Guidance Manual for Implementing the Integrity Pledge: A Ten Step Approach to Enhance Integrity

Guidance Manual for Implementing the Integrity Pledge A Ten Step Approach to Enhance Integrity in Small and Medium Enterprises in Egypt

About the Egyptian Junior Business Association

www.ejb.org.eg

About the HUMBOLDT-VIADRINA School of Governance

www.humboldt-viadrina.org Siemens Compact (UNGC)

United Nations Global

Pricewaterhouse Coopers Egypt

Integrity Pledge

Guidance Manual for implementing the Integrity Pledge

Table of Content About this Initiative

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Purpose and Structure of this Document

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The Egyptian Junior Business Association Integrity Pledge

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Phase 1: “Commitment and Policy”

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1.1 Participating in a senior management training

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1.2 Appointing an Ethics & Compliance Manager

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1.3 Establishing a clear, visible and accessible anti-corruption policy

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1.4 Signing the public declaration

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Phase 2: “Implementation and Improvement”

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2.1 Communication and training

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2.2 Providing guidance mechanisms

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2.3 Preventing and detecting violations

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2.4 Evaluation and continuous improvement

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Phase 3: “Assessment and Participation”

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3.1 Submitting to an external assessment

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3.2 Supporting collective action initiatives

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Annex I: Example of an anti-corruption policy

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Annex II: Identifying and mitigating risks

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Additional resources

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Guidance Manual for implementing the Integrity Pledge

About this Initiative

Guidance Manual for implementing the Integrity Pledge

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On the other hand, business managers who seek to do business without corruption face competitors continue to engage in such acts.

Corruption is one of the major obstacles to economic growth, fair competition and an equitable development of the political process in Egypt. Tackling the issue requires a concerted effort from a variety of stakeholders from all sectors of society – including the business sector. Especially the role of small and medium enterprises (SME) is of crucial importance in this regard.

Simply requiring SMEs to refrain from corruption because it is the right thing to do (“moral case”) may not be enough for SMEs that try to survive in such an economically challenging environment. Such companies need to be offered an alternative way,

case”). thus an important factor in driving Egypt’s socioeconomic development. However, SMEs

alternatives to corrupt behavior in their daily business operations.

The Egyptian Junior Business Association (EJB) from Cairo/ Egypt and the HUMBOLDT-VIADRINA School of Governance from Berlin/Germany are collaborating on a pilot initiative that aims at providing a new way of tackling the issue of SME-related corruption in Egypt. Its objectives are twofold: 1. Establishing an anti-corruption and transparency standard (in the form of an Integrity Pledge SMEs working in Egypt. This will include guidance, training and capacity building with regard to the implementation of the Pledge.

2. Identifying and establishing symbolic and material incentives for SMEs that commit to and implement this Integrity Pledge.

Thus, this approach seeks to combine the WHAT (what SMEs should do to tackle corruption in their operations) with the WHY (why SMEs should put valuable and scarce

While the initiative recognizes that companies, irrespective of size and geographic location, have a responsibility to act as good corporate citizens, it also understands the practical issues of doing business in Egypt. Corruption is illegal and companies face serious consequences if caught engaging in such acts. But in countries with weak governance and law enforcement, such as Egypt, such threats typically are not a

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Guidance Manual for implementing the Integrity Pledge

Purpose and Structure of this Document Countering corruption requires the implementation of a good practice anti-corruption what is expected of them. Such a standard can also help companies to measure and demonstrate their anti-corruption commitment. It further helps other stakeholders, such as business partners, to see what companies are committing to.

The Egyptian Junior Business Association and the HUMBOLDT-VIADRINA School of Governance have designed such a standard (“Integrity Pledge”) that aims to help curbing corruption in the business sector in Egypt with a special focus on SMEs. The Integrity Pledge does not impose new requirements, but rather draws on the principles and provisions of internationally established good practices and guidelines, tailored to the context of Egyptian small and medium enterprises (less than 250 employees).1 But an effective anti-corruption program does not end with signing a piece of paper. The way day-to-day business is done may need to be changed. Recognizing that SMEs will need support in the application of the Pledge’s requirements, the following Guidance Manual has been established as supporting material for implementing this Integrity Pledge. It highlights the key requirements of the Pledge and outlines practical steps SMEs can take to integrate these requirements into their operations.

Guidance Manual for implementing the Integrity Pledge

Implementing an anti-corruption program, as outlined in the Integrity Pledge (page 16), and committing to a zero-tolerance of corruption will not happen overnight. It should rather be seen as a journey on which your company embarks. Consequently, the Integrity Pledge is divided into three-phases to be implemented consecutively.

Chapter

Main Addressee / Principal content

Phase 1 “Commitment and Policy” Chapters 1.1 – 1.4

Phase 1 lays the ground work regarding your commitment to zero-tolerance of corruption and the implementation of an anti-corruption program.

Phase 1 emphasizes that a major prerequisite is a strong, explicit and visible support and commitment from the “top of your company” (e.g. owner, highest governing and/or management body) and a dedicated person who will be in charge of putting the program into action.

Phase 2 “Implementation and Improvement” Chapters 2.1. – 2.4

This Guidance Manual assumes that your company has not yet established an anti-corruption program.

1 For example: International Chamber of Commerce ‘ICC Rules on Combating Corruption’ (2011), Organisation for Economic 2010), Transparency International ‚Business Principles for Countering Bribery‘ (2013), UN Global Compact 10th Principles, World Economic Forum – Partnering Against Corruption Initiative ‚Principles for Countering Bribery‘ (2004).

2 seeks to put the commitment and policy into actions; thus integrating and implementing the program into everyday business activities.

It also outlines that establishing an anti-corruption program is not a one-time exercise but a continual process that requires regular monitoring, evaluation and improvement.

In addition to this Guidance Manual, the Egyptian Junior Business Association and HUMBOLDT-VIADRINA will provide capacity building activities, such as a Senior Management as well as an Ethics & Compliance Manager training to support SMEs. The main addressees of this Guidance Manual are SMEs in Egypt; and more

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Phase 3 “Assessment and Participation” Chapters 3.1 – 3.2

Finally, Phase 3 outlines that your company is ready assessed by an independent and credible third party.

Your company will also seek to engage with other partners in collective action initiatives to counter issues that cannot be solved by your company alone

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Guidance Manual for implementing the Integrity Pledge

Before getting started: what is corruption and

Corruption has repeatedly been listed as one of the major obstacles not only to the economic, but also the political and social development of countries.

Negative consequences for society. Corruption erodes trust in public institutions and undermines a fair and equitable representation in the political process. It reduces the revenue of public budgets, wastes public funds, and leads to intransparent decision making processes. As such, corruption is also one of the biggest obstacles to political stability and democratic development. It increases social disparity and income inequality, it diverts resources from infrastructure and social investments, and increases the cost of public services. Corruption is also often used to circumvent laws and regulations, some of which have social objectives or aim to protect the public interest

Negative consequences for the economy. The economic effects of corruption often include a low economic growth, reduced foreign investment, fraudulence of public contracts, and clientelism in decision making processes. Egypt has ranked 114th (out of 177 countries) in Transparency International’s annual Corruption Perception Index in 2013. Likewise it ranked a low 117th (out of 142 countries) in the World Economic Forum’s Global Competitiveness Index (2012-13). Such low rankings in turn tend to secondary social effects such as high unemployment and “brain drain”. Corruption thus severely hinders the social and socioeconomic development of societies. In addition it often goes hand in hand with an unclear and thus seemingly excessive regulatory system, which in turn leads to a rise of the informal or underground economy. It also leads to mismanagement and a primacy of the most connected or corrupted goods and services over the best ones. In Egypt, as elsewhere, corruption thus has severe damaging effects on the process of political and socioeconomic development; but also on the country’s population (with the poor disproportionally affected).

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Egypt in 20092 said they were obliged to offer illegal payments or presents to obtain licenses. But it is not only in the public administration where companies feel they have to pay bribes to enable or speed-up processes: according to that same study the branches where the paying of bribes was most common were police, banks, and telecommunication. Furthermore corruption can decrease employee morale and

But even aside from corruption’s negative impact on society, economy, and business – corruption is illegal. The Egyptian Penal Code criminalizes active and varying degrees and, in severe cases, even prison sentences. Additionally, contracts

Summary: Examples of negative consequences of corruption for companies

and your overall company.

morale.

Negative consequences for you as a company. Corruption increases the cost of operations and makes them less dependable. Competition is distorted by putting companies that seek to win business opportunities through the quality of their products and services at a disadvantage. Especially in the context of public administration of SMEs in a study by the Center for International Private Enterprise (CIPE) conducted in

2 Center for International Private Enterprise (2009): Business Environment for Small and Medium-Sized Enterprises (SME) in Egypt and SMEs’ Interaction with Government Agencies - 2009 Survey on Corruption

Guidance Manual for implementing the Integrity Pledge

Before embarking on a journey to gradually reduce the risk of corruption in your own organization, an understanding of what constitutes corruption is required.

Guidance Manual for implementing the Integrity Pledge

Categories according to: Act of corruption

Often used is the relatively broad description of “abuse of entrusted power for private gain”3 acts, recognizes the breadth of the concept.

During the negotiations of the United Nations Convention against Corruption (UNCAC), UN Member States considered the opportunity for the global anti-corruption treaty to

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Forms of corruption: Active corruption: You start the act of corruption Passive corruption: You are approached with an act of corruption

Relationship

Business to public sector corruption: from the Egyptian government)

forms of corrupt behavior, the international community reached global consensus on a large number of manifestations of corruption, such as bribery, embezzlement, and

A starting point for you can be the different categories of how corruption can occur:

Business to business corruption: You interact with another business partner Type of transaction

Direct corruption: You are directly involved Indirect corruption: You use someone else to conduct the act of corruption

This will help to get the overall “big picture”.

This somewhat theoretical starting point then needs to be put further into practice, by describing the forms of corruption. This Guidance Manual will look at

considered when seeking to prevent corruption.4

3 http://www.transparency.org/whatwedo

4 Other areas may include fraud, embezzlement, money laundering, etc.

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Guidance Manual for implementing the Integrity Pledge

Bribery Bribery is among the most common forms of corruption for SMEs in Egypt.

Bribery can come in the form of active or passive, business-to-public sector or business-to-business, and direct or indirect corruption.

Bribery is when someone in your company offers, promises, or gives a BENEFIT to

Example: the Sales Manager of your company offers an expensive gift to a

Bribery is also when someone in your company requests or accepts a BENEFIT from SOMEONE

Example: the Procurement Manager of your company accepts a secret

Explanation: BENEFIT A BENEFIT does not necessarily have to come in the form of cash payments. It can be anything of material or immaterial value (e.g. gifts, hospitality, sponsorships) that leaves the receiving person better off than before.

Explanation: SOMEONE SOMEONE can be either a (e.g. someone from the Egyptian government) or a business partner (e.g. customer, supplier).

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You can give a BENEFIT to SOMEONE either directly or by using someone else (e.g. an agent).

bribe and the one who is accepting the bribe (the same holds true for requesting). For example, an employee of your company is paying cash

example, an employee of your company hires an agent and (openly or implicitly) instructs him to pay bribes if necessary in order to win new businesses.

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Guidance Manual for implementing the Integrity Pledge

Extortion Bribery and facilitation payments are typically acts at the discretion of an employee or a company, e.g.:

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Grey areas It is important and challenging to address bribery and extortion as part of your bribery or extortion, there are other forms where the lines between legal and illegal are blurry. For example, giving gifts to business partners can be common and even expected in many regions and contexts, and by itself is usually unproblematic.

But there are instances where someone with authority, or power of decision relevant to your company pressure you or one of your employees into paying a bribe.

decision in a certain way) it crosses the line into corruption. Consequently there is a

When differentiating between legitimate and non-legitimate business practices, companies often face the following challenges5:

bribe at the threat of violence. But extortion also occurs where a bribe is demanded for a service that is necessary for the survival of a company, and there are no alternative providers to turn to for that particular service (e.g. a central administrative agency will not issue a necessary license without receiving an extra payment).

I. Business practices that are illegal but perceived as normal or even required (e.g. facilitation payments).

II.Business practices that are legal but bear the risk of being misused to disguise corruption (e.g. misuse of political contributions, gifts, or hospitality

III.Business practices that are based on biased decisions interest).

I. Facilitation payments: If you have the right to obtain a certain service – mostly from the government – such as operating license or connection to electricity, but you have to pay extra to get this service faster or better, then you are dealing with facilitation license, issue an insurance policy, connect a phone line etc. All these actions are legal and an individual is entitled to them (provided all necessary documents were may ask for an additional payment “under the table”. These payments are usually relatively small and the individuals asking for them are usually lower-level public

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Guidance Manual for implementing the Integrity Pledge

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In summary: facilitation payments, so going to someone else may not solve the problem), or where one institution holds a monopoly on essential goods and services (e.g. there is only one telephone company so their employees will know customers cannot go anywhere else).

II. Special types of expenditures: Certain expenditures are common and legitimate business practices but can also be misused for the purpose of corruption. Such expenditures are:

Corruption is a complex issue with damaging effects for everyone. It increases the cost of doing business, distorts competition, and leaves companies, especially SMEs, vulnerable to random extortion requests.

Companies have therefore an interest in reducing corruption, but in the short term it doing so.

Your company, which is now embarking on the journey of reducing corruption in your own organization, must start with recognizing and addressing these forms of corruption. This is challenging and requires strong dedication from everyone in your company. The three-phase approach of the Integrity Pledge supports this journey,

These expenditures, such as inviting a business partner to dinner, can be a necessary part of doing business – to maintain and foster relationships and problematic, e.g. when dinner invitations turn into regular, expensive invitations of a business partner to win a contract from your company. In the context of bribery, such expenses can also be used to avoid the handover of cash or wiring of money and instead. Thus, these kinds of expenditures need to be treated as legitimate but high risk areas that require special attention within your company.

For example, the owner of a company may also be the chairman of the local football club, which is currently seeking a new sponsor. choose private interest over organizational interest and make decisions that are not in the best interest of your company (e.g. sponsoring the football club for a much in their anti-corruption program.

over time while constantly dealing with practical challenges and even set-backs.

However, the Egyptian Junior Business Association also recognizes that your company cannot address this challenge alone. While it is paramount that you establish effective policies and procedures within your own company, a collective effort of many

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Guidance Manual for implementing the Integrity Pledge

Guidance Manual for implementing the Integrity Pledge

The Egyptian Junior Business Association Integrity Pledge As senior managers of Egyptian businesses we recognize our responsibility to lead by example in creating a corruption-free business environment and to foster fairness and integrity in how business is done in Egypt.

In light of this we will commit to the following: In Phase 1 (“Commitment and Policy”) 1.1 Participating in senior management training on the fundamental anti-corruption principles that are the basis for this Pledge.

1.2 Appointing an Ethics & Compliance Manager with the necessary skills, time and resources to oversee the implementation of this Pledge.

1.3 Establishing a clear, visible, and accessible anti-corruption policy addressing the most relevant risks (e.g. bribery, extortion).

1.4 Signing a public declaration of our commitment to this Pledge.

In Phase 2 (“Implementation and Improvement”) 2.1 Communication and training on our anti-corruption policy and procedures.

2.2 Providing a guidance mechanism for questions and feedback on the policy as well as its translation into practice.

2.3 Implementing measures to prevent and detect violations (e.g. internal controls, reporting lines).

2.4 Evaluating and continuously improving our anti-corruption policy and procedures.

In Phase 3 (“Assessment and Participation”) 3.1 Submitting ourselves to an independent external assessment process of our anti-corruption policy and procedures.

3.2 Supporting collective action initiatives to jointly address major concerns for doing business in Egypt in a transparent, accountable and integer way.

Phase 1

Commitment & Policy Committing to reducing corruption in any organization starts with a strong, explicit and visible support and commitment from the highest level of the company. Most likely this will be the owner, CEO, board of directors, management team, or other “senior management body” of your company. It is the responsibility of senior management to ensure that every employee and relevant business partner is aware of the company’s commitment.

While the major objective of Phase 1 is the signing of a public declaration of your company’s commitment to this Pledge, some groundwork has to be done before that. Senior management must undergo a half-day training to fully understand the scope of this commitment, an Ethics & Compliance Manager with the necessary skills, time and resources needs to be appointed and a clear, visible, and accessible anti-corruption policy (addressing the most relevant risks for your company) needs to be established.

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Guidance Manual for implementing the Integrity Pledge

1.1 Participating in a senior management training When establishing an anti-corruption program it is paramount to have the backing and support of the most senior management in your company, e.g. the owner or managing director. While it is employees who conduct most of the day-to-day activities and face practical corruption-related challenges, their attitude and capacity to prevent corruption depends heavily on this commitment (often referred to as the “tone from the top”).

However, embarking on the journey to reduce corruption in your organization is challenging and requires effort and time. Senior management needs to understand this the Integrity Pledge requires senior management to participate in a half-day, instructor-led training which outlines the fundamental principles of this Pledge and describes the major commitments: zero-tolerance

Guidance Manual for implementing the Integrity Pledge

actively involved in the establishment and on-going improvement of your company’s anti-corruption program. continuously express their commitment and support conduct business and why your company is embarking on this journey. This can for example be done by participating in employee trainings, speaking at company events, praising employees who applied the company’s values in practice. so that an anti-corruption program can be established. This includes, among others: - Appointing an Ethics & Compliance Manager (see 1.2); - Putting aside time for employees to attend training; external experts; etc.

of corruption. For example:6

“<Name of your company> has a zero-tolerance of corruption. This extends to all our business dealings and transactions in all countries in which we or our subsidiaries and associates operate. This policy is given force in an anti-corruption program which is regularly revised to capture changes in law, reputation demands and changes in the business. All directors and employees are required to comply with this policy.”

While zero-tolerance of corruption is the overall objective, it needs to be recognized that there will most likely be instances where this commitment will be violated (especially at the beginning). Set-backs are to be expected and do not necessarily imply a failure of either the program or your company’s commitment.

But nonetheless it must be clearly communicated that such setbacks will not prevent your company from seeking to achieve the overall objective of countering corruption in all its forms. And that this will be done by establishing effective policies and procedures within your company and by seeking allies to address the larger issues (e.g. in form of collective action initiatives).7 6 Source:Adapted from Transparency International UK „The 2010 UK Bribery Act Adequate Procedures“, 2010 7 Zero-tolerance of corruption does not refer to a literal absence of corruption in a numeric sense. It refers to a no-tolerance approach where your company commits to implement reasonable and appropriate measures to minimize the risk of corruption

that can only be won by means of corruption or the acceptance of delays when a license cannot be obtained immediately without making small extra payments (i.e. facilitation payments);

everyone is aware of the anti-corruption program and that it is mandatory for everyone in your company.

necessary). This goes beyond the appointment of the Ethics & Compliance Manager, but includes also that middle managers are aware of their responsibilities under this program.

program, so that everyone understands that this is not a one-time exercise but that it remains high on your personal agenda. Senior management may also use these opportunities to address setbacks of the program and outline strategies to overcome such challenges (e.g. participating in a collective action initiative, seeking to reduce extortion requests from a particular governmental department).

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to demonstrate to your employees and business partners that your company’s situations, employees often turn to their superiors and imitate their behavior.

Checklist: 1.1 Participating in a senior management training Yes

Senior Management Training: led, senior management trainings.

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Guidance Manual for implementing the Integrity Pledge

No

In progress / comments

Does your company’s senior management publicly commit to a zero-tolerance of corruption?

Is senior management involved in the establishment of the anti-corruption program?

Is senior management involved in the on-going improvement of the anti-corruption program?

Does senior management continuously express its commitment and support to program?

resources so that the anti-corruption program could be established properly?

Is senior management willing to void business opportunities and accept delays to avoid corruption?

Does senior management ensure commitment to the program throughout your company?

Depending on the size and structure of your company: Are responsibilities established throughout the company (in addition to the Ethics & Compliance Manager)?

Does senior management continuously lead by example?

Are senior management trainings conducted whenever there are changes to senior management?

and Compliance Programme for Business: A Practical Guide”, 2013.

These checklists should not be understood as a comprehensive or exhaustive list of steps that will guarantee a successful considerations that should be looked at when implementing the Integrity Pledge. It aims to provide ideas for implementation processes or benchmark recently implemented programs. As such it is mostly to be understood as a summary of the key points of the corresponding chapter.

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Guidance Manual for implementing the Integrity Pledge

1.2 Appointing an Ethics & Compliance Manager in implementing the Integrity Pledge. But senior managers cannot do it alone, nor should they. They need support from an operative person “on the ground” with the necessary skills, time and resources to oversee the integration and implementation of this Pledge within the strategy, culture and day-to-day operations of your company.

Independent of your company’s size and resources, senior management should appoint a person dedicated to ethics & compliance matters. To get started, a It is advisable to

follows (ideal case):

record keeping); your company);

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The Ethics & Compliance Manager must have the time and skills to address these concerns in an open communication. Such skills can be obtained by sending the Ethics & Compliance Manager to dedicated training courses (e.g. conducted by local business associations or other organizations) and by utilizing available resources, such as the ”Resisting Extortion and Solicitation in International Transactions (RESIST)”.

This tool, based on real-life scenarios, is designed as a training tool to provide practical guidance on how to prevent and/or respond to an inappropriate demand by a client, business partner or public authority.

The Ethics & Compliance Manager should have a clear and documented role description of rights and responsibilities, such as: 10

with regards to corruption to identify risk areas and likely risks. The risk assessment should be reviewed regularly, updated according to relevant changes and laws, and conducted at least annually. More information can be found in Annex II. collaboration with senior management and other relevant stakeholders. within the strategy, culture and day-to-day operations of the company. your company (e.g. recording of violations and complaints, collecting suggestions and improvements).

An Ethics & Compliance Manager will act as an independent focal point and advisor for ethics & compliance matters within your company; meaning that he or she will be responsible to implement the major elements of the anti-corruption program (as shown in Phase 2 of the Integrity Pledge).9 The Ethics & Compliance Manger will also oversee and report on the progress of the program to senior management.

And probably most important, the Ethics & Compliance Manager will act as a trusted person to answer questions. Especially in the early stages of establishing an anti-corruption program your employees may ask a variety of questions, like “How do shall I handle the request for a bribe payment to secure the winning of an important contract?”

9 The Ethics & Compliance manager will eventually also be responsible for other issue areas, such as health & safety, labor standards, environment, etc.

program (depending on whether your company has its own communications or trainings departments to do this). presentations), and/or where anonymous or external guidance mechanisms are in place (2.2) oversee and evaluate these. controls (2.3).

with regards to ethics and compliance, prior to entering into a business relationship. Due diligence conducted should be documented and stored so that at any given time your company can refer to it.

10 More information on risk assessment can be found in the Annex.

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Guidance Manual for implementing the Integrity Pledge

The Ethics & Compliance Manager should have s company to effectively oversee relevant processes. This is especially important as some of the initial responses may challenge the way business has been conducted in

Checklist 1.2: Appointing an Ethics & Compliance Manger Yes

management, is therefore very important.

Was a senior person with experience in your company appointed as Ethics & Compliance Manager?

Ethics & Compliance Manager training: for newly appointed Ethics & Compliance Manager. The major focus of this practical training is how to setup an anti-corruption program.

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Does the Ethics & Compliance Manager have the necessary time available to carry out this task?

Does the Ethics & Compliance Manager have the necessary skill to carry out this task?

Does the Ethics & Compliance Manager have the necessary authority to carry out this task?

Is there a clear and documented role description for the Ethics & Compliance Manager?

Does the role description include conducting periodic risk assessments?

Does the role description include overseeing adherence to the anti-corruption policies?

Does the role description include overseeing or conducting training and communication on the anti-corruption program?

Does the role description include answering questions on the anti-corruption program?

Does the role description include overseeing mechanisms in place to detect and prevent violations?

Does the role description include getting involved in the due diligence process on business partners?

Does the role description include the periodic provision of status information to senior management?

Does the Ethics & Compliance Manager have a direct reporting line to senior management (e.g. in case of emergencies)?

No

In progress / comments

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Guidance Manual for implementing the Integrity Pledge

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1.3 Establishing a clear, visible and accessible anti-corruption policy

Annex I outlines an exemplary anti-corruption policy, which can be used as the basis for discussion. Does everybody understand the language of the policy? Where are

The starting point to translate the commitment of senior management into a zero-tolerance of corruption is the provision of a policy prohibiting corruption. A clear, visible and accessible policy outlines principles and rules to which all employees of your company need to adhere to.

balance between describing all the relevant principles and rules while not overwhelming your employees. Also, try to avoid too many legal terms. It is therefore recommended to keep your anti-corruption policy short and simple and (where necessary) provide additional detailed policies for high risk areas, such as

In order to provide a clear, visible and accessible anti-corruption policy, the following aspects should be considered:11 The policy should be formally documented. This can be either done as a standalone document or as part of an existing Code of Conduct, or similar document.

The language of the policy should be clear and easy to understand (i.e. acronyms and technical expressions should be avoided). If you operate in multiple countries with different languages, the policy should be translated.

The policy should be drafted in consultation with employees. A participatory approach creates a sense of ownership, and supports the recognition and acceptance of the overall program.

The policy should be visible to all parties within and outside the company. The policy should be clear, visible and accessible to your employees at all levels within the company. The policy should also be visible to external parties, such as shareholders, business partners, etc. Visibility and accessibility of the policy reinforce the anti-corruption program among employees and enhance both awareness and reputation. Visibility and accessibility also strengthen the deterrence of corruption.

e.g. outlining that facilitation payments are bribes and are generally prohibited. A detailed policy for facilitation payments may however recognize that in certain contexts they are so widespread and handle such situations (e.g. making such a payment requires approval from senior management, documentation in the company’s books and records afterwards, and most important, establishing a long-term strategy to avoid such payments). Also, the policy may include exemptions of the general prohibition when employees must prevent serious harm;

e.g. introducing a general threshold for gifts, or prohibiting contributions to political parties during times where legislation relevant to your company are drafted;

internally.

Whether you end up with one policy (which covers also the above-shown “grey areas”) or if you opt for one short generic policy and three additional detailed policies for the “grey areas” is something you need to decide with your colleagues. It will also depend on the size and nature of your business. Policies and procedures should be applicable

When drafting your policy, you should start by conducting a meeting with relevant very important that you draft a policy together with key employees within your company, as this creates a sense of ownership, and supports the recognition and acceptance of the overall program.

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Furthermore, it is strongly recommended to provide additional real-world examples or generic case descriptions to enhance the understanding of how these policies apply to day-to-day work situations (e.g. as part of your anti-corruption training, refer to 2.1).

Guidance Manual for implementing the Integrity Pledge

Checklist 1.3: Establishing a clear, visible and accessible anti-corruption policy Yes

No

In progress / comments

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1.4 Signing the public declaration Signing a public declaration of your commitment to this Integrity Pledge marks the employees, your business partners and the public with regards to the importance the

Does your company have a policy in place that outlines principles and rules to which all employees need to adhere to?

Is this policy formally documented?

to arrange for the public announcement of signing the Integrity Pledge.

Was this policy drafted in consultation with employees and other stakeholders (e.g. business partners)?

A communication strategy should be developed by your company for the occasion of publically signing the Integrity Pledge (e.g. media strategy, public event). The Pledge should be signed by the highest governing body of your company (e.g. owner, CEO).

Communication should include the reasoning for why this commitment is being made and express your company’s commitment to embark on the activities shown in Phase 2 of the Integrity Pledge.

Is the policy written in a language that is clear and easy to understand?

Is the policy visible and accessible to all relevant parties inside and outside your company (e.g. published on your company’s website)?

Does your company’s policy address high-risk areas such as gifts, hospitality, political contributions, charitable donations, facilitation payments?

The signed Integrity Pledge has to be available on your company’s website (if you have one). A list of all Integrity Pledge signatories will also be made publicly available.

By publicly signing the Integrity Pledge, your company commits itself also to undergo an independent assessment of your performance (see 3.1).

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Checklist 1.4: Signing the public declaration Yes Has the Integrity Pledge been signed by the highest ranking representatives of your company?

Was the signing accompanied by a media event?

Was this event used to also communicate your reasoning for signing the Integrity Pledge?

Was this event used to outline your on-going commitment to the principles of the Integrity Pledge and to embark on Phase 2?

Is the (signed) commitment visible and publically available (e.g. on the company’s website)?

No

In progress / comments

Guidance Manual for implementing the Integrity Pledge

Phase 2

Implementation and Improvement Obtaining commitment from senior management and establishing a clear, work lies ahead, putting the commitment and the policy in everyone’s mind and work activities. Countering corruption is the responsibility of everyone in your company, and not only the senior management or the Ethics & Compliance Manager. But not everyone is initially convinced or has the right skills to do work according to the new anti-corruption policy. Thus, under the leadership of the Ethics & Compliance Manager, various anti-corruption measures need to be implemented and continuously improved in your own organization. Such measures include internal and external training and communication, possibilities to ask questions, activities to prevent and detecting violations, and general oversight. Eventually your anti-corruption program also needs to include your own business partners, such as your suppliers, contractors.

number of employees, industries you are operating in, suppliers) as well as the risks you are facing. In fact, the foundation for implementing the Integrity Pledge is an understanding of your company’s risks. For example, some “grey areas” may not be applicable to your company (e.g. your company may not do political contributions). Or not everyone in your company requires the same level of training and awareness. need to conduct an initial risk assessment and repeat this on a regular basis (at least annually). Information on how to conduct a risk assessment can be found in Annex II of this Manual. Only then can you ensure that your program is effective in countering corruption and is also sensitive to costs.

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2.1 Communication and training

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company’s rationales for the program, its policies and procedures. This can be done as in-person training or e-learning trainings.

Your company is run by the way your employees conduct their day-to-day business activities. It is therefore of paramount importance that all employees – independent of their position – are aware of their roles and responsibilities under the anti-corruption program. Employees must also have the right skills to act accordingly (e.g. conducting due diligence on business partners or responding verbally to an extortion request).

limited number of employees. Such trainings address particular risk areas. For example, if there is a risk that some of your employees face extortion requests from to respond to such a request. Role-play training may be offered to these employees to obtain the necessary skills to react properly to such a request.

When launching your anti-corruption program, it is recommended to communicate this to everyone in your company, independent of their position or role. Every employee or person working for your company (e.g. sub-contractors) needs to know:

In addition, you may want to distribute guides, checklists and other forms of training material among employees. For example, a policy on gifts and hospitality is much more effective if accompanied with some form of checklist to assess whether a gift for a business partner is appropriate or not. (i.e. as outlined in the Integrity Pledge).

must also include the message that there will be no sanctions if employees walk away from a corrupt deal, even if that means losing business

Finally, employees relate most to trainings and communication if real-world case studies and dilemmas are used and discussed.

such training to your employees, you may consider the following options:12

Such a standard communication should be repeated on a regular basis (e.g. at least on an annual basis), so that your company’s commitment remains high on everyone’s agenda. Also, these messages should be conveyed to new colleagues as part of the induction process.

company you may ask to participate in their training programs for suppliers (if existent).

anti-corruption community offers a rich set of guidelines, tools and training modules free of charge, such as the training tool “Resisting Extortions and Solicitations in International Transactions” (RESIST – also available in Arabic) or the e-learning platform “The Fight Against Corruption“. Additional tools are listed below.

How to best conduct such a communication depends on the structure, size and risks of your company. If your company is rather small it may be enough to have a joint group session where the company’s senior management talks about the above listed topics to all employees.

It may also be advisable to document communication and training and make it accessible to all employees, e.g. on your company’s website, as part of a newsletter or other forms of internal communication. For getting started, your employees can be asked to state their initial questions and concerns, which can then be consolidated, addressed and distributed by the Ethics & Compliance Manager in a ‘Frequently Asked Questions’.

external anti-corruption training (e.g. conducted by your local business association), and then convey the information to other internal colleagues.

trainings through collaboration with e.g. business partners, a local chamber of commerce, or a trade union.

Obviously, not everyone in your company has the same exposure to corruption risks. A sales manager may be confronted with an extortion request more often than the anti-corruption risk assessment. In general there are two types of training.

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As a general rule of thumb, communication and training is often the most cost-effective way to support the effective implementation of your anti-corruption program.

In addition to communication and training that is directed at your company’s own employees, you should also make information about your program publically available.

This can include the public commitment from your senior management, your anti-corruption policies, how you conduct training, whether you have a reporting hotline, and other major activities in this regard. Public reporting seeks to provide information on what your company does to counter corruption – it is by no means meant to publish corruption-related incidents or similar kinds of sensitive information!

Making program-related information available comes at no cost to your company but it sends a strong signal of your commitment to your own employees, your peers, and business partners. This will make your company more attractive to large, risk-sensitive companies (e.g. multinational enterprises that are subject to strict anti-corruption laws, such as the US Foreign Corrupt Practices Act or the UK Bribery Act 2010).

If your company has a website you can simply post the information there. Various manuals exist that provide you with guidance on what you can publish (see below).

Checklist 2.1: Communication and training Yes Are your communication and training activities based on the company’s anti-corruption risk assessment?

Was the launch of your anti-corruption program communicated to everyone within your company?

Does this internal communication include information on what behavior is acceptable and what is not?

Does this internal communication include information on why your company has

Does this internal communication include information on where to turn in case of questions, concerns, or to report violations?

Is this communication repeated on a regular basis (at least annually)?

Training Manual(s): Compact; World Economic Forum (2011): RESIST: Resisting Extortion and Solicitation in International Transactions – A Company Tool for Employee Training.

Anti-Corruption Training Manual (Infrastructure, Construction and Engineering Sectors).

E-learning: http://www.doingbusinesswithoutbribery.com

Public Reporting: on the 10th Principle Against Corruption.

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Is this communication conveyed to new employees as part of the hiring process?

Are training mechanisms in place to ensure your employees are equipped with the necessary skills to act according to their roles and responsibilities?

Is information on your anti-corruption program available to external stakeholders (business partners, customers etc.) and the general public?

No

In progress / comments

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2.2 Providing guidance mechanisms Establishing an anti-corruption program in your company will – especially at the beginning – trigger questions, concerns or even resistance among your employees.

Some may feel that pursuing the overall objective of zero-tolerance of corruption is, even in a phased approach, unrealistic in Egypt. Others may not even understand why who do understand the rationales behind your company’s commitment and are encouraged to contribute to this endeavor, but do not know how.

Again, a strong and visible support from your company’s senior management is very important in this initial stage. Training and communication will also help to provide answers and overcome some initial skepticism.

However, the main test of your program comes when employees are experiencing situations that are prohibited under your anti-corruption policy. Employees may have a large contract. But when faced with this situation, when competing against other companies, when trying to win a contract that is important for your company: will the employee remember all the commitments, trainings and communication?!

It is therefore very important that your employees do not feel left alone but have the chance to turn to a trusted source within your company to

should I do?

- I have been asked to hire the cousin of a potential client as a sub-contractor.

If we don’t we may not win the deal. How should I respond?

- I have been invited to speak at a conference in Paris by one of our suppliers.

They are going to pay for all travel expenses. Can I accept this?

- Is it okay if I bring a gift to the wedding of our major customer’s daughter?

- Can we sponsor the local football club even though our Sales Manager sits on the board of this club?

- Can I invite a new client to a nice dinner to discuss business opportunities?

- Our internal checklist on hospitality should include events that are always prohibited.

- We currently have two redundant internal controls to check for double payments.

- It would be good if we can have the company’s anti-corruption policy in a nice portable format so that we can carry it with us (incl. phone numbers for questions or emergencies).

fact, a large proportion of the Ethics & Compliance Manager’s time should be dedicated to answer questions. All employees should be invited to raise questions – and you may even consider providing rewards to employees who constantly do so (for more information, see next chapter). In order to facilitate the provision of answers, the inquiries from the employees should be documented (anonymously if necessary), combined with the answers. This can then serve as a learning document for all employees (e.g. in form of a ‘Frequently Asked Question’ document) and discussed during training sessions.

You may also consider establishing an internal help hotline (depending on the size of your company and the location of your employees). Such a help hotline may also be provided by external services providers. For more information please refer to the next chapter.

Guidance Manual for implementing the Integrity Pledge

Checklist 2.2: Providing guidance mechanisms Yes Is the Ethics & Compliance Manager enabled to serve as the contact point for employees to seek guidance, raise questions, and suggest improvements to the program?

Are inquiries and suggestions from employees documented (anonymously)?

Are inquiries and the responses available to all employees (e.g. “Frequently Asked Questions” document, published on an internal website)?

Are suggestions evaluated to consider their usefulness?

If deemed useful, are suggestions implemented?

No

In progress / comments

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2.3 Preventing and detecting violations A proverb states that ‘Trust is good, control is better’. As any productive and motivating work environment relies on mutual trust, control may not always be better – but controls are nonetheless necessary. Internal controls and record keeping are a key element in the overall anti-corruption program. In addition, mechanisms to report misconduct (internal reporting) should be established to prevent and detect violations.

Further, it is not only necessary to establish preventive and detective measures, but also to clearly outline what the consequences are if misconduct is discovered.

Sanctions need to be put in place in order to penalize violations of your program and also establish rewards (incentives) for employees that demonstrate exemplary commitment to your program.

System of internal controls and record keeping A major element in any anti-corruption system is to establish a system of internal controls. How such a system will look like will depend on the size of your company, your risks and your available resources – but the underlying objective is the same: preventing corruption before it happens and detecting corruption when it occurs.

A system of internal controls typically contains two major measures:13 seek to prevent corruption through policies and procedures related to the execution of day-to-day work activities. This includes for example: - Clear role descriptions, - Approval limits, - Separation of responsibilities (e.g. the approval of invoices is separated from the release of payments), - Rotation of personnel, - Mandatory vacations, - Restricted access to sensitive business activities. For example, you may want to establish a procedure that the procurement of goods or the hiring of external agents requires the signature of two employees within your company (the so-called 4-eye principle).

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seek to prevent as well as detect corruption by supporting and monitoring the adherence to the organizational measures. There are two types of controls: - Preventive controls restrict or deter incidents of corruption from occurring authorization from your superior before releasing a payment to a business partner is a preventive control.

- Detective controls seek to identify weaknesses and irregularities after the execution of work activities. For instance, detective controls may be as simple as reviewing manually your payments to see whether (intentionally or unintentionally) invoices were paid twice or if payments were split to circumvent your approval limits. does not necessarily mean that a corrupt act occurred; but as it shows a deviation from what is expected, you nevertheless need to address these occurrences.

In addition to establishing internal controls, your company needs to keep accurate books and records invoices, loan statements, delivery slips, but also other documented information, such as contracts, proposals, and agreements. Books and records are the basis on which you can execute your controls. Due to the risk of misuse, you may also consider keeping a register of special expenditures (e.g. gifts, hospitality) – given or received – to monitor potential misuse and explain payments in case questions regarding their legitimacy arise. This may be a simple spreadsheet, administered by the Ethics & Compliance Manager.

The same holds true for facilitation payments in case they could not be prevented. While the clear rule is that such payments should not be given, it has been outlined earlier that there are situations where not paying is simply not an option (e.g. if it endangers the safety of your employees). In such cases these payments should be clearly recorded. This may have a positive side effect: at the end of the year your senior management will be (negatively) surprised how much money your company had to pay on these, typically perceived, very small transactions. This may reinforce the commitment in reducing such payments (e.g. through collective actions with other companies or organizations).

Guideline(s): (2013); Internal Control - Integrated Framework. Executive Summary http://www.coso.org/IC.htm

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Internal reporting (“whistleblowing”) Even companies with an effective anti-corruption program may experience corruption or an attempt of corruption within their operations. It is therefore important that employees witnessing such behavior feel empowered and have the measures to report such violations (often referred to as whistleblowing). A form of reporting mechanism is thus needed to increase the likelihood that if and where violations occurs, it gets reported by one of your employees (or even outsiders).

In fact, a central element of an effective anti-corruption program is that violations are found and penalized. The detection of occasional violations (either through internal controls or through internal reporting) should therefore NOT be seen as a failure of the program, but as a positive "feedback" that the program works.

Ethics & Compliance Manager. This re-emphasizes the importance of selecting an

In smaller companies, it may be possible that there is a close proximity between the company’s senior management and the Ethics & Compliance Manager – especially when both parties have been long in the company. In such cases, you need to be sensitive to the fact that employees may feel reluctant to report their observations to the Ethics & Compliance Manager (especially if they fear negative consequences from the senior management). Thus, in addition to such a way of internal reporting, your company may offer other protected reporting channels, such as external hotlines or a trusted independent external advisor (e.g. lawyer).

Independent of whether you establish only an internal reporting mechanism or complement them with external measures, the following points should be considered:

should therefore be considered to make these reporting measures anonymous – but any intentional misuse must be punished.

be no reprisals, even if allegations turn out to be untrue.

of job or harassment.

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When incidents of corruption are detected, it is paramount that reports are investigated immediately and effective action is taken. Otherwise your employees will most likely not report in the future and your company’s overall commitment to the anti-corruption program may be questioned.

Guideline(s):

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Appropriate sanctions for violations It is important for your company to clearly communicate that violations of your anti-corruption program will not be tolerated. Employees must be sanctioned if they violate your policies and procedures. Such sanctions can include reductions of variable income, transfer to another (lower paid) position, or even loss of the job.

Sanctions should not only penalize a corrupt act itself, but also the lack of adherence to your company’s policies (e.g. an employee is constantly giving unapproved gifts to business partners). If you have a Human Resources Manager in your company, he or she should work side-by-side with the Ethics & Compliance Manager.

Sanctions send a strong message that your company is serious about not only establishing but also enforcing the anti-corruption program. It also helps to deter employees from repeated violations as well as deter witnessing employees from violating the program themselves.

Sanctions need to be designed in a way that they are perceived as appropriate.

Obviously, not every violation is the same. Violating to obtain approval before inviting

be distinguished from repeated violations. It may therefore be advisable to establish a

from your employees, such a sanction catalogue should be developed jointly (under the leadership of the Ethics & Compliance Manager).

Sanctions must be applied consistently in practice. While this sounds obvious, experience shows that this is very often not done. Remember: your company has a zero-tolerance of corruption! You must therefore ensure that all violations are (e.g. some managers will not be punished) the wrong signal is being sent to your employees. It is therefore extremely important that senior management signs off on the sanction catalogue. If there is no clear commitment to actually apply sanctions in practice, you may as well not establish your program at all! In serious cases, you may also have to report the violation to external authorities.

Employees must have a chance to appeal sanctions. To make sure that sanctions are review and an opportunity to appeal sanctioning decisions. Especially where allegations are based solely on a third party report, it is important that employees have the possibility to respond to allegations (before the sanction is applied as well as after).

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Relevant incentives The most important aspect of your entire anti-corruption program is that your employees follow the policies and procedures: that they know what is allowed, what is forbidden and where to go in case of questions, doubts, or suggestions for improvements.

In the beginning, not everyone in your organization may be convinced that this is the right way or that it is actually doable in practice. Showing that senior management is behind the program already is a strong signal; but it is even stronger if you provide incentives to your employees for adhering to your program. Similar to common business practices, e.g. giving bonuses to sales managers to motivate them to make more sales, you can also use incentives to enhance acceptance for your anti-corruption program.14 Such incentives should not target criteria related to the character or the mind-set of your employees (e.g. what do they feel about the program), but on operational criteria (such as attendance of trainings, participation in the development of the program, improvement suggestions, knowledge about the policies).

Checklist 2.3: Preventing and detecting violations Yes Are your system of internal controls, books & records and internal reporting procedures based on your company’s anti-corruption risk assessment?

Does your company have a system of internal controls?

Does the system contain organizational measures?

Does the system contain preventive as well as detective controls?

Are accurate books and records of business activities kept?

Does your company keep a register of special expenditures, such as gifts or hospitality (given or received)?

Are measures in place to report violations?

Are they anonymous?

Are reports investigated immediately?

compliance with the anti-corruption program when giving performance-based bonus employees, such as praising employees for adhering to the program, or access to external training programs.

Suggested reading(s): Building incentives in your compliance & ethics program

Is effective action taken on them?

Is it clearly communicated that violations of the anti-corruption program will not be tolerated?

Are employees that violate the anti-corruption program sanctioned?

Are sanctions designed in a way that they are perceived as appropriate?

Does the company have a formal documented sanctions catalog?

Did senior management sign off on the sanctions catalog?

Are sanctions applied consistently in practice (e.g. are sanctions applied according to a formal sanctions catalog)?

Do employees have a chance to appeal sanctions?

Are incentive systems in place to reward employees for following the anti-corruption program?

Are incentives applied according to operational criteria?

than “play by the rules”.

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No

In progress / comments

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2.4 Evaluation and continuous improvement Over time your company will change – and so will your business environment. You will hire new people, your senior management may change, you may have to cut back on spending due to an economic downturn. You will acquire new customers, get new suppliers, new governmental counterparts, or you may expand into new markets.

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When answering the two above shown questions you should also look for opportunities to continuously improve your program. When establishing a program initially, there is typically a tendency to do too much (e.g. too many internal controls).

Reviewing it carefully after some time may lead to the decision that some of the measures are redundant and can be replaced or completely disregarded. This may even result in cost savings. The evaluation may also show that some of your efforts need to be strengthened.

You have to make sure that your anti-corruption program stays up-to-date and still evaluation of your program to see whether

policy), and whether

entity or person to conduct the evaluation. It may be advisable to get the support of an external party (e.g. consultant) to increase independence.

The results of the review and evaluation need to be reported to your company’s senior management (e.g. owner, CEO, board). Senior management need to sign-off on changes to the program.

(including new legal requirements or demands from your customers).

You should review and evaluate the program on a regular basis – at least annually. A thorough evaluation of the anti-corruption program is not only useful to prove that your anti-corruption policies and procedures are working and are up-to-date. Identifying short-comings or learning from mistakes is just as important. Honest dealing with actually reduce costs.

There are various ways to gather the information necessary to evaluate your program.

(e.g. how do your business partners see your program).

employees tried to circumvent some of the measures.

requirements or actual corruption cases from peers within industry or region).

You may conduct such an annual review in conjunction with the annual risk assessment to save time and money.

Tool(s): Transparency International Self-Evaluation Tool

Guidance Manual for implementing the Integrity Pledge

Checklist 2.4 Evaluation and continuous improvement Yes Is the anti-corruption program evaluated on a regular basis to make sure that it is working as intended (at least annually)?

Is information collected through the internal control system considered in the evaluation?

Are questions, advice inquiries, and reported violations considered in the evaluation?

Are external sources used in the evaluation?

Is your company also making sure that the anti-corruption program stays up to date and

Does the company look for opportunities to continuously improve the program?

Are results of the evaluation reported to your company’s senior management?

Is senior management signing-off on the proposed changes?

No

In progress / comments

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Phase 3

Assessment and Participation With the completion of Phase 2 you have put commitment and policies into actions; thus you have integrated and implemented the program into your everyday business activities. And you should be proud of what your company has achieved so far. But don’t stop here. As has been shown, an anti-corruption program is not a one-time exercise but a continual process that requires regular monitoring, evaluation and improvement.

Phase 3 aims to meet this challenge by introducing a thorough and credible assessment process for your anti-corruption program and by advocating for collective action initiatives to tackle challenges you cannot face alone.

It is important to note that assessing the implementation of the Integrity Pledge means whether your company really implemented all the steps outlined in the Integrity Pledge, and how well you did (process-based assessment). Consequently, the assessment does neither include a not mean that there may not be corruption within your company, but it means that your company put reasonable and proportionate steps in place to minimize the risks and that the Integrity Pledge has been respected and the agreed actions have been implemented.

The underlying objective of this initiative is to establish a business-led movement for Egypt that is able to increase the implementation of anti-corruption practices among SMEs and to impact of individual actions and make ethics & compliance the norm of doing business in Egypt.

To motivate sound business practices sustainably, SMEs committing to anti-corruption standards should be better off than peers that do not. This can be done by offering commercial and reputational incentives. The rationale behind applying incentives is simple and intriguing: providing tangible business advantages to companies which demonstrate ethical leadership motivates even those companies which so far have not seen any value in countering corruption.

Implementing the Integrity Pledge through effective policies and procedures should thus result from your customers, banks, investors, the media and eventually even the government. prove that their commitment works in practice. Thus, an independent assessment of your company’s anti-corruption program is required.

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3.1 Submitting to an external assessment

Establishing a credible assessment process

By signing on to the Integrity Pledge (step 1.4) companies commit to undergo a regular independent assessment process.

A key characteristic of making the external assessment a credible process is the oversight by a multi-stakeholder Supervisory Board. This Supervisory Board will comprise national (and international) stakeholders from the business sector, public sector and civil society, as well as individual anti-corruption experts. The group will include anti-corruption experts as well as operative stakeholders that have the practical experiences and theoretical knowledge to guide this important activity.

Including the perspectives from a variety of stakeholders in the Supervisory Board, especially those of organized civil society, will ensure a balanced governance and avoid claims that the established requirements or practices favor only (certain) companies.

Assessing its implementation may be one of the most important aspects of a successful anti-corruption program. Signing the Integrity Pledge, and taking steps to implement it in practice, will not guarantee that the anti-corruption program is actually working. And without any independent assessment, it is also unlikely that external stakeholders will be convinced of its effectiveness and credibility – which is the basis two-fold goal: a benchmark to assess the quality of the anti-corruption program to your company. This will provide you with feedback on how well your anti-corruption program is being implemented and suggest areas for improvement.

The major activities of the Supervisory Board are:

independent and credible judgment that reasonably assures your company is really doing what you claimed to do by signing the Integrity Pledge.

Recognizing that there is currently no agreed-upon standard for independent assessments of an anti-corruption program, this process builds on existing good practice standards15 and discussions with pilot companies. The assessment needs to address two aspects: credible so that

cost considerations need to be taken into account for companies undergoing the assessment, as this initiative focusses mostly on SMEs with limited resources.

15 In order to determine the most suitable assessment approach, various international initiatives have been analyzed: the United Nations Global Compact, Ethic Intelligence, TRACE International, B LAB, Conféderation Géneral des Entreprises de Maroc, the Convention on Business Integrity in Nigeria, and the OECD Peer Review.

Integrity Pledge up-to-date with international good practice standards The Multi-Stakeholder Steering Board will be supported by a secretariat.

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Establishing a cost-effective assessment process Companies have to go through a two phased assessment process, which is divided into

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After submission, a total score will be calculated and presented to your company (intermediate results will be available to you before submission). If your company assessment. If your company scored below the threshold, you can re-submit the self-assessment after the necessary adjustments have been made.

2.) External assessment

Integrity Pledge’s requirements

While a company is best suited to provide information about internal processes, they may also be (perceived as) the most biased. Companies have a vested interest in nformation of the self-assessment has to be checked and evaluated by an external assessor to guarantee accuracy and credibility.

If the external assessor disagrees with your company’s self-assessment, recommendations for improvements will be given to your company. Your company then has the opportunity to implement corrections over a period of six to 12 months and request a re-assessment.

3.) Approval by Supervisory Board

1.) Initial self-assessment Companies are usually in the best position to provide information about their anti-corruption program, its successes, failures and practical challenges. Therefore, The aim is to collect all relevant information regarding the implementation of the Integrity Pledge within your company. questionnaire. The questionnaire will follow good practice standards (such as the United Nations Global Compact).

internal anti-corruption policy).

The Multi-Stakeholder Supervisory Board will review both the self-assessment and the external assessment and compare them with their own evaluation (including e.g. experiences, benchmarks and perception) of the company16.

assessments and thus, whether the company receives the “Integrity Award”. In case of disagreement with the results, the Supervisory Board may request (at its own discretion) additional sources of information. If no agreement can be reached the Supervisory Board serves as an escalation point, and may use a (majority based) veto if necessary.

The Supervisory Board will forward the results to the secretariat.

“Integrity Award” Companies that obtain approval from the Supervisory Board will be publicly recognized with the “Integrity Award”. This award symbolizes the high standard of integrity which the company has achieved.

the public (with due regard to sensitive information).

16 A similar innovative multi-dimensional assessment methodology is currently pioneered by – inter alia – the Convention on Business Integrity in Nigeria (www.cbinigeria.com)

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4.) Annual self-assessment After a company has received the “Integrity Award”, the self-assessment has to be updated annually to guarantee ongoing adherence to the Integrity Pledge.

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3.2 Supporting collective action initiatives Implementing the Integrity Pledge But in order to arrive at a business environment with a reduced level of corruption, more needs to be done – more than your company alone can do. It requires the concerted effort of a variety of stakeholders.17

will be automatically prepopulated in the online questionnaire. After making relevant updates, the self-assessment has to be re-submitted.

Failure to provide an updated self-assessment within a 6 months grace period will trigger the loss of the “Integrity Award”.

5.) Regular external assessment Each company has to re-do the external assessment within the timespan of three years.

If the external assessor disagrees with your company’s self-assessment, recommendations for improvements will be given. Again, your company then has the opportunity to implement corrections over a period of six to twelve months and request

the right to carry the “Integrity Award”.

6.) Approval by Supervisory Board Both the annual self-assessment as well as the external assessment will be reviewed

high standard of integrity, an “Integrity Award” will be granted that symbolizes the on-going achievement.

Even companies with a strong senior management commitment and an outstanding anti-corruption program may face various corruption-related challenges which they are unable to tackle on their own. Most notably these challenges occur in the following three areas: Procurement: Companies with strict anti-corruption policies may lose contracts to corrupt competitors.

Extortion Requests: that (especially) SMEs will be ill-equipped to withstand on their own.

Advocacy: In the long-term countering corruption will require a strong legal backing and political will. Stakeholders can push for such a policy change, but they will not have much leverage on their own – especially in the case of SMEs with limited resources.

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Cooperation between like-minded parties is necessary when trying to tackle these issues. Such cooperation, commonly referred to as “collective action”, will increase an

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Annex I: Example of an anti-corruption policy In the following, an exemplary anti-corruption policy is provided. If you intend to use this policy, please review it carefully and adopt it to your own circumstances and

anti-corruption practices are not well established, collective action approaches can

Suggested reading(s): Guide for Business

areas that the anti-corruption policy should target. However, it is recommended that the policy at a minimum covers the areas shown below. <Our company> has a zero-tolerance of corruption. This policy extends to all our business dealings and transactions in all countries in which we or our subsidiaries and associates operate. This policy is given force in a detailed anti-corruption program which is regularly revised to capture changes in law, reputation demands and changes in the business. All our directors and employees are required to comply with this policy.

In particular: through third parties. <Our company> also prohibits its employees from soliciting, employee’s family, friends, associates or acquaintances.

contributions to political parties, organizations or individuals engaged in politics, as a way of obtaining advantage in business transactions. <Our company> should publicly disclose all its political contributions.

used as a subterfuge for bribery. <Our company> publicly discloses all its charitable contributions and sponsorships.

and eliminate them.

whenever they could affect or be perceived to affect the outcome of business

directors, managers, employees and contracted parties such as agents, lobbyists and other intermediaries to prevent the risk of bribery or other corrupt behavior.

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Annex II: Identifying and mitigating risks

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documented including information on: - The timing and frequency of the assessment.

your company. To effectively prevent corruption the program needs to be tailored to

- Procedures for the risk assessment.

- People involved in the assessment.

the starting point of any successful anti-corruption program (and ongoing evaluation).

A proper risk assessment helps to identify the corruption risks that are relevant for your company and prioritize them according to their importance, impact, and likelihood of occurrence. Corruption risks can differ depending on the size, structure, geographic region, or business model of your company. Corruption risks may also differ within your company (e.g. between departments and employees).

- Reporting of outcomes.

out according to the previously agreed upon process. international regulations).

potential impact and likelihood of occurrence. The result will be a so-called “heat-map” that needs to be updated regularly to ensure that all relevant risks are continuously considered and monitored.

Mitigating the risks of corruption

business partners.

decide how to deal with them. This means determining which risks can be eliminated or reduced and then deciding how to decrease their impact or the likelihood of their occurrence through e.g. risks.

contracts.

How to conduct a risk assessment:

conduct the risk assessment (generally the Ethics & Compliance Manager). be exposed to corruption risks (e.g. sales representatives, procurement managers) and, where appropriate, external stakeholders.

The outcomes of the risk assessment, including prioritized risks and mitigation strategies, should be documented.

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Guidance Manual for implementing the Integrity Pledge

Guidance Manual for implementing the Integrity Pledge

SMEs may have fewer resources to assess risks than large companies. But they also have fewer employees and their operations tend to be less complex. This makes the

Additional resources

further collaborate with other SMEs or chambers of commerce, business associations and trade unions to gather information on corruption risks and identify mitigation options.

Business

Tools: Assessment.

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(2007): APEC Anti-corruption Code of Conduct for Business Unity South Africa (2009): An Anti-Corruption Guide for South African SMEs Center for International Private Enterprise (CIPE); Hills Program on Governance (2011): Anti-Corruption Manual for SMEs International Chamber of Commerce (2011): ICC Rules on Combating Corruption Organisation for Economic Co-operation and Development – OECD (2010): Good Practice Guidance on Internal Controls, Ethics, and Compliance Transparency International medium enterprise (SME) edition Transparency International (2009): Business Principles for Countering Bribery: Transparency International Self-Evaluation Tool Transparency International United Kingdom (2010): Adequate Procedures - Guidance to the UK Bribery Act 2010 Transparency International United Kingdom (2012): Guidance for Anti-Bribery Due Diligence in Mergers, Acquisitions and Investments U4: Anti-Corruption Resource Center (www.u4.no) (2013): An Anti-Corruption Ethics and Compliance Programme for Business: A Practical Guide Legal Library (http://www.track.unodc.org/LegalLibrary/Pages/home.aspx) World Economic Forum / Partnering Against Corruption Initiative (2005): Principles for Countering Bribery

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Guidance Manual for implementing the Integrity Pledge

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Guidance Manual for implementing the Integrity Pledge