practices and procedures

In our experience, the most difficult areas to tackle will be assessing the effectiveness of measures taken to prevent slavery and human trafficking and putting a measurement system in place to demonstrate an improvement over time which the government expects to see.

GoodCorporation is experienced in developing robust policies and procedures to tackle Human Rights and Modern Slavery abuses. We also have effective assessment and measurement methodologies which enable companies to benchmark performance and measure improvement.

In Brief...

Big Pharma and the Sunshine Rule

GoodCorporation has worked with a number of clients in the Pharma sector assessing and measuring business ethics practices and compliance with the Pharma Code.

Our Business Ethics Debate on the forthcoming Sunshine Rule posed the question Can the Pharma industry achieve transparency with self-regulated disclosure?

While many have welcomed the new rule, some barriers to transparency remain. The debate looked at the likely effectiveness of self-regulation versus the need for legislation.

Pharma Times attended the debate and covered the issue this month.

Building better banks

It is widely acknowledged that the Financial Conduct Authority faces a difficult task. 2015 was described as an annus horribilis for the regulator and 2016 began with a grilling from the Treasury Select Committee for dropping the culture review of Britain’s banks.

While the FCA may not be experts on working culture, the procedures for testing and measuring ethical conduct are well established. The Department of Justice regularly carries out surveys of ethical culture when a company is prosecuted for bribery and corruption. GoodCorporation routinely measures ethical conduct and benchmarks performance across industries and sectors.

The banking scandals that lead to the financial crisis were caused by ethical failures. It’s hard to see how avoiding a review of practice and procedures amounts to good regulation. It fails to provide any guarantees that history will not repeat itself and denies those banks that have worked hard to change culture the recognition they deserve.

House of Lords Debate: Why do good companies behave badly?

This was the title of the final Business Ethics Debate of 2015 introduced by John Kay. The discussion focused on the goals businesses set and the role they play within the wider community.

John argued that long-term planning that embraces business development goals and objectives breeds success and delivers shareholder returns. However, when maximising shareholder value becomes a primary aim, it becomes all too easy for the business model to fail.

The debate examined corporate behaviour, purpose, profit, quarterly returns and the role of the shareholder.

The goodblog

The latest posts on the goodblog look at debarment and deregulation.

We argue that enforcing exclusions from public tender could and should be used more effectively to drive change and reward those organisations that play by the rules.

Our blog on deregulation looks at why good regulation is pro-business and why companies support the UK Bribery Act.

Newsletters October 21, 2015

Update Autumn 2015

Is compliance keeping you up at night?

Breaching regulations is an expensive business as Volkswagen has discovered. Within hours of the revelation going public, the company had lost a fifth of its market value, its managers faced criminal charges and several billion dollars had been removed from the bottom line to pay for the recall and inevitable fines. Described by some as the Libor of the car industry, the emissions scandal shows how quickly and deeply companies can be damaged.

VW is not alone in paying a hefty price; prosecution authorities have become much more active. So far this year, the Financial Conduct Authority in the UK has fined companies in excess of £800m and businesses are also vulnerable to fines from the Serious Fraud Office of up to 400 per cent of any illicit profits from bribery, fraud or money laundering.

Not surprisingly compliance teams are taking a long hard look at how to avoid such scenarios. We are increasingly working with clients to test and strengthen their compliance function and can see an ethics-based approach clearly emerging as best practice.

Companies are realising that compliance efforts are more likely to fail if they are not underpinned by a strong ethical culture. If the ethical values of the code of conduct are properly embedded then compliance is more likely to be assured across the many aspects of a business governed by regulation and legislation.

The latest goodblog looks at the steps needed to put robust compliance in place and ensure a good night’s sleep. GoodCorporation client Tullow Oil summarises their approach below. We also include reports from our business ethics debates, our appearances on the conference circuit and other news.

If you would like to talk to us about testing or strengthening your compliance programme, please get in touch.

DOJ to focus on individuals in corporate crime cases

In September the Department of Justice (DOJ) issued a memorandum from the Deputy Attorney General announcing the Department’s intention to pursue aggressively any individuals involved in corporate crimes.

According to the memorandum, the DOJ believes that seeking to hold individuals to account for perpetrating illegal misconduct is one of the most effective ways of combating white-collar crimes. Such accountability, the Department believes, will deter future illegal activity, incentivise change in corporate behaviour, ensure that the proper parties are held responsible and promote public trust in the justice system.

The memorandum, known as the Yates Memo, has identified six ‘key steps’ that will enable DOJ attorneys to do this.

See the goodblog for details of the six steps and what this might mean for international businesses.

Building an ethical compliance function

Tullow OIl has long recognised that compliance and high ethical standards are critical to good corporate governance. The company’s Code of Business Conduct is widely promoted to all staff and business partners, and its anti-bribery and corruption programme has twice been independently reviewed by GoodCorporation. In 2014, it was ranked in the top quartile of GoodCorporation’s benchmark of anti-corruption adequate procedures reviews.

Building on this commitment, Tullow invited GoodCorporation to provide expertise on how to strengthen its compliance function still further by underpinning the rules with a greater emphasis on the company’s ethical values.

This has involved:

An organisational risk assessment to identify which business function is responsible for which area of ethical risk and how these risks are governed by the Code of Business Conduct.
Allocation of responsibility for compliance with the Code within each department
Identification of the structure and resources necessary to deliver compliance by department
Advice on a measurement system identifying relevant KPIs to enable an assessment of effective compliance
Definition of a reporting and assurance framework to identify what should be reported and how an assurance of ethical conduct could be undertaken and delivered to the Board.

GoodCorporation leads debate at Compliance Week Europe event

As the multimillion dollar fines show, the failure to prevent bribery is a costly affair. So how can a business decide when its anti-corruption procedures are adequate?

GoodCorporation will be posing this question in the closing session of the first day of Compliance Week Europe in Brussels, October 26-7.

Leo Martin will moderate what promises to be a vigorous debate between conference attendees and fellow panelists Christopher David, Counsel at Wilmer Hale and Danone SA Chief Compliance Officer Alexander Jungling.

In Brief...

Are businesses losing the fight against corruption?

Andrew Feinstein, founder of Corruption Watch UK, author and former ANC MP, opened our Businsess Ethics Debate on the fight against corruption with an assessment of the global corruption landscape.

Tougher legislation such as the Bribery Act has led to many organisations strengthening their anti-corruption policies and procedures.

Law enforcement agencies are taking a more serious cross-border approach to pursuing corruption, making prosecution harder to avoid.

There has also been an increase in self-reporting, with the US remaining aggressive in its pursuit of corrupt corporates and in its drive to encourage others to tighten their laws.

Nonetheless, corruption scandals continue to emerge and despite improved legislation, the UK has moved down Transparency International’s Corruption Perceptions Index since 2010.

Andrew emphasised that corruption is not a victimless crime but has a real impact on society, undermining the rule of law, the correct functioning of the market and diverting resources away from essential development needs.

The problems businesses face were discussed in detail along with steps that can be taken to mitigate risk and tackle the problem effectively, including tougher sanctions, speak-up systems, collective action and strengthening the ethical culture.

Read the debate summary in full here

Anti-Corruption Boot Camp

Leo Martin led delegates at London’s LegalConfex in September through the Anti-Corruption Boot Camp with thought-provoking contributions from fellow-panelists Omar Qureshi from Cameron McKenna and Sean Thomas of Hewlett Packard.

The panelists discussed a range of compliance challenges including the key difficulties in implementing robust ABC controls on the ground; where the Serious Fraud Office, Department of Justice, Securities Exchange Commission are going; is cross-country co-operation working?; what is the impact of non-compliance; what are the traps and risks when under investigation and when are procedures adequate?

Key points to note included:

The need to set the right tone form the top in Joint Venture arrangements with the possible assistance of an independent supervisory board
The importance of due diligence and common sense to make sure the right questions are being asked (e.g. Are our licences being acquired too quickly?) to avoid bribery being effectively outsourced via third parties
Increased scrutiny of facilitation payments by the DOJ

Newsletters July 24, 2015

Update Summer 2015

GoodCorporation launches Anti-Corruption Benchmark

GoodCorporation has been working with international organisations since the start of the millennium testing the strength and effectiveness of their ethics and compliance programmes. Following the passing of the Bribery Act, we have also been asked to test the robustness of adequate procedures using the GoodCorporation Framework on Bribery & Corruption.

As a result of these assessments we have now been able to produce an adequate procedures benchmark.

Companies can use the benchmark to measure the effectiveness of their anti-corruption procedures either independently or compared to similar organisations.

We can also benchmark ethical behaviour using the results of the 500 business ethics assessments conducted over the past 15 years.

Being sure that an ethics and compliance programme is properly embedded is crucial to mitigating risk and protecting reputation. Corporate behaviour is driven by the code of conduct. Best practice is starting to be recognised in this area, with many leading organisations working hard to establish the highest of standards.

While codes of conduct have been around for decades, with Johnson & Johnson’s Credo among the first published in 1943. It was Sarbanes Oxley in 2002 that required public companies to have a code for senior executives that bolstered their importance.

Today, most companies have a code, it’s making sure it really works that is the real challenge.

BBC publishes GoodCorporation's review of its child protection and whistleblowing policies

The BBC has published GoodCorporation’s review of its child protection and whistleblowing policies. The review involved a detailed assessment of the BBC’s policies and procedures in these key areas. it included interviews with senior BBC managers, employees, freelancers and independent production companies.

For more details and to download a copy of the report, visit the <https://www.bbc.co.uk,1″>BBC website

Are businesses losing the fight against corruption?

Good businesses need a level playing field if they are to compete fairly in a global market place. The spate of recent corruption scandals however, would suggest that despite the efforts of prosecutors and legislators around the world, bribery is still very much part of doing business.

GoodCorporation invited Andrew Feinstein, Founder of Corruption Watch UK to introduce this topic at our summer Business Ethics Debate at the House of Lords.

Are businesses losing the fight against corruption? was discussed by senior executives from a range of national and international companies on July 14. A summary of the debate will be posted on the GoodCorporation website.

GoodCorporation’s House of Lords debates are by invitation only. If you are interested in attending, please contact us.

When can anti-corruption procedures be deemed adequate?

GoodCorporation will be posing this question in the closing session on Day One of Compliance Week Europe in Brussels, October 26-27.

As the multimillion dollar fines clearly demonstrate, failure to prevent bribery is a costly affair that continues to hit the headlines. As risk levels and regulations vary from country to country, how can a multinational ever be sure it won’t be caught out in a distant part of the globe?

Leo Martin will moderate what promises to be a lively debate between conference attendees and panelists Christopher David, Counsel at Wilmer Hale, London and Danone SA Chief Compliance Officer Alexander Juengling. See the agenda for more details.

For a discount off the registration fee, please use the following code CWE15_GOODCORP.

In Brief...

The Bottom Line

With corruption leading the headlines following the Fifa revelations, BBC Radio 4 debated the bribery risks to which businesses are exposed on The Bottom Line.

Leo Martin joined Evan Davis for the discussion. Managing facilitation payments, risks to life and limb, gifts and hospitality, conflicts of interest, loss of revenue and public outrage are all covered under bribery legislation.

Can businesses really stamp it out or must we accept that corrupt payments will always be part of doing business? Evan Davis leads the discussion.

Slave Labour

The UK’s Modern Slavery Act passed earlier this year, claims to be one of the first in the world to specifically address slavery and trafficking.

The Act provides law enforcement agencies with the tools required to tackle modern-day slave masters introducing far tougher sentencing and greater protection for victims

In addition, Section 54 includes a provision requiring large businesses to produce an annual statement on the actions they have taken to ensure their supply chains are free of slavery, forced or compulsory labour.

These reporting requirements are expected to come into force from October 2015, however there is concern that the government has yet to define what it means by ‘large company’.

Nonetheless companies are urged to assess slavery risks and conduct rigorous due diligence in the supply chain.

The goodblog examines the steps companies should take in more detail.

GoodCorporation has already worked with clients to assess their human rights’ impact and to review labour conditions in the work force.

A detailed ethics and human rights assessment of Total SA’s operation in Myanmar was conducted with the Danish Institute of Human Rights.

A case history of this assessment is now available on the GoodCorporation website.

What Fifa should do next?

With seven executives under arrest, 18 charged with tax evasion and racketeering in the US and 53 possible cases of money-laundering being investigated by the Swiss, the spotlight is clearly on.

Mr Blatter may have resigned, but he remains in post until December. While proposals for integrity checks on all top Fifa officials have been backed, the New Yorker states that what Fifa needs is a miracle.

While it may take a miracle to bring good governance about, none of it is rocket science and all of it could be implemented with the right leadership.

GoodCorporation will be publishing recommended actions for Fifa in the August issue of Governance & Compliance Magazine

Conference Season

GoodCorporation exhibited at the C5 Anti-Corruption Forum London last month. Excellent sessions from David Green, SFO, Osama Al Jayousi, Carillion and Kathryn Higgs, Balfour Beatty.
In September Leo Martin will be joining the Anti-Corruption Boot Camp panel discussion at Legal Confex. The session aims to provide the tools necessary to avoid investigations, remain compliant and monitor third party conduct.

Newsletters April 16, 2015

Update Spring 2015

Business ethics and the election

With the UK General Election weeks away, the parties are setting out their platforms and all are promising to deliver a strong economy, with good job prospects and a balanced budget.

Despite much rhetoric over the years regarding the need to restore trust in business, none of the parties has felt the need to put ethics on the agenda. Is ethics simply not a vote winner?

According to a ComRes poll published earlier this year, this isn’t necessarily so. Their survey of 2000 British adults found three quarters (72%) think that the next Government should make it a priority to promote ethical practices among big businesses.

Other surveys published over the past 12 months have indicated that levels of trust in business have fallen globally. The Edelman Trust Barometer for 2015 registered an ‘evaporation of trust’, while the Deloitte 2014 Global Survey on Reputation Risk found that among C-suite executives, 55% felt that risks related to ethics and integrity were their top concern.

From the work we do with a range of clients across the globe, in a variety of sectors, ethical issues are very much on the agenda. Corporates are continuing to invest substantially in strengthening adequate procedures. To underpin efforts to combat corruption, we are also seeing investment in ethics and compliance and in ethical corporate culture. Businesses are increasingly keen to benchmark their performance in this area and work on any improvements needed.

Business ethics may not be on the political agenda, but it is very much on the corporate one. Politicians may be shy of using regulation to bring about an ethical change in businesses; beating business with a stick has never been a real vote-winner. However, given the work that so many companies are doing, is it time for politicians to offer a carrot?

Rewards for businesses that demonstrate ethics and integrity could reinforce any claims to be building a strong economy. Government is a big buyer of private sector services and could choose to only work with untarnished organisations. Rewards could do more to reverse the evaporation of trust than any regulation and may even win a few votes along the way.

Child Protection: How can businesses ensure robust and adequate procedures?

GoodCorporation’s opening Business Ethics Debate of 2015 looked at the steps businesses need to take to ensure adequate safeguarding protection for children.

The framework for protecting children in the UK is firmly rooted in legislation, policies and principles, with people employed throughout the public sector to ensure that the law is adhered to and policies are implemented.

Safeguarding children is a dynamic issue. The current safeguarding reviews and in particular the forthcoming review into historical sex abuse, led by New Zealand High Court judge Lowell Goddard, will almost certainly lead to statutory changes requiring a high level of vigilance on the part of companies.

Reporting child sexual abuse could become a mandatory responsibility as it is in a number of US States and Canada. Keir Starmer has already made a call for such legislative changes and it is expected that the forthcoming Dame Janet Smith Review into the BBC and the review of historical abuse will also support such legislation.

Our debate looked at the steps businesses should take using a risk management approach and the problems that may need to be overcome.

Click here to read the debate summary in full.

GoodCorporation's Data Protection framework can help companies comply with EU Data Protection Regulation

With significant reforms to EU Data Protection expected to come into force by the end of 2016, businesses will be required to demonstrate robust governance of their data protection.

Companies will need to show that they have identified risks and provide a level of assurance that controls are in place to comply with the new laws.

This is the first reform of data protection regulation for many years and will create a pan-European law with much tougher sanctions. Breaches of the new regulation could lead to fines of up to five per cent of annual turnover.

The best organisations take great care to protect their data properly, seeing it as an essential part of treating customers fairly.

The GoodCorporation Data Protection Framework helps organisations ensure that they have the correct systems in place, enabling them to demonstrate robust governance of their processes.

Click here to see the framework.

Compliance Week Europe 2015

Leo Martin will be leading a debate on “When can anti-corruption procedures be deemed adequate?” at Compliance Week Europe in Brussels on October 26 2015. For a discount of €100 off the registration fee, please use the following code CWE15_GOODCORP

In Brief...

GoodCorporation completes more auditing work for the Banknote Ethics Initiative

Three more companies have been audited by GoodCorporation as part of the Banknote Ethics Initiative (BnEI), designed to maintain high ethical standards across the banknote industry.

Arjowiggins Security SAS, Note Printing Australia Ltd and SICPA SA have all successfully completed their independent audit to become fully accredited members of BnEI.

Eight companies have successfully completed the accreditation process, demonstrating commitment within the industry to adopting ethical practices and taking a stance against corruption and anti-competitive behaviour.

The European Central Bank and the 19 European Central Banks from countries that have introduced the Euro have just announced their support for BnEI. This brings the total number of central banks from around the world to publicly declare their support for this initiative to twenty seven.

Restoring public trust

At a business breakfast for the Investing in Integrity Charter Mark, the Lord Mayor of London Alderman Alan Yarrow spoke of the need for businesses to improve their culture and also reassure the public that they are trustworthy.

Investing in Integrity is a Charter Mark founded by the Institute of Business Ethics and the Chartered Institute of Securities and Investment. It enables an organisation to demonstrate a genuine commitment to ethical conduct and behaviour.

GoodCorporation developed the assessment framework for Investing in Integrity which involves a two-stage process. Stage one is a management self-assessment survey; stage two involves an external audit, by GoodCorporation, to verify the self-assessment.

Site visits, staff interviews, an employee survey and reviews of documentation are all part of the stage two process which is designed to provide evidence that what a company thinks is happening is really working on the ground.

Treating Pensioners Fairly

The recent liberation of pensions has led to warnings that pensioners could become the victims of yet another mis-selling scandal.

GoodCorporation has called for pension freedoms to be matched with information and regulation to ensure that savers not ‘scammers’ come out on top.

Mint Condition

Following on from a series of articles in Governance & Compliance on corruption risk in the BRIC countries, GoodCorporation has looked at the risks associated with doing business in the MINTs.

Mexico & Indonesia

Nigeria & Turkey

Newsletters January 12, 2015

Update: Winter 14/15

Combating corruption: are businesses doing enough?

A key area of our work in 2014 working was helping companies to test and strengthen their anti-corruption controls. We saw some excellent practice implemented, but also know how difficult it can be in some of the world’s more challenging markets.

Consequently, many organisations are still struggling to implement robust procedures. Our anti-corruption white paper Combating corruption: are business doing enough? revealed that over a third of the anti-corruption controls we have assessed were found to be inadequate.

Corruption is likely to remain high on the corporate agenda in 2015, with the multimillion pound fines we have seen in the recent past looking set to continue.

The Government has reinforced its commitment to tackling corruption with the publication of the UK Anti-Corruption Plan in December, pledging to strengthen law enforcement and increase protection for those who report corruption.

Whistleblowing is therefore likely to retain its prominence in the coming year, with companies seeking to implement effective systems to monitor concerns.

Other business ethics issues that are likely to come under the spotlight in 2015 include directors’ remuneration, corporate taxation, forced labour, slavery, trafficking and child protection.

The challenges are plentiful and we wish you all the best for the coming year.

Michael Littlechild

Anti-corruption due diligence the hardest control to put in place

Sixty three per cent of the anti-corruption due diligence controls that we assessed were graded inadequate.

Developing a process to get this challenging area right is vital for businesses. Failure to do so places companies at greater risk from corrupt practices. It also weakens any defence should corruption occur and charges are brought. As investigations into GSK, Rolls Royce and Alstom have shown, companies are more at risk from corruption by third parties and intermediaries than in any other area of their business.

With many multinationals having tens of thousands of suppliers it is not surprising that this is proving to be a problem.The temptation to do superficial due diligence on thousands to tick the right box is great.

However, the best approach is to begin with a careful risk-based assessment of suppliers, to identify those that pose a real threat to the organisation.

Carefully designed decision trees can be invaluable, but few companies are using them effectively to risk-assess suppliers in order to gauge a level of due diligence that is appropriate and reasonable. The best companies take a proportionate approach, applying a range of checks depending on any red flags identified.

Gap emerging between those companies succeeding in putting adequate procedures in place and those that are not?

While the overall results of our white paper show that businesses are generally struggling to embed strong adequate procedures, we are also seeing the emergence of a considerable gap between high and low performing companies.

In analysing the results of our assessments, we divided the companies into four quartiles, according to average assessment grades. The disparity between the top and bottom performing companies is striking. The biggest gap is in the area of ABC controls in government and regulatory affairs where 80 per cent of the companies in the bottom quartile have inadequate procedures versus only 6 per cent in the top quartile.

Our white paper looks at the reasons why and provides examples of best practice.

In Brief...

UK Bribery Act: a powerful tool or a damp squib?

This was the question raised at our winter Business Ethics Debate at the House of Lords when we looked at the UK Bribery Act and the progress companies have made putting adequate procedures into place.

At the debate, the Bribery Act was likened to corporate manslaughter legislation; coming in with a clarion call but to little effect as prosecutors resorted to soft cases to bring about a conviction resulting in little real change.

While it is clear that the Bribery Act has changed the debate, its real impact on corporate behaviour may well depend on forthcoming cases.

The Act has undoubtedly moved the goalposts, knocking the US Foreign Corrupt Practices Act off its perch as the gold standard of anti-corruption legislation, to become widely regarded as the new benchmark.

Businesses are rightly preoccupied about enforcement and the prospect of prosecution.

Part of this picture is the introduction of Deferred Prosecution Agreements (DPAs), widely considered to be the most significant change to law enforcement weaponry.

However, while they were welcomed, businesses were advised to proceed with caution. Getting this right will be vitally important for organisations. If a company is too slow, the SFO may already know of the offence and the chance to do a deal will be gone. Too quick, and you risk telling the SFO something they may never have found out and have to live with the consequences.

Businesses were advised to take a deep breath and launch a swift but rigorous investigation before attempting to obtain a DPA. A thorough assessment of the problem is needed along with an understanding of whether or not a DPA will be offered. Unlike the States, a DPA is not considered a right in he UK, but is the result of a court procedure.

A strong ethical culture that permeates throughout an organisation was seen as essential to the solution. Equally important is the need to demonstrate that adequate procedures are in place and working effectively.

Compliance teams were advised to ensure that appropriate audit systems were in place generating a paper trail to show compliance should the need arise.

Can companies do business ethically in the Middle East?

A group of senior figures from a cross-section of multinational organisations joined GoodCorporation for the Autumn Business Ethics Debate at the House of Lords in October.

With five countries in the region in the bottom ten of Transparency International’s Corruption Perceptions Index 2014, this is clearly a problematic part of the world in which to do business.

Particular areas of concern were discussed including the use of agents and intermediaries, gifts and hospitality, facilitation payments and the treatment of workers on construction projects. Public procurement also remains weak in poorly governed states, posing a real risk to companies.

For a full summary of the debate visit our website

Newsletters November 3, 2014

Autumn 2014

Leading the Debate

Our international work continues apace. GoodCorporation teams have completed assessments in ten countries since the last issue in June, including Venezuela, Indonesia, Russia, Tunisia, Australia and Jordan, strengthening our expertise in helping businesses embed an ethical culture in a global marketplace.

Ethical culture remains high on the management agenda as businesses continue to acknowledge the role it plays in compliance, reputation management and risk mitigation.

Our Business Ethics Debates reflect this thinking. This month in Paris we debated anti-corruption compliance and third party risks; examined how to establish a speak-up culture in Brussels and in London we asked if business can be done ethically in the Middle East.

The Paris and London events were by invitation only, but the Brussels debate was part of the Compliance Week Europe annual conference. Details of the discussions will be posted on the Business Ethics Debate section of our website.

Speaking Up in the NHS

Promoting whistleblowing was a key recommendation of the public inquiry into the Staffordshire Hospital scandal. A number of steps have been taken in England, but the campaign group Patients First warns that there is still a ‘culture of fear’ in the NHS. According to an NHS national staff survey, the proportion of staff reporting being bullied, harassed and abused by colleagues has risen from 14 per cent in 2010 to 22 per cent in 2013.

Worse still, another recent NHS staff survey found that only 40 per cent of staff felt that concerns raised would be dealt with appropriately.

Following the recent scandals, NHS trusts are increasingly recognising that creating an open culture where staff and patients can speak up freely, without fear of reprisal is key to improving patient safety and preventing harm.

Regulators are looking for evidence that senior management in healthcare organisations have taken steps to create a ‘speak up’ culture, with robust whistleblowing systems effectively in place to ensure concerns are appropriately dealt with.

In addition to an open-door environment, the best solution is to have a separate, credible grievance procedure for handling individual complaints, with a separate whistleblowing mechanism to handle issues of general concern.

GoodCorporation can provide guidance on how to create an open-door culture, differentiating staff grievances from legitimate business concerns and establishing a credible whistleblowing system. Our Whistleblowing Framework helps organisations ensure that concerns can be raised without fear. We have experience in a range of commercial and public organisations including the BBC, the NHS and the Department of Health.

Embedding an Ethical Culture

Since the Bribery Act became law in 2011, GoodCorporation has conducted over 50 anti-corruption assessments around the globe to test whether organisations have succeeded in embedding adequate procedures to prevent corruption.

Many of our clients recognise that this can only be achieved by checking to see what is actually working on the ground: ensuring that the ethical culture set out by senior management is properly established.

Our approach to this usually begins with a high-level review of corporate policies relating to anti-bribery and corruption, involving face-to-face interviews with senior management and a critique of policies and procedures.

Following this, we recommend an in-depth audit at site level to test whether ABC practices are really embedded. Working with our own team, but often in partnership with the internal audit department, we interview managers, employees and suppliers at site and and head-office level to test the effectiveness of a company’s Anti-Bribery and Corruption (ABC) programme. Anti-corruption clauses, invoice review procedures and other anti-corruption practices are all put to the test, resulting in a clear understanding of the effectiveness of the ABC programme and a plan of action to ensure it remains successfully embedded.

While the Bribery Act is yet to put anyone to the test, it is clear from Ministry of Justice guidance that regular monitoring and evaluating of anti-bribery procedures is considered a necessary part of anti-corruption mitigation. Whether this is conducted internally or using external mechanisms such as the GoodCorporation Anti-Corruption Framework, organisations must ensure that practices and procedures are properly embedded, not just at head office, but throughout their operation.

In Brief...

GoodCorporation expands project management team

Senior consultants Jeremy Allan and Michael Clarke joined GoodCorporation’s project management team this Autumn to lead our assessment work across a variety of sectors.

Jeremy has over 15 years of professional services’ experience, holding senior positions at both Ernst & Young and KPMG. He has led global risk assurance programmes for FTSE 100 companies and carried out anti-corruption work in both the Middle East and the Americas. He has led sustainability programmes and has expertise in human resources, supply chain management and human rights.

Michael has senior management experience in both the public and private sectors, working for government and FTSE 100 organisations in healthcare and global security, including Serco and G4S. He has led the development and roll-out of global anti-corruption programmes and has particular expertise in stakeholder engagement and reputation management.

GoodCorporation has also extended its intern programme. Lisa Olsthoorn joins us from the Netherlands where she has recently obtained a masters degree in Conflict Studies. Prior to joining GoodCorporation, she undertook an internship at the Ministry of Foreign Affairs in The Hague.

Getting to grips with gambling controls

As the Gambling Commission consults on new licensing standards that could include a social responsibility code as well as advertising restrictions, four of Britain’s biggest bookmakers have formed The Senet Group in a move to promote responsible gambling.

At this stage their initiatives focus on advertising: removing adverts for touch-screen roulette machines from their windows and refraining from advertising “free bet” sign-up offers on TV until after the watershed. However, there is also a proposal to fund an educational campaign on problem gambling and ensure that more responsible gaming messages are communicated.

While all this is welcome, it is still only scratching at the surface of responsibility.

In the goodblog, we argue that with participation in gambling activities on the rise in the UK, the industry should take a more proactive stance, monitoring for and intervening when problem gambling activity is detected. Our blog looks at the model that could be used and the steps that could be taken.

Read the story in full here.

Newsletters July 18, 2014

Update Summer 2014

It's time to change behaviour not the rules

The problem with rules is that there are never quite enough of them. This is particularly the case in business where situations often evolve before the rule has been invented, leaving regulators to play catch-up, while those caught out restore tarnished reputations.

Regulators on both sides of the Atlantic are busy tightening the rules, but if all this does is create more tick-box compliance, experience tells us that little will change. Scandals will emerge and businesses will find themselves exposed when staff make the wrong decision, often in a situation the rules haven’t reached.

Instead of asking “is this legal?”, businesses should be asking “Is this right?”. After all, if it’s right, the chances are it’s also legal. A shift in focus away from rules but towards behaviour is needed.

Strong core values running throughout an organisation will strengthen any compliance programme, be it antitrust as we see below or Adequate Procedures to prevent corruption. Many of the companies we work with, that have invested substantially in strengthening adequate procedures, are now asking themselves how they can ensure that when the difficult situation arises, staff really will do the right thing?

The answer lies in establishing a strong code of conduct based on ethical core values. Senior management need to set the tone, communicate expectations, incentivise good behaviour and monitor what is actually happening on the ground.

Regulators, industry bodies and governments should be looking at how to encourage this more effectively. Sarbanes Oxley and the US Federal Sentencing Guidelines already require companies to promote honest and ethical conduct. However, from the scandals that continue to emerge it is clear that honest and ethical are narrowly defined as legal, following the letter rather than the spirit of the law.

It’s time to shift the emphasis towards encouraging good conduct – it’s how people behave that really makes the difference.

Can an ethical culture prevent anti competitive practices?

This was the question we posed to senior executives at our Business Ethics Debate in May, attended by the Competition and Markets Authority.

The discussion began by examining why establishing an ethical culture can be harder than it sounds. It can cost time and money to establish; can result in a loss of profit if the only ethical solution is to turn business away and it can create ‘first mover disadvantage’ for firms seeking to introduce an ethical culture into a market where ethical behaviour may not be apparent.

However, although these arguments may sound convincing, they should not be used as a reason to avoid business ethics. They merely show why for some, business ethics can remain in the ‘too difficult’ box.

On the contrary, over the medium to long term, an ethical culture provides a competitive advantage, building reputation, consumer loyalty and trust. In a highly competitive market, a sense of strong core values can act as a real differentiator.

Even more importantly a strong ethical culture directs behavior and provides reassurance that staff will know what to do when faced with difficult situations – particularly those not governed by rules.

With the regulators being both pressurised and empowered to act, establishing a strong ethical business code should be the first step towards avoiding reputational damage.

Read the summary in full

GoodCorporation launches Antitrust Framework

Changes to UK competition law resulting from the Enterprise and Regulatory Reform Act 2013 have had an impact on all areas of competition law. That together with the launch of the newly empowered Competition and Market Authority, mean that companies face increased regulatory risk.

To help companies in this heightened regulatory environment, GoodCorporation has launched an Antitrust Framework designed to help companies minimise competition risks by ensuring that they have the right ethical culture and relevant practices firmly embedded.

The Framework can be used for internal self-assessment or for independent external assurance. It follows the methodology employed by our Business Ethics Standard creating an assessment process that gathers evidence for each practice and awards grades against a four-point scale.

In Brief...

House of Lords Debate: Ethical challenges in EPC

Nathalie Louys, General Counsel of Subsea 7 led GoodCorporation’s Business Ethics Debate on ethics and compliance in Engineering Procurement Construction.

The discussion looked at Anti-Bribery and Corruption (ABC) compliance and the pressures this places on suppliers.

A number of key issues were raised including: liability for sub-contractors; prescriptive compliance clauses; contract termination; cost; best practice and partnerships.

Collective action by contractors was considered, with the suggestion that this could lead to higher standards of ABC compliance and be far more effective than rigid contracts and unmanageable liabilities.

Click here to read in full

GoodCorportion ABC Risk Assessment workshops help strengthen Adequate Procedures

Understanding and managing local bribery risks is a vital first step in any anti-corruption programme.

Businesses need to feel confident that these risks are understood and properly managed. To help companies do this, GoodCorporation has developed Risk Assessment workshops that can be tailored to different industries and local markets.

These workshops provide an effective means of training local business units and raising awareness of the key issues. Risks and how to mitigate them are identified collectively, leading to the development of a tailor-made action plan for each business unit.

GoodCorporation produces a risk map for the relevant market and tailors the workshop to instill greater understanding of the issues.

Not only does this help strengthen ABC compliance, it also helps demonstrate adequate procedures.

GoodCorporation guide to corruption risks in Brazil

Brazil has tightened up its anti-bribery laws in a bid to tackle the corruption that costs the country billions of dollars a year.

The May issue of Governance & Compliance Magazine features an article by GoodCorporation’s Leo Martin.

In Cleaning up its act we look at the risks business face and advise on the anti-corruption compliance programmes that need to be in place.

GoodCorporation at Compliance Week Europe event

GoodCorporation will be leading a Business Ethics Debate on whistleblowing at the second annual Compliance Week Conference taking place in Brussels from October 13-14 2014.

At the event, delegates will have the opportunity to discuss corporate ethics, compliance, risk management, due diligence and other related topics via panel discussions, keynote presentations, and breakout sessions.

The early registration rate is €350 off the full rate and will increase after July 31.

Newsletters April 15, 2014

UPDATE SPRING 2014

Raising ethical standards

In recent years, there has been much said about the need to raise ethical standards in business. Politicians, commentators, business leaders and industry spokespeople have all expressed a view.

From the work that we do with individual organisations, we know there is often considerable commitment to raising standards and changing behaviour.

However, when it comes to collective action within an industry or sector, resolve seems to falter at the final hurdle. Numerous codes have been drawn up in several sectors, but when companies are required to demonstrate real commitment, enthusiasm wanes and individual organisations start to break away.

Which is why the Banknote Ethics Initiative (BnEI) has been so impressive. Launched in 2013, BnEI set out to promote ethical business practices across the banknote industry, with a focus on the prevention of corruption and on anti-trust compliance, supported by a robust independent audit.

This is one of the best examples of collective action to raise ethical standards. Companies within the sector are starting to see accreditation as an endorsement of their good conduct and as such are prepared not only to commit to certain standards, but to put themselves to the test.

Little wonder, perhaps that BnEI is gaining international recognition and its principles have been endorsed by the Bank of England, the Bank of Canada, the Reserve Bank of Australia and several others.

It would be good to see this replicated in other sectors.

GoodCorporation audits first companies in the Banknote Ethics Initiative

GoodCorporation has audited the first companies to be accredited under the Banknote Ethics Initiative (BnEI).

Developed to raise standards across the banknote industry, BnEI requires its members to follow a code of conduct developed by the Institute of Business Ethics. GoodCorporation translated that code into an audit framework and developed the methodology. Chief Risk & Compliance Officer at Innovia Security, Geoff Bell was impressed by the audit’s application of integrity and ethics to all parts of the business, describing it as stringent and “extremely thorough”.

Membership is open to all organisations within the industry, who must agree to adhere to the BnEI Code of Ethical Business Practice. All organisations that sign the code must become accredited by passing an audit carried out by one of the scheme’s auditors. Current members include Arjowiggins Security SAS, Crane Currency – a division of Crane & Co., Inc., De La Rue plc, Giesecke & Devrient GmbH, Innovia Security, KBA-NotaSys SA, Note Printing Australia Ltd and SICPA SA.

GoodCorporation debates how to make whistleblowing work

GoodCorporation invited Cathy James, CEO of Public Concern at Work to lead our debate on how to make whistleblowing work.

Cathy began the debate by stating that how an organisation deals with its whistleblowing is a barometer of its ethical culture and values.

The debate highlighted the reasons why whistleblowing can be problematic, looking at the connotations of betrayal and denunciation, the fear of reprisals and the fact that all too often companies fail to act.

Business delegates discussed the effectiveness of an open-door culture, the importance of communication and training, the need to separate grievances from whistleblowing and how effective management of the speak-up system is vital.

Read our blog on how to make whistleblowing work.

GoodCorporation updates the Business Ethics Standard

In the fourth review of the GoodCorporation Business Ethics Standard since its launch in 2001, GoodCorporation has strengthened the human rights and working conditions sections of its responsible business framework.

This development reflects the UK Government’s Action Plan on Business and Human Rights, launched last year in response to the United Nation’s Guiding Principles on Human Rights. In its action plan, the Government states that businesses should treat the risk of causing or contributing to human rights violations as a legal compliance issue.

The revised standard will help UK companies comply with this guidance, while raising standards in their own enterprises as well as in those of service providers working on the organisation’s sites.

In Brief...

GoodCorporation launches first Whistleblowing Framework

GoodCorporation has developed a whistleblowing evaluation framework designed to help organisations ensure that stakeholders can raise concerns without fear.

GoodCorporation’s framework clarifies the leadership, policies, training and monitoring that need to be established in order to make a whistleblowing system work for the benefit of stakeholders and the businesses itself.

Setting up a whistleblowing process is relatively easy. However, it is unlikely to be used or of benefit, if it isn’t part of a trusted ‘open-door’ culture and internal communication process that encourages stakeholders to raise problems or concerns without fear of detriment or reprisal.

In the best companies, senior management want to know what is going on, so create effective systems that encourage employees and other stakeholders to tell them.

Our 30-point Framework can be used to test the strength of such systems, either through an internal assessment or as the basis for an external review. It stipulates the systems and processes that should be implemented, how investigations should be managed, staff trained and the process communicated to other stakeholders.

See the goodblog for more on whistleblowing

Building Better Banks

Richard Lambert, former director general of the CBI, has been asked to establish a professional body to raise standards of conduct across the UK banking industry.

Prior to establishing such a body a consultation process was launched, designed to gather the opinions of the widest possible group of stakeholders.

GoodCorporation supports the notion of an independent body whose purpose is to raise professional standards across the industry and has submitted a detailed response to the questions posed.

New Project Director joins GoodCorporation team

GoodCorporation has appointed Brian Parry to join the senior team as a project director.

An experienced strategic management consultant and former principal consultant at KPMG, Brian will lead assessments for GoodCorporation’s multinational clients.

Prior to joining GoodCorporation, Brian was the Head of Public Engagement for the Central Office of Information. He has worked on projects for major organisations in both the private and public sectors, including for Trinity Mirror Group, Ladbrokes plc, Marks & Spencer, Defra, Ofgem and the Department of Transport.

His expertise encompasses board-level reviews, strategy development, compliance support, public consultations, project management, stakeholder engagement and analysis, policy development and risk management.

A former rower, Brian is also an accomplished chef with an interest in hispanic studies.

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