1. PREFACE

 

Transparent, fair and open business activities are one of the key elements of impeccable business reputation. According to sociological and scientific research, in the long run business companies implementing anti-corruption measures acquire a greater competitive advantage against the rest of the market participants thus protecting and even improving their image, attracting more investments and establishing long-term relations with reliable business partners.

 

1.1.        Purpose
 

A Handbook for the Creation and Implementation of Anti-Corruption Environment in the Private Sector (hereinafter referred to as the Anti-Corruption Handbook for Business, Handbook or AHB), is a methodological tool of practical application for Lithuanian business organisations (entities)[1] , the purpose of which is:

  • to assist in creation of the anti-corruption business environment, to enhance business transparency and responsibility;
  • to enhance the awareness of damage caused by corruption in business sector and to encourage the taking of active measures in combating this phenomenon;
  • to advise on identifying corruption risks, measures to be taken and implemented for   management of the risks;
  • to educate business on legal regulation of corruption, to inform about the liability of both employees and business organisations for corruption-related offences, to share specific practical examples of corruption-related offences;
  • to provide advantages of the implementation of corruption prevention measures and transparent business practice in favour of business competitiveness.

 

1.2. Background of the Development of the Anti-Corruption Handbook
 

The Anti-Corruption Handbook for Business was prepared in implementing measure 2.1.2 of the Inter-institutional Action Plan for the Implementation in 2015-2019 of the National Anti-corruption Programme of the Republic of Lithuania for 2015-2025[2] and having regard to the following:

1) Article 12 of the United Nations Convention against Corruption, which was ratified by Lithuania in 2006, states that each state must take measures to prevent corruption in the private sector.

2) The OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions[3], the ratification of which is one of the preconditions for Lithuania's membership in the OECD, establishes the enforcement of the extensive liability of legal persons for the bribery of foreign public officials, immediate and effective mutual legal assistance in criminal investigations brought by a Party concerning offences.

3) Corruption is universally-recognized as a serious hindrance to a country’s social, economic and political development. Corruption:

  • undermines the rule of law, results in the inefficient allocation of scarce resources, demoralizes democratic political systems and undermines respect for human rights;
  • impedes economic growth, destroys predictability, thus increasing business costs and discouraging both domestic and foreign investments[4].

4) The results of sociological research show that the problem of corruption is widespread in the private sector and it significantly damages the sector. The actions and decisions of corrupt leaders and lower-level managers of business organisations are most often detrimental to organisation owners (stockholders, partners, shareholders, etc.). When the public becomes aware of such cases, huge damage is caused to the organisation’s reputation, the restoration of which requires a lot of time, efforts and cash resources.

5) According to preliminary calculations, the cost of corruption for the taxpayers of the European Union is approximately EUR 120 billion annually, which almost equals the annual EU general budget and constitutes 1% of the EU’s GDP[5].

6) Striving for the long-term economic growth and welfare of citizens in the country, a transparent, cost-efficient and effective investment and management of the EU Structural Funds assistance and the State resources in both business and public sectors, also enhancement of the public trust in transparency of the EU Structural Funds assistance investment process and procedures are of crucial importance[6].

 

Moreover, international companies, in order to reduce business risks, while searching for  business partners quite often take note of the fact whether  their potential partner applies  anti-corruption measures; and some international organisations, in making decisions on  project funding and the opportunities of organisations for participating  in the projects, also check whether these organisations are  not included into the blacklists, whether they have the anti-corruption measures in place, etc.[7]

Therefore, it follows that the anti-corruption measures implemented by business organisations on their own initiative are useful, effective, cost-efficient and generating value added. All the more that an organisation actively working towards transparency is more successful in dealing with its reputation restoration matters in the  case of corruption manifestations.

 

1.3.       International Experience
 

The preparation of the Anti-Corruption Handbook for Business involved the use of the following international documents of the EU and other countries, which also define the guidelines for detecting and reducing corruption in business:

  1. Anti-corruption Handbook for the Norwegian Business Sector prepared by Transparency International Norway[8];
  2. Anti-Corruption Ethics and Compliance Handbook for Business jointly prepared by the OECD, United Nations Office on Drugs and Crime (UNODC) and the World Bank[9];
  3. OECD Good Practice Guidance on Internal Controls, Ethics, and Compliance [10];
  4. OECD Principles of Corporate Governance for 2015[11];
  5. OECD Principles of Corporate Governance of State-owned Enterprises for 2015[12];
  6. OECD Risk Management by State-Owned Enterprises and their Ownership for 2016[13];
  7. The Third UN Anti-corruption Toolkit of the Global Programme Against Corruption 2004[14].

 

1.4.       Message from the Authors
 

The Anti-Corruption Handbook for Business was prepared through cooperation between the  public and the private sector, i.e. the major initiator and originator of this Handbook is the Special Investigation Service of the Republic of Lithuania (lead author — Aloizas Šafranovič, Chief Specialist of the Corruption Risk Division of the Department of Corruption Prevention of the Special Investigation Service of the Republic of Lithuania; direct supervisor of the author  — Vidmantas Mečkauskas, Head of the Corruption Risk Division of the Department of Corruption Prevention of the Special Investigation Service of the Republic of Lithuania, coordinatorRomualdas Gylys, Head of the Department of Corruption Prevention of the Special Investigation Service of the Republic of Lithuania, technical assistance editing the manuscript - Gerda Jurgelevičiūtė, Specialist of the Corruption Risk Division of the Department of Corruption Prevention of the Special Investigation Service of the Republic of Lithuania), with active contributions  from the Lithuanian Association for Responsible Business (commonly called LAVA; in Lithuanian: Lietuvos atsakingo verslo asociacija) (represented by Renata Gaudinskaitė, Expert of Business Responsibility Development, Chapter 2 and subchapters 4.3, 6.13, 6.15, 6.14, 6.16), DNB bankas, AB (Vytautas Danta, Head of Compliance Department, subchapters 6.1, 6.6, 6.12), Ernst & Young Baltic, UAB (Liudas Jurkonis, Head of Fraud Investigation & Dispute Services for the Baltic Region, Chapter 5 and subchapters 6.13, 6.17), Chief Official Ethics Commission (Tomas Čiaplinskas, Senior Adviser of the Investigations Department, subchapters 6.7, 6.8, 6.11), Ministry of Justice (Marius Vainauskas, Adviser of the Division of Criminal Justice under the Administrative and Criminal Justice Department, subchapter 6.12), Transparency International Lithuania (Project Manager Rugilė Trumpytė, subchapter 6.14), TEO LT, AB (Tatjana Lukoševičienė, Lawyer, Head of Compliance Team, subchapter 6.13), National Anti-corruption Association (Expert Vytas Rimkus, Chapter 5), Clear Wave (Project Manager Andželika Rusteikienė, Chapter 3), Algoritmų sistemos, UAB (Paulius Vaitkevičius, Director for Business Development, digital versions of the Handbook, web interface and its system management). During the preparation of the Draft Anti-Corruption Handbook for Business, it was submitted for public coordination and, for coordination with business associations as well as state and municipal institutions — their comments and proposals were taken into consideration, and the Anti-corruption Handbook for Business was adjusted accordingly.

 

The Anti-Corruption Handbook for Business consists of four main parts:

  • introduction;
  • theoretical part (Chapters 2-4), the purpose of which is to help understand the concept of corruption, its detrimental effect and why business needs anti-corruption policy;
  • practical part (Chapters 5, 6), the purpose of which is to give practical advice on creating the anti-corruption environment in organisations;
  • annexes with specific examples of good practice.

 

The authors believe that this Handbook is a unique tool for business entities seeking to implement transparent and responsible activities, which will help business organisations apply effective anti-corruption measures in their activities that will help identify and manage the potential risks of corruption therein, raise business anti-corruption awareness, promote ethical behaviour, immunity to corruption, develop responsibility and accountability.

It is important to understand that "corruption is a complex phenomenon with economic, social, political and cultural dimensions, which cannot be easily eliminated. An effective policy response cannot be reduced to a standard set of measures; there is no 'one size fits all' solutions"[15], thus, there is no single model fits all diverse businesses.

The Anti-Corruption Handbook has no single specific model, which a specific business entity could adapt to itself.

The Anti-Corruption Handbook for Business is of a recommendatory nature, therefore it is designed in such a manner that business entities of different levels of creativity and abilities are able to adapt it differently, and it fits   a specific business entity. We believe that the Handbook will help to achieve best results.



[1] The term “business entities”  means private legal persons as well as state and municipal enterprises,  public limited companies.
[2] https://www.e-tar.lt/portal/lt/legalAct/13fd20601e6e11e586708c6593c243ce/gCsWGgZdEt 
[3] https://e-seimas.lrs.lt/portal/legalAct/lt/TAP/1b1cff20316211e6a222b0cd86c2adfc?positionInSearchResults=0&searchModelUUID=ad083ff6-9125-45ca-a679-bf5836f3f5c1 
[4] Corruption prevention to foster small and medium-sized enterprise development prepared by the United Nations Office on Drugs and Crime (UNODC) and the United Nations Industrial Development Organization (UNIDO).

https://www.unodc.org/documents/corruption/Publications/2012/Corruption_prevention_to_foster_small_and_medium_size_enterprise_development_Vol_2.pdf 
[5] Communication from the Commission to the European Parliament, the Council and the European Economic and Social Committee regarding Fighting Corruption in the EU of 6 June 2011 (COM(2011) 308 final).

http://register.consilium.europa.eu/doc/srv?l=LT&f=ST%2011237%202011%20INIT 
[6] The Operational Programme for Economic Growth directly designed for competitiveness enhancement by creating a favourable environment for innovations and small and medium business as well as improvement of economic infrastructure efficiency was implemented from the EU Structural Funds assistance and the State resources (a total of approximately EUR 3.9 billion). The Operational Programme for the EU Structural Funds' Investments in 2014-2020 also envisages funding for promoting the competitiveness of small and medium business, fostering employment-enhancing economic growth which reduces unemployment, etc.

[7] For example: http://web.worldbank.org/external/default/main?theSitePK=84266&contentMDK=64069844&menuPK=116730&pagePK=64148989&piPK=64148984 

[8] http://www.transparency.no/wp-content/uploads/sites/10/TI_beskyttdinvirksomhet_eng_web.pdf 

[9] http://www.oecd.org/corruption/anti-corruption-ethics-and-compliance-handbook-for-business.htm 

[10] https://www.oecd.org/daf/anti-bribery/44884389.pdf 

[11] http://www.oecd-library.org/docserver/download/2615021e.pdf?expires=1464293837&id=id&accname=guest&checksum=DF1E08DF261420BEE60A60276798FD8C 

[12] http://www.oecd.org/daf/ca/soemarket.htm 

http://www.oecd-ilibrary.org/governance/oecd-guidelines-on-corporate-governance-of-state-owned-enterprises-2015_9789264244160-en 
[13] http://www.keepeek.com/Digital-Asset-Management/oecd/finance-and-investment/risk-management-by-state-owned-enterprises-and-their-ownership_9789264262249-en#.WBGJruQcSUk#page1 

[14] http://www.u4.no/recommended-reading/the-global-programme-against-corruption-un-anti-corruption-toolkit-third-edition/downloadasset/803 
[15] Report from the Commission to the Council and the European Parliament EU Anti-Corruption Report, 2014, p. 3: http://ec.europa.eu/dgs/home-affairs/e-library/documents/policies/organized-crime-and-human-trafficking/corruption/docs/acr_2014_lt.pdf