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WHY ZERO TOLERANCE AGAINST CORRUPTION IS IMPORTANT FOR BUSINESS

On 30 May 2022, Transparency International Latvia (TI Latvia, Delna) and the Corporate Social Responsibility Platform (CSR Latvia) launched the Zero Tolerance Against Corruption initiative. By joining the initiative, companies agree to follow and promote the principles of transparency and to implement and disclose anti-corruption policies and procedures within the company and the business environment in general. Bonava Latvia, Pauls Stradiņš Clinical University Hospital, Rīgas Meži, Schwenk Latvia and State Real Estate are the first companies that have joined the initiative.

The launch event was joined by:

  • Minister of Justice Jānis Bordāns,
  • Nicola Allocca, Chair of the OECD Business Anti-Corruption Committee,
  • Dace Liberte, Head of the OECD and Economic Cooperation Division, Ministry of Foreign Affairs,
  • Agnese Gaile, Head of Process and Sustainability in the Baltics, Bonava Latvia,
  • Jānis Naglis, Member of the Board of Paula Stradiņš Clinical University Hospital,
  • Anita Skudra, Chairperson of the Board, Rīgas Meži,
  • Evita Goša, Member of the Board, Environmental and Legal Director of of Schwenk Latvia,
  • Oskars Cēris, Internal Security Manager, State Real Estate.

The discussion was moderated by Agnese Alksne-Bensone, Chairperson of the Board of CSR Latvia. Opening remarks were given by Inese Tauriņa, Executive Director of TI Latvia.

CONTEXT

Studies show that most companies around the world have experienced corruption or corruption attempts in the course of their operations, yet many still lack effective anti-corruption programmes and the skills to assess them. Inadequate anti-corruption mechanisms risk exposing organisations to further instances of corruption in the future, undermining their reputation and competitiveness, hindering the attraction of foreign investment and negatively affecting public perceptions of the business environment in general.

The analysis carried out by TI Latvia in 2021 on anti-corruption disclosure practices in Latvian companies highlighted the relevance of this issue in the Latvian context. To help companies prevent, detect and fight corruption, last year TI Latvia developed the Open Business Guidelines and now invites companies to join the Zero Tolerance Against Corruption initiative.

BUSINESS INTEGRITY AND ZERO CORRUPTION

In the first part of the event, external experts gave brief insights into current developments in the field of anti-corruption.

The Minister of Justice, Jānis Bordāns, stressed that in the fight against corruption, everyone must be prepared to act with courage. This entails changing both people’s attitude when faced with instances of corruption and the attitude towards those who are already actively taking a stand against it. Whistleblowers must not be ostracised and regarded as traitors, and the sense of urgency in the fight against corruption must not disappear. The Minister of Justice called for corruption to be seen as the disintegration of human values, with society, businesses, the economy and public administration disintegrating along with it.

Nicola Allocca, Chair of the Organisation for Economic Co-operation and Development (OECD) Business Anti-Corruption Committee, introduced the audience to the OECD Anti-Bribery Convention, one of the most important anti-corruption instruments setting legally binding standards to criminalise bribery of foreign public officials in international business, and the OECD 2021 Renewed Anti-Corruption Recommendations. He underlined the global nature of corruption, stressing that we must all work together to prevent corruption by sharing experiences and information and promoting a new possible UN Sustainable Development Goal 18 – zero corruption.

Dace Liberte, Head of the OECD and Economic Cooperation Division at the Ministry of Foreign Affairs, told us more about the OECD Guidelines for Multinational Enterprises, one of the first international instruments dedicated to responsible business conduct. Published in 1976 and updated in 2011, the document was addressed to both governments and companies and remains relevant today. It is now the reference document when it comes to responsible business. The Guidelines underline that a company has a responsibility to identify corruption risks, assess which are the most important ones, take measures to mitigate them; then evaluate the effectiveness of these measures and make improvements. Liberte also pointed out that in February this year, the European Commission presented a proposal for a directive on due diligence for sustainability. The text of the directive is based on both the guidelines and the methodology described in the OECD recommendations on due diligence for responsible business conduct.

DISCUSSION OF COMPANY REPRESENTATIVES

In the second part of the event, representatives from the first five signatories to the Zero Tolerance Against Corruption initiative, pledging to adopt and promote the principles of transparency and to implement and publicise anti-corruption policies and procedures within the company and the business environment in general, discussed the following questions:

What prompted you to turn your attention to anti-corruption issues?

Agnese Gaile (Bonava Latvia) and Evita Goša (Schwenk Latvia) pointed out that the companies they represent have always paid attention to anti-corruption, but that public interest has now encouraged them to also share their knowledge and good practices with others. Jānis Naglis (Pauls Stradiņš Clinical University Hospital) stressed that as one of the largest employers in Latvia, dealing with thousands of clients a year, the company feels a social responsibility to prevent corruption. Anita Skudra (Riga Forests) mentioned that this topic was raised by whistleblowers in the company last year, and encouraged by a favourable political environment in the Riga City Council, which suggested that these issues could be openly discussed. Oskars Cēris (State Real Estate) explained that anti-corruption has been a long-standing issue, as state capital companies have obligations imposed by the legislator in this area. The company also mentioned that it felt social responsibility due to its size and the potential risks arising from its sector of activity.

What is the biggest ethical dilemma or challenge for companies?

Several companies mentioned the shadow economy as their biggest challenge, which has become even more widespread in the wake of the pandemic. It was pointed out that both attracting and retaining or integrating employees is difficult due to the prevalence of the informal economy. Challenges from third parties, i.e. getting partners and clients to respect the company’s ethical standards, were also mentioned. Social responsibility, i.e. the perception that the company serves society, was also highlighted.

Who in the company is responsible for ethical business, transparency and zero tolerance against corruption?

The companies agreed that legislation alone cannot make a significant difference in preventing corruption, because without internally thought-out anti-corruption mechanisms, change can only be a formality. The role of management is particularly important in bringing about change, as the higher-ups set the tone by example, but all employees must take responsibility for their actions. In order for employees to be able to do this, it is important to provide full employee training.

For the business environment to become intolerant of corruption, who needs to change first: society, business, public authorities?

It is important that the public understands how corruption affects various processes, because this understanding makes corruption unacceptable everywhere else. At the same time, the division between state, society and business can undermine everyone’s responsibility in the fight against corruption – we are all connected and we can all do something to improve the situation. We need to start with the courage to say ‘no’; the ability to admit our mistakes and to learn.

How to join the initiative?

TI Latvia (Delna) and CSR Latvia invite companies to join the Zero Tolerance Against Corruption initiative to jointly promote business integrity and transparency in companies in Latvia. Working together, we will encourage companies to disclose information about their anti-corruption policies and procedures, help companies understand best practices in disclosing information, and raise awareness about the implementation and improvement of anti-corruption measures in companies in general.

To find out how to join the Zero Tolerance Against Corruption initiative, click here->.

To watch the Zero Tolerance Against Corruption launch event (in Latvian), click here->.

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