2. EXPECTATIONS FOR BUSINESS

 

Transparency is a prerequisite for corruption prevention and disclosure.

 

Business stakeholders — state institutions, investors, market participants, employees, public organisations, consumers and the general public. Their expectations for business are transparent, ethical and corruption-free activities, bringing the best results: good and high-quality products, services developed by business, and well-paid jobs.

These expectations encourage businesses to take appropriate actions: to declare their determination to prevent corruption, implement anti-corruption programmes or individual anti-corruption measures, and be transparent in terms of corruption-related issues.

 

2.1.        Public Expectations
 

Every citizen has the right to live in a transparent and fairly-governed society, which pursues the principle of the rule of law; therefore, both the society and various public organisations believe that all business organisations, despite their country of operation, will be fair, carry out their activities in an ethical, responsible and transparent manner.

Growing concerns of the public, authorities and international organisations over the levels of corruption and problems caused by it result in increasing numbers of various public organisations and associations established on the initiative of active public participants that promote transparent and responsible business operations.

 

Such types of organisations also operate in Lithuania. Some of them may be distinguished, such as: Transparency International Lithuania, the Association for Responsible Business of Lithuania (LAVA) and Investors' Forum.

  • Transparency International Lithuania (commonly called TILS; in Lithuanian: Transparency International Lietuvos skyrius) is a division of the international organisation Transparency International[16] operating in Lithuania since 6 June 2000.  The Open Society Fund Lithuania is the founder of this organisation. TILS is a non-political organisation cooperating and coordinating its activities with both public sector and non-governmental organisations (NGOs) in Lithuania and abroad. The purpose of this organisation is to promote civic anti-corruption initiatives and their organisation in Lithuania.
  • The Association for Responsible Business of Lithuania (LAVA) [17] unites enterprises and organisations seeking to introduce the principles of responsible and ethical performance in their activities. This is an independent national platform for sharing good practices of responsible business, promoting the creation of value through cooperation between organisations, the public and the State. The LAVA originated from the National Network of Responsible Business Enterprises (commonly called NAVĮT; in Lithuanian: Nacionalinis atsakingo verslo įmonių tinklas), which launched its activities in Lithuania in 2005. The LAVA is a representative office of the UN Global Compact[18] in Lithuania and a member-partner of the European Business Network for Corporate Social Responsibility (CSR Europe)[19] in the country.
  • Investors' Forum[20] is a voluntary, totally independent and self-managed business association of the largest and most active investors in the Lithuanian economy. Founded in June 1999, Investors‘ Forum today has over 50 members.

 

Mission of Investors’ Forum: to improve business environment and investment climate in Lithuania through cooperation with public institutions and the business community. Vision of Investors’ Forum: the most investor-friendly business climate in the EU, attracting FDI for the benefit of Lithuania.

Investors’ forum together with the United Nations Development Programme was one of the pioneers to raise corporate social responsibility issues in Lithuania. Association participates in OECD anticorruption network for Eastern Europe and Central Asia. Investors‘ Forum manages business driven social labelling initiative “Clear Wave“ to promote business integrity and transparency.

 

2.2.       State Expectations
 

The National Security Strategy of the Republic of Lithuania[21] states that one of the internal risks, dangers and threats to the national security, which must be given particular attention by institutions ensuring national security, is corruption, which undermines legitimate interests of individuals and the State, discredits the principle of the rule of law, diminishes the citizens' trust in democratic values and democratic authorities, as well as reduces the country's attractiveness to foreign investors.

The problem of corruption has also been addressed by the European Commission in its Report for 2014[22] by stating that corruption is a threat to the State and society, citizens' safety, human rights, fosters shadow economy and reduces the country's attractiveness to foreign investments. This phenomenon is detrimental to good governance, efficient management of the public funds and market competition. In extreme cases it breaks the citizens' trust in democratic institutions and processes.

 

"Corruption is the spoke in the State's wheels, preventing faster development and better life to our persons," affirmed President Dalia Grybauskaitė (in January 2016).

 

The Special Investigation Service of the Republic of Lithuania (commonly called STT; in Lithuanian: Specialiųjų tyrimų tarnyba)[23] founded in 1997 is the central national body of Lithuania for combating the corruption phenomenon in the country. This body is independent of the executive authority and accountable to the President of the Republic and the Seimas (Parliament) of the Republic of Lithuania.

The main objectives of the STT are to detect and investigate corruption-related criminal offences, develop and implement anti-corruption measures. The service focuses its activities on reducing corruption in the public sector and promoting intolerance of the public for this phenomenon.

The National Anti-Corruption Programme. In order to ensure a long-term, effective and targeted anti-corruption and control system in Lithuania, the National Anti-Corruption Programme of the Republic of Lithuania for 2015-2025 was approved in 2015[24]. To implement the objectives and tasks of the Programme, the Government of the Republic of Lithuania approved the Inter-Institutional Action Plan for 2015-2019[25] (as it was mentioned, measure 2.1.2 of the Plan involves the preparation of handbooks on the creation and implementation of the anti-corruption environment in the public and private sectors).

The implementation of the Programme is organised and controlled by the Government with participation of the STT. The Programme is implemented by the ministries, the Special Investigation Service, the Prosecutor General’s Office of the Republic of Lithuania, the Public Procurement Office, the Chief Official Ethics Commission, and the Central Electoral Commission of the Republic of Lithuania and other state and municipal institutions and bodies within their remit.

Non-governmental organisations, the groups of society concerned and private sector entities may contribute to the implementation of the Programme and achievement of its objectives and tasks.

Anti-Corruption Policy and the OECD. Effective anti-corruption activities are of major importance for Lithuania's efforts towards the membership in the OECD, and the country has already been invited to s negotiations.

What makes this membership important for Lithuania is that it would improve the competitiveness of the Lithuanian economy in the international context and enhance the trust in the State. The OECD members receive more favourable assessments by international rating agencies and financial institutions, and this might help the country to have better borrowing conditions.

On 8 July 2015 the Council of OECD adopted the Roadmap for the Accession of Lithuania to the OECD Convention[26], which sets out the terms and conditions for Lithuania's accession.

According to this Roadmap, the OECD committees will perform detailed reviews and all of them will have to confirm the country's adherence to the OECD criteria, including various business branches and economic sectors, such as investments, combating corruption, company management, financial markets, insurance, competition, taxes, environment, chemicals, public governance, regulation policy, statistics, economy, education, employment and social affairs, healthcare, trade, export credits, fisheries, science and technologies, digital economy, and consumer policy.

There are six stages of assessment envisaged for Lithuania f, one of which was successfully passed in December 2015, during the second assessment, which took place in June 2015, the OECD Working Group  provided a very positive assessment of  the general institutional and legal system for corruption control existing in Lithuania, proposed to grant Lithuania a member status in the Working Group[27] and noted several directions, where Lithuania should make greater efforts: to expand the application of criminal liability to legal persons, to ensure without reservations  the seizure of  income received from transactions made through bribery of public officials, and to provide for the possibility that persons offering bribes through intermediaries operating in other countries could be prosecuted in all cases.[28] In view of the OECD recommendations laid down, appropriate amendments to the Criminal Code of the Republic of Lithuania were adopted on 10 November 2016.[29]

 

2.3.       Expectations of Employees
 

Organisations believe that their employees will be loyal and motivated. In their turn, employees believe that their employer will demonstrate ethical values, social responsibility, defend the interests of the staff as well as give a clear position in combating corruption and other types of dishonest behaviour.

An organisation and its staff usually have a lot of common interests, however, in the event of the corruption incident, they often diverge.

Although both sides may experience very negative effects (the organisation — costs for lawyers and restoring  reputation, possible big fines, limitation of activities or even liquidation, loss of potential investors and partners; an employee — a fine or imprisonment, conviction, ruined professional career, difficulties in searching for a new job, etc.), during criminal prosecution the organisation will be interested to  lay the greater blame on the employee who participated in the act of corruption, while the employee will maintain that he/she was acting on behalf of the management,  that the management was informed, and that the organisation had no sufficient anti-corruption policy, which prohibits appropriate action, or that there was no such training at all.

 

 It is noteworthy that:

  • The Labour Code requires that, when concluding an employment contract, the employer or his authorised person must introduce the person being employed upon signature to the conditions of his potential work, the collective agreement, work regulations and other acts regulating his work, which are in force at the workplace [15];
  • In its cassation practice the Supreme Court of Lithuania has stated that should the employer fail to comply with the obligation to introduce the employee to his / her duties and if the employee, although being careful enough, fails to comply with certain duties or performs them insufficiently, these actions on behalf of the employee may not be regarded as culpable and used as the basis for disciplinary liability[16];
  • Article 20(3) of the Criminal Code states that a legal entity may be held liable for criminal acts of a natural person, where a criminal act was committed for the benefit or in the interests of the legal entity by a natural person acting independently or on behalf of the legal entity, or as a result of insufficient supervision or control;
  • The implementation of the provisions of the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions provides for liability of legal persons regardless of prosecution of natural persons.

 

Therefore, it is very important to ensure that all organisations include clear anti-corruption provisions and requirements for ethical behaviour in their legal acts and introduce them to employees upon signature, as well as organise periodical anti-corruption training.

There is a trend towards staff selection companies that they more and more often receive employers’ requests for recruiting personnel from such organisations, which implement the anti-corruption programmes and training of an appropriate level.

 

2.4.       Expectations of Business Partners
 

Business organisations believe that their business market participants (partners, suppliers, clients, etc.) will be fair in implementing their contractual obligations and free of corruption, otherwise the organisations would risk of becoming accomplices in corruption activities and thus being subjected to criminal or civil liability.

There is also a huge risk for reputation if it turns out that a certain organisation maintains contacts with corrupt companies or individual natural persons involved in corruption.

The proper management of corruption risks in business relations means having and consistently implementing the stringent anti-corruption policy. Therefore, a potential business partner should always be clearly informed at once of the future requirements and expectations raised by the organisation in the field of combating corruption. More and more often organisations include these requirements and expectations in their contracts with business partners[32].

 

2.5.       Expectations of Investors
 

More and more investors engage in responsible investment practices, raising clear expectations for an organisation’s risk management, business ethics and social responsibility. The essence of these expectations is zero tolerance for corruption and consistent corruption prevention.

 

These expectations shall mean:

  • Responsibility assumed by the management. A business organisation must have a determination to declare zero tolerance for corruption and a publicly-available policy approved by the management defining what this means for the company, which would include the main corruption risks related to the appropriate business sector. The management must also ensure that the organisation has a system in place for dealing with potential incidents of corruption.
  • Implementation and compliance. The requirement of zero tolerance for corruption must be implemented by applying effective corruption prevention measures which must be integrated into the organisation's business processes. The anti-corruption measures must help prevent corruption, identify situations, which put organisations at risk, and include the guidelines for incident management.
  • Accountability and communication. The requirement of zero tolerance for corruption must be clearly communicated top-down to the entire organisation. The voice of the top management is critical in efficient combat against corruption.

 

The adherence to the Anti-corruption Programme should be reported in a bottom-up manner, i.e. from the lowest level units of the organisation up to the Board or other supreme management body. The principle of transparency should be exercised in the company's public reports by providing information on the anti-corruption programme, organisation's ownership interests and the main financial data. Incidents should be reported to the Chief Compliance Officer, the Audit Committee, the Board and appropriate institutions in accordance with the provisions of the Anti-corruption Programme.

In the case of serious corruption incidents, the management itself should inform the major stakeholders, such as clients, partners or owners.



[16] http://www.transparency.lt/apie-mus/ 
[17] http://asociacijalava.lt/ 
[18] https://www.unglobalcompact.org/ 
[19] http://www.csreurope.org/ 
[20] http://www.investorsforum.lt/lt/ 
[21] National Security Strategy approved by Government of the Republic of Lithuania Resolution No IX-907 of 28 May 2002, subpar. 12.2.: https://www.e-tar.lt/portal/lt/legalAct/TAR.2627131DA3D2/TAIS_429234 
[22] EU Anti-corruption Report  by the European Commission, 2014, which is  available on the website: http://ec.europa.eu/dgs/home-affairs/e-library/documents/policies/organized-crime-and-human-trafficking/corruption/docs/acr_2014_lt.pdf 
[23] More information on the STT and its activities is available on the website: http://www.stt.lt/lt/menu/stt-veikla/#turinys 
[24] National Anti-Corruption Programme of the Republic of Lithuania for 2015-2025 adopted by  Government of the Republic of Lithuania Resolution No XII-1537 of 10 March 2015: https://www.e-tar.lt/portal/lt/legalAct/25c529d0cbcd11e4aaa0e90fce879681 
[25] Government of the Republic of Lithuania Resolution No 648 of 17 June 2015 On the Approval of the Inter-institutional Action Plan for 2015-2019 for the Implementation of the National Anti-Corruption Programme of the Republic of Lithuania for 2015-2025, which is available here:  https://www.e-tar.lt/portal/lt/legalAct/13fd20601e6e11e586708c6593c243ce/gCsWGgZdEt 
[26] The Roadmap is available on the OECD website:

http://www.oecd.org/officialdocuments/publicdisplaydocumentpdf/?cote=C%282015%2992/FINAL&docLanguage=En 
[27] The status of a member grants the Lithuanian representatives a  possibility  to participate  in  all meetings of the OECD Working Group (except for confidential sessions), to make oral statements during the meetings m, propose  items to the Agenda, to take part in the discussions of the Working Group by discussing   specific criminal cases of international bribery.
[28] http://www.juozasbernatonis.lt/lietuva-kyla-laipteliu-auksciau-stojimo-i-ebpo-procese/ 
[29] Law Amending  Articles 20, 225, 226, 227, 230 of the Criminal Code of the Republic of Lithuania and the Annex to the Code: https://www.e-tar.lt/portal/lt/legalAct/c371df70abe111e6b844f0f29024f5ac  
[30] Article 99( 4) of the Labour Code of the Republic of Lithuania: https://www.e-tar.lt/portal/lt/legalAct/TAR.31185A622C9F/encPGlOTEP 
[31] The  judgement of the Lithuanian Supreme Court in Civil Case No. 3K-3-314/2005 of 30 May 2005.
[32] See Annex No.1. Declarations of Transparency in the Implementation of a Contract to the Handbook.