5. CREATION OF ANTI-CORRUPTION ENVIRONMENT

 

In Lithuania both the public and private sectors have to strive for zero tolerance for corruption[63]. Keeping in mind all measures created for that purpose, it seems that this is the case. For example, the public sector has the National Anti-Corruption Programme and other corruption prevention measures developed[64], while the private sector implements various measures regarding zero tolerance for corruption, for example, Anti-Corruption Policy, Gifts Policy, Policy for Avoiding Conflicts of Interest and Ethical Codes, which constitute an integral part of organisations' internal rules of procedure.

Greater transparency and zero tolerance for corruption in the private sector could be achieved by developing anti-corruption policies for different fields of the private sector or individual companies, for example, an anti-corruption handbook for industrial organisations, an anti-corruption handbook for banking and credit organisations, an anti-corruption handbook for small businesses, etc.

It is noteworthy that there is no single universal model for creating anti-corruption (unfavourable for corruption) environment in business organisation(s). Organisations differing in size and type of activities can encounter different risks of corruption, thus the individual corruption prevention measures discussed in this Handbook may be unequally effective and / or relevant.

Depending on the goals set, risks posed by corruption, anti-corruption awareness and financial capacities, each business organisation should choose its own model of creating anti-corruption environment, corruption prevention measures and the extent to which these will be applied in the organisation.

 

The two alternative models for creation of anti-corruption environment and Ernst & Young methodology below are presented as an example, while the individual corruption prevention measures to be applied in business are provided in the subsequent chapter.

 

The first alternative — creation of anti-corruption environment in organisations by implementing typical corruption prevention measures:

  • The success of anti-corruption activities mostly depends on the will and determination of the management of an organisation to implement the policy of zero tolerance for corruption. Namely the management must be the main initiator and promoter of anti-corruption ideas at the organisation. The management must transmit the main message that corruption will not be tolerated in this organisation. Therefore, first of all, it is necessary to agree upon the role of the management of the business organisation in anti-corruption policy, transparency rules for directors, shareholders, board and council members; it should also be agreed on impeccable reputation requirements and management of conflicts of interest. It is essential to develop the management's understanding about the damage caused by corruption and fraud, in order to make them support anti-corruption initiatives.
  • Later on the organisation should analyse the situation and identify the extent of risk of corruption at the organisation, the level of employees' tolerance for corruption, corruption risk factors in the most significant areas of the organisation's activities, elimination of which would reduce the risk of corruption and dishonest behaviour.
  • The gathered information should be the basis for deciding on the content and scope of the organisation's anti-corruption policy as well as creating the Codes of Ethics and Conduct for the employees, the major purpose of which would be transparency[65], integrity and exemplary behaviour.
  • For the organisation’s anti-corruption policy were practicable, the provisions of the Codes of Ethics and Conduct were not declarative and the compliance with them were ensured, penalties for non-compliance with them on equal conditions were applied, a person responsible for corruption prevention should be assigned.
  • Later on the whistleblower protection mechanism should be set up and the procedure for reporting cases of corruption should be defined.
  • Then, the rules for the management, use and disposal of the organisation’s property should be established.
  • Further on, gifts and representation policies, adjustment and avoidance of conflicts of interest policies should be discussed and regulated, and the rules for charitable donations and sponsorships should be established.
  • If an organisation is involved in lobbying, it should be agreed on the principles of such involvement.
  • The company should establish the principles and procedure for its accountability to the public, clients, partners, and other interested parties.
  • The company should conduct honesty and loyalty assessments of prospective employees and those working in the company; it should also identify the level of staff tolerance for corruption. Periodic anti-corruption education and development of the employees' anti-corruption awareness should also be implemented by the company.
  • Regular analysis of the environment at the organisation and identification of potential corruption risk factors should also be performed, and specific corruption prevention measures for elimination of the corruption risk factors identified should be agreed upon.
  • Also, transparency requirements for business partners and procedures for checks on them should be established.
  • Each organisation should agree on measuring the overall anti-corruption awareness of the organisation, the principles and procedure for anti-corruption education.
  • Where appropriate, the organisation should develop an anti-corruption programme and the plan of its implementing measures.

 

The second alternative — planned creation of anti-corruption environment considering the needs of a specific organisation.

As it was mentioned, there is no single model to guarantee success in creating and implementing the anti-corruption environment in a business organisation. Corruption prevention experts[66] propose implementing this process in several stages:

 

  • Stage one — organisation’s self-assessment / analysis of the current situation in a business organisation

First of all, an organisation should assess what has already been done in the field of anti-corruption, transparency and other fields related to formation of an unfavourable environment for corruption as well as to identify the major risks of corruption, their degree, potential effects, etc. (this involves an "informal analysis" — a pragmatic corruption risk analysis of all operational processes — based on the personal knowledge and experience of the expert). This may require hiring external consultants.

 

  • Stage two — choosing a model (its scope) for creation of the anti-corruption environment

This stage involves a self-assessment of the organisation's size, volumes of activities, carrying out of a cost-benefit analysis and making the "political" decision on what anti-corruption measures (and to what extent) will be implemented in the organisation, as well as the time-span and human resources (independently or by hiring external experts) for that, etc.

This stage should be consolidated by a "political declaration", i.e. an internal document adopted by the supreme management body of the organisation, which would establish the "political will", define the principal values, consolidate the model for the formation of anti-corruption environment chosen at that stage, and assign the persons responsible for the creation of anti-corruption environment, etc.

 

  • Stage three — creation and implementation of the model of anti-corruption environment

Depending on the size of the organisation and the degree of the risk of corruption in its activities, the anti-corruption environment in the organisation could be of two models (levels):

a) Basic model of anti-corruption environment — formation of anti-corruption environment based on the correction methods of the behaviour of the members of the organisation's collective.

b) Extended model of anti-corruption environment — formation of anti-corruption environment based on behaviour correction and organisational-technical methods focused on elimination of the key reasons and preconditions for corruption both in the company's collective and operational processes.

 

a) The basic model of anti-corruption environment provides for a possibility to influence the key reason for corruption — the aim to gain illegal profit at the cost of the State, competitors or the employer. The main purpose of this model is to create and maintain an organisation’s micro-climate, which would encourage the employees to be fair, responsible, transparent and loyal in performing the duties assigned to them, as well as adhere to the rules of conduct, etc. This model could be implemented by using the following measures:

  • defining and consolidating organisational values and behavioural rules / standards for all collective members with no exceptions based on principal values (intolerance for corruption, honesty, responsibility, loyalty, etc.);
  • regulating the issues related to the adjustment of work-related and private interests in the implementation of assigned duties;
  • providing for sanctions, as measures having effect, for failure to comply with the established requirements (in order to create conditions that would make corrupt and other intolerable behaviour inexpedient);
  • regularly and purposefully implementing the staff training in this field;
  • providing a description of procedures and appointing responsible persons who would ensure effective and regular implementation of the rules of conduct, the requirements for adjustment of work-related and private interests.

 

Where appropriate, additional measures could include:

  • At the stage of staff selection:
    • appropriate assessment of the candidates' personal data, biography and references from previous workplaces;
    • testing of the candidate’s personal qualities.
  • During employment:
    • periodical assessment of the employees' honesty (adherence to the rules of conduct, loyalty);
    • developing the staff cross-checking system (to provide for a duty to report “dishonest behaviour” / non-compliant with behavioural standards and to promote such reporting behaviour), ensuring the "four-eyes principle"[67].
    • assessment of transparency in operational processes.

 

b) The extended model of anti-corruption environment refers to formation of anti-corruption environment based on behaviour correction and organisational-technical methods focused on elimination of the key corruption problems, reasons and preconditions   at the organisation. Its purpose is to create and maintain an organisation’s micro-climate, which would encourage employees to be fair, responsible, transparent and loyal in performing their duties/functions as well as to adhere to the rules of conduct; in addition, to use technical and organisational measures to withdraw or markedly restrict the opportunity to act not in compliance with behavioural standards, and to enhance the probability of being caught upon violating them.

 

This model could be implemented by using the following measures:

1) defining and consolidating organisational values and behavioural rules / standards for all collective members with no exceptions based on principal values (intolerance for corruption, integrity, responsibility, loyalty, etc.);

2) regulating the issues related to the adjustment of work-related and private interests in the implementation of assigned duties;

3) providing for sanctions, as measures having effect, for failure to comply with the established requirements (in order to create conditions that would make corrupt and other intolerable behaviour inexpedient);

4) regularly and purposefully implementing the staff training in this field;

5) developing the corruption risk management system (process) in the organisation, which would include:

  • defining processes that would be deemed as risky in terms of corruption, as well as reasons and conditions, which create preconditions for the probability of manifestation of corruption, therein;
  • an assessment of risks and potential consequences of corruption (including potential damage by assuming risks and cost assessment) as well as making the decision to ignore / assume risk or manage it, i.e. implement all actions immediately or by preparing a measure plan;
  • the implementation of planned actions (i.e. the elimination of reasons and conditions that are determined by inappropriate regulation, management, absence of control and accountability or insufficiency; also, the implementation of technical and organisational measures withdrawing or restricting the opportunity to act against behavioural standards and increasing risk of being caught upon violating them);
  • the preparation and implementation of corruption prevention programmes and measures, as well as monitoring their effectiveness;

6) developing an effective structure / system ensuring regular assessment of adherence to behavioural standards and law requirements (for example, by implementing a compliance policy at the organisation).

 

The possible additional measures for implementing the extended model of anti-corruption environment could be as follows:

  • At the stage of staff selection:
    • appropriate assessment of the candidates' personal data, biography and references from previous work places;
    • testing of the candidates' personal qualities.
  • During employment:
    • periodic assessment of the staff honesty (adherence to the rules of conduct, loyalty);
    • developing the staff cross-checking system (to provide for a duty to report “dishonest behaviour” / non-compliant with behavioural standards and to promote such reporting behaviour);
    • joining networks of socially-responsible groups of business enterprises: UN Global Compact, LAVA, Baltoji banga (in English: Clear Wave), etc.

 

Ernst & Young (hereinafter referred to as EY) methodology for creation of anti-corruption environment, which includes the key elements of the compliance (corruption-prevention as well) programme reflecting the good international practice.

 

In order to ensure the effective functioning of the compliance programme, each compliance and corruption prevention element named in the provided model should be adapted to a specific organisation and its environment, but in all cases the programme should include:

  • preventive actions and measures (e.g. anti-corruption-related disciplines and procedures, training, motivational system);
  • monitoring actions and measures (e.g. risk and activity analysis, implementation of trust lines or other tools, surveys and interviews);
  • control actions and measures (sanctions, procedures for managing incidents or fraud cases, and consequence management procedures).

 

The efficiency of compliance system requires a clear and consistent communication of organisational values and position as well as periodical monitoring and / or compliance audits to assess the efficiency of policy implementation.

 

 

The principles of EY method for the creation of anti-corruption environment are provided in the figure below, by listing the proposed procedures for implementing elements of compliance / corruption prevention system:

  • determining organisational values and principles of transparency;
  • communication of the principles listed in the code of ethics and transparency policy;
  • implementation of tools and measures to establish the implementation of transparency policy;
  • management and monitoring of the measures to ensure the application of the principle of transparency.

 

 

One of the alternative tools for combating corruption and creation of the anti-corruption environment is the new ISO Standard 37001[68].



[63] The concept of zero tolerance was developed in the USA around 1980s with increasing cases of drug use at schools. The USA took matters in their hands. Thus schools were introduced to the concept of zero tolerance at schools. This was a message for school communities, implying that certain violations will not be tolerated. Inevitable punishment with no excuses, no matter if the misdemeanour is petty or serious. First of all, the attention was focused on drug use. http://www.eosgrupes.lt/lt/psichologija-ir-pedagogika/1/nuline-tolerancija The strategy of zero tolerance was based on the broken windows theory, developed by G. Kelling and J. Wilson in 1983. The broken windows theory states that there is a connection between disorder and crime. Ignorance to small crimes results in a sense of having no laws, thus encouraging more serious offences — criminals don't believe that they will be arrested. The authors of the broken-windows theory noticed: if a building has broken windows and they are not repaired, eventually they will be accompanied by other signs of disorder — graffiti, rubbish, vandalism; the abandoned building might even be broken into by drug dealers or the homeless. So, even the most petty of crimes should receive the same amount of attention as the serious ones, thus seeking to ensure the implementation of the principle of inevitable punishment // Lecture of Gintautas Sakalauskas. // http://www.google.lt/url?sa=t&rct=j&q=&esrc=s&frm=1&source=web&cd=2&cad=rja&ved=0CC4QFjAB&url=http%3A%2F%2Fweb.vu.lt%2Ftf%2Fg.sakalauskas%2Ffiles%2F2012%2F09%2FKriminologijos-paskaitos-2012-IV-dalis.ppt&ei=lr_wUuq8M6WBywPmsIGoAQ&usg=AFQjCNFJ6Qz22BLthqc98VO1FWvDcBzkEg
[64] Corruption prevention measures implemented in the public sector are defined in the Republic of Lithuania Law on  Prevention of Corruption: https://www.e-tar.lt/portal/lt/legalAct/TAR.4DBDE27621A2/TAIS_436086
[65] Transparency. In performing activities, intolerance for unfair means of competition as well as illegal actions, such as:

  • dissemination of misleading information about competitors or their activities;
  • failure to comply with the Law on Competition;
  • bribery  in order to achieve more favourable conditions / decisions for business or harm to competitors;
  • public criticism of competitors' activities;
  • forgery of financial documents;
  •  concealment of taxes.

[66] An alternative operating model was described by Vytas Rimkus, the expert of the National Anti-Corruption Association of Non-Governmental Organisations, which was revised and supplemented by the compilers of the AHB.
[67] The "four-eyes principle" refers to a situation, when certain actions of one employee must be reviewed and approved by another.

[68] More information on the website:

http://www.lsd.lt/index.php?1922119988

http://www.iso.org/iso/home/store/catalogue_tc/catalogue_detail.htm?csnumber=65034

http://www.iso.org/iso/iso37001