Collective Action Against Corruption 4 | Collective Action

A Practical Guide for Collective Action against Corruption 4 | Collective Action. Experiences and Outlook

ABOUT THE UNITED NATIONS GLOBAL COMPACT The United Nations Global Compact is a call to companies everywhere to voluntarily align their operations and strategies with ten universally accepted principles in the areas of human rights, labour, environment and anti-corruption, and to take action in support of UN goals and issues. The UN Global Compact is a leadership platform for the development, implementation and disclosure of responsible corporate policies and practices. Launched in 2000, it is the largest corporate sustainability initiative in the world, with over 8,000 companies and 4,000 non-business signatories based in 160 countries.

www.unglobalcompact.org

ACKNOWLEDGEMENTS This publication was partially funded by the Siemens Integrity Initiative, a multi-year funding project that supports the UN Global Compact to advance Collective Action in emerging markets.

The UN Global Compact wishes to thank the companies, organisations and Global Compact Local Networks that contributed to this publication.

Design: Spumma. www.spumma.com

Georg Kell Executive Director United Nations Global Compact

Corruption remains the greatest obstacle to performance rather than wasteful rent- economic and social development around seeking. It requires political leadership and the world. Its political costs can include the private sector engagement. destruction of public order and the erosion of societal trust in the institutions that are As the business case against corruption expected to be the gatekeepers of society’s is getting stronger and as more and more aspirations. In economic terms, corruption political leaders recognize the costs of depletes wealth, contributes to further corruption, there is reason to be optimistic inequality and hinders entrepreneurship. By that Collective Action at the country level some estimates, the direct cost of corruption can lead to genuine transformation. far exceeds USD 1 trillion per year. It is an investment barrier. Corruption also The UN Global Compact is proud to have undermines other social aspirations such worked with the Siemens Integrity Initiative as environment stewardship, health and over several years in different countries – education. Brazil, Egypt, India, Nigeria and South Africa. Important lessons have been learned and Despite over a decade of concrete efforts, inroads have been made. We appeal to policy including the creation and enforcement of makers and private sector actors to redouble stricter regulations, the cancer of corruption their efforts against corruption, helping seems to be spreading everywhere; in the entrepreneurship to deliver what it should: North and the South, in the East and the decent jobs and economic empowerment. West. Within the United Nations, the Sustainable As the digital empowerment of people Development Goals are expected to recognize worldwide continues to expand, the forces explicitly the fundamental role of an that lead to the rise of transparency are enabling environment for markets to grow. gathering momentum. Transparency itself It is our hope that the proposed goal: “to is a necessary first step, but it must be promote peaceful and inclusive societies for complemented with concrete action in sustainable development, provide access to order to change systems. This is where the justice for all and build effective, accountable idea and practice of Collective Action can and inclusive institutions at all levels”, will play a critical role. Only if the public and greatly inspire the global community to private sectors collaborate can we overcome cure the world of one of its greatest evils: systemic barriers, change the status quo and corruption. build transparent systems that favor good Foreword by OLAJOBI MAKINWA

Olajobi Makinwa Chief, Anti-Corruption & Transparency and Africa UN Global Compact

Over the past ten years, a growing number Perhaps the most notable outcomes of the of companies, governments and civil initiatives described in this publication are society organizations have been exploring their constant search for ongoing dialogue collaborative efforts to further advance the and their continuous, tangible improvement. business case against corruption. The rich Whether it is in the form of agreeing to set of experiences described and analyzed in common behavioral standards, performing this publication, A Practical Guide for Collective risk assessments, training the value chain, Action against Corruption, show how Collective certifying companies or monitoring tenders, Action has been used strategically to improve the Collective Action experiences showcased ethical business practices. in this publication testify to how business practices can be changed – for the better. Collective Action allows for the flexibility and adaptability that businesses need to stay on A Practical Guide for Collective Action against top of conflicting situations and dilemmas Corruption provides an excellent overview that emerge daily. Through the stages of a of a range of applications of the Collective Collective Action project – from inception to Action concept in different business sectors development to implementation – businesses and various regions. The publication shows can join hands with governments, NGOs and successes and challenges, and offers practical other stakeholders to use their many diverse guidance. It shines a searchlight on the experiences collaboratively. future of Collective Action.

Collective Action also spurs a process of I hope that this guide will stimulate new permanent improvement, moving far beyond thinking on current efforts and inspire new formal self-regulations. It results in tangible directions for Collective Action initiatives impact and is a critical route to ensure clean working to stem the tide against corruption business. around the world. Message from SIEMENS

Sabine Zindera Birgit Forstnig-Errath Vice President Director Collective Action Siemens Legal and Compliance Siemens Legal and Compliance

The aim is clear: Collective Action helps to create fair “Collective Action” (in other words, putting market conditions for all market players, thereby making in place methods, activities, and alliances clean business possible throughout the world. The idea to jointly combat corruption) is one of the behind this is simple; its implementation is often highly top priorities of the compliance system at complex and challenging. Siemens under the “prevention” action level.

The Siemens Collective Action strategy for implementing the concept entails three The Siemens global Compliance System is complementary channels: Integrity Pacts, divided into three action levels: prevent, Sector-Specific Agreements (or Compliance detect, and respond. It was introduced in its Pacts), and, as an important basis for the current form after a compliance scandal in first two channels, Long-Term Initiatives2. 20081 . Having recognized the need to further Siemens originally became acquainted with benchmark our own system, to share our the concept of Collective Action through learning on compliance and to bring together its participation in a multi-stakeholder like-minded businesses and other actors, working group of the World Bank Institute, Siemens has extended its compliance efforts among whose members was the UN Global beyond the boundaries of the company and Compact3. its direct business relationships. The area of

1. For more details on the organization, processes, and system, see Siemens, Compliance, available at http://www. siemens.com/sustainability/en/core-topics/compliance/overview/index.htm, accessed April 2015. 2. For the WBI working party and complementary channels of Siemens’ Collective Action concept, see Sabine Zindera, “Collective Action – Der gemeinsame Kampf gegen Korruption” in Wieland/Steinmeyer/Grüninger (eds), “Handbuch Compliance Management”, Berlin: Erich Schmidt Verlag, 2010, pp. 699–713, and Siemens, Collective Action, available at www.siemens.com/collective-action, accessed July 2012. 3. For a more detailed description of the history of Collective Action at Siemens, see Mark Pieth (ed.), “Collective Action – innovative strategies to combat corruption”, Dike (2012); article by Sabine Zindera and Birgit Forstnig-Errath “Siemens: promoting Collective Action – from theory to practice“, p. 177-196. Since 2009, the Siemens Integrity Initiative professionals and provided platforms to has played a leading role in the expansion discuss and implement anti-corruption of Collective Action. The initiative is part strategies. New champions emerged in the of comprehensive settlements with the private as well as public sector, publicly World Bank in 2009 and the European calling for ethics codes of conduct and a Investment Bank in 2012. As a result of this collective commitment to clean business. commitment, Siemens set up the Siemens Most project activities have triggered much Integrity Initiative and provided it with over needed changes of behavior, policy reform USD 100 million to be allocated in several and even new laws that have helped to create funding rounds over 15 years. Currently we fairer market environments5. are supporting more than 55 projects and organizations4 all around the world in their What we need are more examples and good efforts to find innovative solutions to combat practices that are shared as widely as possible corruption through Collective Action. and which can help to inspire others to follow suit. We hope that this publication After more than four years of implementation on Collective Action will spread the word we have seen remarkable achievements and about what is possible and how we can all change, which gives us hope that the idea of work together to address corruption in the Collective Action can really make a difference. marketplace. We wish all of you who engage Our Integrity Partners have developed the in Collective Action every success in your anti-corruption training material needed future activities. to shape the attitudes and behavior of

4. For a full list of projects funded under the Siemens Integrity Initiative, see www.siemens.com/integrity-initiative. 5. A summary of activities and impact achieved over the last year can be found in the Siemens Integrity Initiative Annual Reports: www.siemens.com/integrity-initiative/report2014. Abbreviations

AfDB African Development Bank PEC Business Ethics Pact (Paraguay’s Pacto AIA Aerospace Industries Association of Ético Comercial) America PEFA Public Expenditure and Financial ADB/OECD Anti-Corruption Initiative for Asia Pacific Accountability ASD Aerospace and Defence Industries PRME Principles for Responsible Management Association of Europe Education BSR Business for Social Responsibility RoW Rest of the world CAENA Argentine Chamber of Animal Nutrition SHTP Saigon High-Tech Park (Vietnam) Companies (Cámara Argentina de SIGMA Support for Improvement in Governance Empresas de Nutrición Animal) and Management CAC Coalition Against Corruption (Thailand) SII Siemens Integrity Initiative CIPE Center for International Private Enterprise SME Small and Medium-Sized Enterprise CIS Common Industry Standards (developed SOE State Owned Enterprise by ASD) TI Transparency International EITI Extractive Industries Transparency TpC Transparency International Colombia Initiative TT Toward Transparency Eurocham Association of American-European TUGAR Technical Unit on Governance and Anti- Chambers of Commerce and Business Corruption Reforms (Nigeria) Association UKDFID United Kingdom Department for GACI Global Anti-Corruption Initiative International Development GOPAC Global Organization of Parliamentarians UN United Nations against Corruption UNDP United Nations Development Programme IGO Intergovernmental Organization UNODC United Nations Office on Drugs and Crime IRU International Road Transport Union USAID United States Agency for International LATAM Latin America Development MACN Maritime Anti-Corruption Network VCCI Vietnam Chamber of Commerce and MENA Middle East and North Africa Industry MNE Multinational Enterprise VIA Vietnam Integrity Alliance NESG Nigerian Economic Summit Group WBI World Bank Institute NGO Non-governmental Organization WCO World Customs Organization OECD Organisation for Economic Co-operation WEF World Economic Forum and Development Table of Contents

Executive Summary 10 About this Publication 11 Methodology 11

1 Introduction 12 2 Collective Action 16 2.1 Collective Action Types 16 2.2 Collective Action Today 24

3 Collective Action: A Description of 28 Initiatives Worldwide 28

3.1 Highlighted Collective Action Initiatives 28 3.1.1 Nigeria’s Port Sector 28 3.1.2 Customs Brokers in Turkey 33 3.1.3 Water Pipes, Water and Sanitation in Colombia 35 3.1.4 Electric Energy Transportation in Argentina 40 3.1.5 Small and Medium-Sized Enterprises in Egypt 43 3.1.6 Clear Wave in Lithuania 46 3.1.7 Anti-Corruption Awareness in India 49 3.1.8 Construction and Infrastructure Sector in South Africa 52 3.1.9 Nursery School Renovation in Hungary 55 3.1.10 Business Environment Integrity Pact in Romania 58 3.1.11 Anti-Corruption Coalition in Thailand 61 3.1.12 Makati Business Club: Project SHINE in the Philippines 64 3.1.13 Oživení Systems in the Czech Republic and Slovakia 68 3.1.14 Clean Games Inside and Outside of the Stadium in Brazil 71 3.1.15 Nigerian Economic Summit Group Initiative 76 3.2 Summary of Additional Collective Action Initiatives 78

4 Analysis of the 28 Collective Action Projects’ Answers to the Survey 84

4.1 Geographic and Industrial Scope and Initiators 84 4.2 Time to Signature 85 4.3 Substantive Scope / Subject Matter Covered 86 4.4 Results and Practical Impact 86 4.5 The Role of Facilitators 89 4.6 Participants / Members 90 4.7 Ethics Committees and other Monitoring Tools 91 4.8 Post-Signing Activities 92 4.9 Experiences and Recommendations 94 4.10 Major Challenges 95 4.11 Top-down vs. Bottom-up Approach to Collective Action 96 5 Practical Recommendations for Setting up Collective Action Initiatives 98

5.1 Resistance to the Initiative 98 5.2 Meetings 99 5.3 Training Activities 100 5.4 Monitoring 104 5.5 Further Activities 105 6 5.6 Final Note 105 New Paths for Collective Action 106

About the Center for Governance and Transparency 109 About the Authors 110 Bibliography 111

Annex I: List of Collective Action Initiatives 115 Annex II: Questionnaire 126 Annex III: List of Respondents 129 10 | A Practical Guide for Collective Action against Corruption

Executive Summary

This publication is organized in four parts. innovative Collective Action projects, The first section offers a theoretical and including extending their coverage from anti- conceptual analysis of Collective Action as an corruption issues to other matters related to anti-corruption tool, including a discussion business ethics, such as environmental, labor, of its historical origins and the dominant human rights, and discrimination concerns; classifications and conceptual frameworks closer collaboration between NGOs, IGOs and employed. The second section offers 15 academia; new frameworks stemming from in-depth and 13 summary descriptions locally or regionally based projects; and the of Collective Action projects undertaken pursuit of more fluid and practical projects. around the world. These descriptions This publication’s main goal is to advance the highlight diverse models and objectives of business case for fighting corruption through Collective Action initiatives and a wide array Collective Action. It does so by describing, of characteristics, such as their geographical reviewing and analyzing the participation and industrial scope, topics covered, the roles of a diverse array of actors in Collective of initiators and facilitators, timeframes Action projects around the world, including from project start to the signing of an multinational and local companies, NGOs, agreement, monitoring tools, results and multilateral organizations, and others to practical impact, and major challenges and identify and share best practices. The aim learning experiences. The third section offers of this publication is not to showcase past practical recommendations for individuals or current efforts as closed models for and organizations interested in setting up replication, but rather to highlight each as Collective Action initiatives, including tips an individual, positive story to inspire and on how to overcome stakeholder resistance stimulate innovative ideas for formulating and other commonly encountered obstacles, and improving future Collective Action how to organize and approach pre-agreement projects. Ultimately, prospective initiators meetings, and suggestions for training and facilitators will use this tool, together activities and the development of monitoring with the experiences and lessons contained tools. The fourth and final section proposes in these pages, to forge their own paths. ideas for exploring the development of A Practical Guide for Collective Action against Corruption | 11 About this Publication

This publication’s main goal is to advance the or current efforts as closed models for business case for fighting corruption through replication, but rather to highlight each as Collective Action. It does so by describing, an individual, positive story to inspire and reviewing and analyzing the participation stimulate innovative ideas for formulating of a diverse array of actors in Collective and improving future Collective Action Action projects around the world, including projects. Ultimately, prospective initiators multinational and local companies, NGOs, and facilitators will use this tool, together multilateral organizations, and others to with the experiences and lessons contained identify and share best practices. The aim in these pages, to forge their own paths. of this publication is not to showcase past Methodology

This publication discusses 28 Collective covered, communication methods, use of Action initiatives, of which 15 are described ethics committees and other monitoring in depth and 13 are summarized. The authors tools, and post-implementation activities. also analyze the achievements of these The survey also requested qualitative Collective Action initiatives and furnish responses regarding challenges encountered, readers with a practical guide for designing expected and achieved impacts, and whether and organizing them. Collective Action projects should be initiated at the local or global level. To gather data on each initiative, the authors prepared a survey with 23 questions and UN Global Compact received 28 responses to prompts (Annex II) in cooperation with UN the surveys and, in some cases, facilitators Global Compact, which then sent the survey responded to a number of follow-up to facilitators of various Collective Action questions. From the 28 responses, the projects worldwide. authors selected 15 initiatives to highlight in detail in section 3.1 of this publication so as The survey was designed to gain a deeper to present a diversity of information in terms understanding of the different types of of geographic locations, substantive content, Collective Action initiatives and their unique industrial composition and collective action challenges, impact and opportunities. The type. The other 13 initiatives are summarized survey aimed to gather information on a in section 3.2. The analysis and practical range of topics including: basic descriptive guide that follow are, in addition to the data such as the types of Collective Actions, authors’ experience as facilitators, based their geographical scope, and type of parties on all 28 responses. To help readers better that compose them; procedural data such as understand the descriptions, analyses, and the identities of the initiators, the timeframe the practical guide, this publication opens from the beginning of a project to the with a brief overview of Collective Action as execution of the agreement, and their current a compliance improvement tool and a review status; as well as questions on substantive of the relatively sparse literature on this details about each project, such as the topics topic. 12 | A Practical Guide for Collective Action against Corruption 1 Introduction

Corruption causes massive harm to representatives of corporate interests). society as a whole, besieging governments, Demand-side anti-corruption tools include organizations and individuals. Corruption better wages for civil servants, superior scandals involving international companies education, higher personnel turnover, increasingly make headlines around the greater process transparency, and enhanced world. Fines, legal costs, and reputational regulatory enforcement. On the supply- damage diminish corporations’ revenue side, anti-corruption efforts should involve streams as well as their appeal to consumers, changes to organizational culture, improved business partners and prospective employees, performance evaluations, and incentive causing significant losses for their systems that take into account long-term stakeholders. These losses, which extend to factors designed to curtail the myopic pursuit society at large, underscore the shortcomings of spoils by any means and at any cost. of existing anti-corruption systems and point out the need for governments, judicial This book describes a practical tool to systems, NGOs, academia and corporations fight corruption, developed by the World to find ways to fight corruption more Bank Institute, UN Global Compact, CIPE, effectively. Global Advice Network, Grant Thornton and Siemens: Fighting Corruption through Despite virtually universal condemnation, Collective Action: A Guide for Business7. The corruption persists. Some measures with notion underlying Collective Action is potential to curb corruption have not been straightforward: companies work with sufficiently effective. External and internal competitors and other stakeholders to create controls – checks and balances – are clearly the necessary conditions to ensure fair necessary, but evidently they are not enough competition in a market or, for example, to guarantee ethical business practices. in a specific procurement process. Fair Corruption has not been put out of business competition ensures that transactions are either by imposing harsher laws and decided on commonly agreed factors such as regulations or by adopting more sophisticated quality and price, rather than being skewed corporate compliance programs. Society by bribing and cheating. should be looking for ways to innovate in its fight against corruption. In his book The Logic of Collective Action: Public Goods and the Theory of Groups8, American In addition to stringent legislation, greater economist Mancur Olson showed that transparency in financial transactions, and individual members of a group often do internal and external controls, reducing the not take action to achieve shared objectives appeal of corrupt business practices requires even when they benefit from attaining such tools specifically designed for application on goals. Olson argues that Collective Action, both the “demand-side” (primarily involving analyzed from an individual member’s point – though not exclusively – public officials) of view, provides incentives to “free-ride” by and the “supply-side” (generally through benefitting from the contributions of the

7. World Bank 2008a; World Bank 2008b. 8. World Bank 2008a; World Bank 2008b. 8 Olson 1963.

A Practical Guide for Collective Action against Corruption | 13

group without shouldering a fair share of negative (such as sanctions, also referred to the effort and the costs. Thus, free-riding as disincentives11). results only in sub-optimal levels of the group’s common objectives. Of course, few of At its essence, it is a matter of trust in one the group’s objectives would be achieved if another’s ethical behavior. The intent of all its members adopted this uncooperative purposeful Collective Action is to dispel the behavior. Consequently, as Olson stated, mistrust that leads companies to behave a group will fail to achieve its objectives unethically because they assume their peers (i.e. the common good) unless it holds very and competitors do the same. Collective Action specific characteristics. Collective Action, initiatives endeavor to build trust among which works well in certain cases and is more companies through formal commitments challenging in others, has been intensely to certain standards of behavior, mutual studied by social scientists. As a consequence, observation, and sometimes, external the literature on the topic is extensive9. monitoring of participants’ actions. The notion of Collective Action is built on joint Applied to anti-corruption, Collective efforts made by companies to change the Action faces the problem that even environment or business practices within an though all companies would benefit industry or market in general or, specifically, from a more transparent and competitive when competing for procurement or service business environment, not all of them contracts. The path to mutual trust can often will be willing to individually invest their be lengthy and requires sustained efforts over resources or risk their continuity to build several stages and rounds of agreements. such an environment. Indeed, in some cases, individual incentives (e.g. enhancing Collective Action can help to create safe business opportunities through corruption) environments for good business practices, can lead companies to act against their minimizing opportunities to operate outside collective interest. In this typical “prisoner’s the rule of law and leveling the playing dilemma” scenario, the key lies in finding field for players of all sizes, including ways, through greater cooperation among small and medium-sized companies (SMEs) peers, to provide “selective” incentives for and upstream (suppliers) and downstream participating in the common effort and to (sales channels) value chains. Together with minimize – and potentially eliminate – costs their competitors and other stakeholders, disproportionate to each individual actor’s companies can promote transparent market proportional share of group benefits10. practices that lead to fair business deals for These incentives can be either positive or all12. Typically, though not necessarily,

9. Reuben 2003. 10. Reuben 2003. 11. Reuben 2003. 12. World Bank 2008a:2. 14 | A Practical Guide for Collective Action against Corruption

Collective Action rests on three pillars: in the countries where they operate. Industry self-regulation through Collective Action can Multiple parties enter into formal help fill the void left by weak institutions Collective Action agreements. and imperfect policies, serving as an aegis Trusted third parties (often civil society to protect good business practices and organizations) act as facilitators. preventing businesses from taking unethical Public sector agencies participate as shortcuts. Engaging multiple players in parties and/or promoters or initiators. Collective Action leads to confrontation with corruption on multiple fronts in Engaging in Collective Action brings benefits all its forms. For instance, the Extractive to participants and their surrounding Industries Transparency Initiative (EITI) has organizations. According to the WBI sought to engage and coordinate actions by Guide13, participation in Collective Action stakeholders interested in institutionally makes substantial social contributions to weak regions, where corruption dilemmas the surrounding business environment, emerge daily in sensitive and economically including: paramount industry sectors such as mining, oil and gas15. Increasing the impact and credibility of individual actions. Collective Action may prove particularly Protecting vulnerable individual players useful in settings where not all companies (e.g., SMEs) by bringing them into an competing in an industry or bidding process alliance of like-minded organizations. have formal compliance programs in place, Leveling the playing field among or where large companies compete with competitors. smaller outfits that operate more informally Complementing, temporarily substituting, and lack the wherewithal to fend off undue and/or strengthening weak local laws and solicitations. Especially in countries where anti-corruption practices14. corruption is pervasive, these conditions often lead companies to distrust each other Collective Action helps companies to better and assume that others are willing to offer or withstand the many forms of corruption agree to pay bribes. and bribery. For example, when members of a group share reports of bribes solicited Certainly, no company pays bribes gladly. by public officials, they increase the risk However, in some business environments, of exposing such behavior to the broader executives view them as inevitable. Others society. The heightened risks of public believe that they have no choice but to play exposure inhibit companies from paying along as they lack the resources to ensure bribes and make it more difficult for venal organizational survival if they refuse. officials to extract such payments. As a result, companies have a hard time committing to both transparent business The more widespread Collective Action practices and financial success in hostile becomes, the more difficult it is for individual settings. Collective Action offers a new companies to exploit governance weaknesses approach designed to encourage greater

13. World Bank 2008b:11. 14. World Bank 2008b:11. 15. EITI 2011. A Practical Guide for Collective Action against Corruption | 15

coordination and self-regulation among there – or giving voice to their protests, participants as mutual trust is built through criticizing the circumstances and making collaboration. proposals for change. The “invisible hand” as described by Adam Smith would suggest Multinational enterprises (MNEs) doing market exit, as market participants freely business in complex ethical environments, change their relationships based on their especially in emerging markets, can be said interests. Giving voice would be a more to have a moral obligation to improve the political action. “Voice” exposes causes of local business climate by fighting corruption, dissatisfaction and, therefore, illuminates considering that they usually are in a better a path to improvement, making “exit” not position to wage this battle. MNEs tend to have the only possible alternative for escaping an more financial backing to persevere through unsatisfactory situation. Stated differently, performance problems stemming from lost the easier it is to simply exit, the less likely projects, delays in customs clearings, and it is that the more complex and time- permit problems resulting from a refusal to demanding alternative of “voice” will be pay bribes. Ultimately, MNEs always have the chosen. However, loyalty (e.g., a company’s last resort option of leaving a market. Such long-standing history in a market) may difficulties are sometimes insurmountable diminish the temptation to exit, especially for SMEs. when it implies other negative consequences such as leaving global customers unattended, By initiating and entering into Collective political backlash, and costs associated with Action initiatives with other large companies halting operations. and local SMEs, MNEs can create “safe- havens” for their smaller counterparts, Collective Action can facilitate MNEs’ use of where they can trust business practices “voice” in emerging markets, strengthening will be fair and enjoy protection from the weight of “loyalty” aspects in exit extortion and bribe solicitation. In complex versus voice decisions. MNEs have sufficient environments, these islands of protection incentives and resources to engage in make SMEs less vulnerable, providing them Collective Action with local SMEs to create a secure springboard from which to stage niches of clean business. Nonetheless, further anti-corruption efforts. participation in Collective Action may require them to contribute a greater share Consistent with Albert Hirschmann’s of resources and their benefits may have argument in his famous book Exit, Voice, and a greater impact for other parties. With Loyalty16, companies have two alternative a strong understanding of the interplay responses to unsatisfactory group behavior between “exit” and “voice” as impacted by the (i.e. high corruption levels in a specific notion of “loyalty,” MNEs approach Collective market). These options are exiting the Action with a better understanding of other market – refusing to continue doing business companies’ concerns, thereby improving the results of their common efforts.

16. Hirschmann 1970. 16 | A Practical Guide for Collective Action against Corruption 2 Collective Action In 2008 the WBI published Fighting Corruption In addition to explaining why and how to through Collective Action: A Guide for Business use the tool of Collective Action, the guide to help companies organize initiatives to provides a typology of various forms of meet competitive, economic and ethical Collective Action, identifying four categories challenges posed by corruption. The guide and their most significant characteristics. defines Collective Action as “a collaborative In describing and analyzing the Collective and sustained process of cooperation among Action initiatives surveyed by the UN stakeholders … [that] increases the impact Global Compact, this publication dwells and credibility of individual action, brings principally on the categories employed by vulnerable individual players into an alliance the WBI model, described in further detail of like-minded organizations and levels the immediately below. Nevertheless, a number playing field between competitors.” The of the surveyed initiatives do not fit clearly guide continues, stating, “Collective Action into the WBI framework. Therefore, this can complement or temporarily substitute publication also discusses other frameworks for and strengthen weak local laws and anti- and typologies and sometimes refers to corruption practices17.” terminology not included in the WBI model.

2.1 Collective Action Types

The WBI model identifies four major types of While commitment levels vary across Collective Action: Collective Action initiatives, they are a characteristic that is particularly useful Anti-Corruption declarations. for differentiating between initiatives. This Principle-based initiatives. variable divides initiatives into two groups: Certifying business coalitions. (a) those that agree to external enforcement Integrity pacts. and, thereby, express a high-level of commitment, and (b) those that agree only to The WBI classifies Collective Action projects low-level commitments. On one end of this on the basis of two core criteria: timeframe spectrum, high-level commitments involve and commitment level. Short-term contractual agreements to ethical practices initiatives involve commitments that are subject to third-party audits and agreed limited in time, often to the duration of an sanctions or penalties. On the other end, individual project or transaction (or a series low-level initiatives involve only aspirational of them). Long-term initiatives, on the other commitments that lack enforcement hand, involve permanent commitments or mechanisms. Regardless of this meaningful commitments for extended periods of time. difference, companies are subject to

17. World Bank 2008b: 4. A Practical Guide for Collective Action against Corruption | 17

pressure from peers, the public and other even toothless, aspirational agreements can stakeholders to keep ethical commitments create significant pressure for companies to and mind for reputational risks. Therefore, abide by agreed ethical guidelines.

Figure 1. Figure 1. Collective Action Types1

18. World Bank 2008b. 18 | A Practical Guide for Collective Action against Corruption

Anti-Corruption declarations management during the performance phase of the project. The declaration emphasized Anti-Corruption declarations are Collective and formed the basis for discussions on Action initiatives in which participants compliance and anti-corruption matters, but make a public commitment to refrain from consistent with the WBI model, no external corruption during a specific project. These monitor was involved. Participants in the declarations imply a low level of commitment, initiative reported that the conversations as compliance is not enforced by an external held on the basis of the declaration were a monitoring mechanism. Also, they are constructive step to reducing corruption risk typically limited in time to the duration of a in connection with the project20. particular project19 or transaction. Principle-based initiatives The main objectives of anti-corruption declarations are to prevent corruption in A principle-based Collective Action is a projects and transactions, and to initiate long-term initiative to promote appropriate open discussions about corruption risks business conduct within a certain country in past and present problems experienced and/or sector, leveraging the voice of diverse specifically by individual firms and generally stakeholders to effectively address the within the sector. Discussing these critical problem of corruption and join forces to issues makes it possible to collectively set push the government to implement anti- behavior expectations for all individuals in corruption laws21. the group. The central idea is that corruption risks will be reduced as potential bribe-givers Similar to anti-corruption declarations, and bribe-takers realize that inappropriate principle-based initiatives lack mechanisms behavior can be subject to individual and to enforce compliance with agreed ethical collective scrutiny. These practices should commitments. But, in contrast, they are be contrasted against the principles stated typically long-term initiatives. They are in the declaration to draw a clear, public formed for a variety of reasons. For instance, line between what is acceptable and what is where companies are interested in collectively not. This public line is then crystallized in a combating corruption but are uneasy with signed statement that can be published and the concept because of limited trust in their shared with sub-contractors and other actors competitors’ behavior or reluctance to accept in the company’s value chain. formal monitoring of compliance, they may want to test the waters by first engaging in The anti-corruption declaration signed in “soft-commitment” initiatives. Particularly 2003 by contractors of AVA GmbH for a large high-risk environments or transactions may project involving a major refurbishment be too problematic for companies to agree on of a waste incineration plant in Frankfurt, enforceable standards, especially when there Germany is an early example of this type of is a significant lack of trust between industry initiative. Only direct contractors entered into competitors. the agreement, which was signed by their top

19. World Bank 2008b. 20. World Bank 2008b. 21. World Bank 2008b:33. A Practical Guide for Collective Action against Corruption | 19

Further, principle-based initiatives are ideal expanded its application to other industries. if the objectives of the Collective Action are Since this effort started, more than 30 focused on generalized change throughout national aerospace and defense associations the entire business environment affecting a and 400 European companies from various particular industry sector or country. Sector- industries have adhered to these standards23. wide initiatives are typically issue-specific. For example, initiatives have been geared Certifying business coalitions towards combating “facilitation payments” in the customs sector or “signing bonuses” Similar to principle-based initiatives, in the oil and gas sector. certifying business coalitions are long-term engagements to promote ethical business Collaboration in “soft-commitment standards in a specific industry or geographic initiatives” is also important because it gives area. These two types differ in that certifying participants an opportunity to publicly business coalitions are monitored externally. express their interest and willingness to Certifying business coalitions monitor and commit to fair and transparent business certify members’ compliance with the shared practices. These initiatives serve as an principles and commitments set forth in excellent platform for companies to their Collective Action agreements. collaboratively discuss and evaluate their anti-corruption stances and to share insights This is the strongest type of Collective and build trust. Through relationships Action agreement, as it involves hard, and mutual trust built when companies enforceable commitments and formal collaborate in soft-commitment initiatives, monitoring and enforcement structures, companies often lay the foundations details of which are made public. Certifying necessary for acceptance of enforcement coalitions constitute a strong signal to the mechanisms and future participation in public that their membership takes anti- “hard-commitment” Collective Action. corruption measures seriously. As a result, they contribute to increased trust in and One example of a principle-based initiative, compliance with agreed anti-corruption with detailed ethical standards and policies. In the WBI model, external auditing procedures and broad potential reach, is may be performed by any trusted third the Common Industry Standards initiative party, such as an academic advisor, an undertaken by the European aerospace and independent accounting or auditing firm, or defense sector. In 2007 the Aerospace and a civil society organization. Because auditing Defence Industries Association of Europe22 involves evaluating the degree of success in created a business ethics committee that implementing agreed norms and measuring agreed on and published a set of norms compliance, objectives and norms must be known as Common Industry Standards clearly defined in the agreement. (CIS). In addition to producing a detailed set of ethical standards and best practices, the The agreements set out the procedures CIS also produced a compliance toolkit and under which audits are to be conducted.

22. Aerospace and Defence Industries Association of Europe 23. Industries standards. 20 | A Practical Guide for Collective Action against Corruption

Upon a successful audit, the subject legal and ethical compliance, anti-corruption company will be awarded certification, and legislation, quality control, honesty, and the coalition will proceed to publish it. A transparency. The PEC’s membership boasts coalition certification, which is sometimes many of the most important companies from represented by a trade label, is often a variety of economic sectors. As an example promoted among government clients and of tangible economic benefits of participating private-sector customers to obtain benefits in the PEC, members are granted “green- for certified companies (e.g. simplified light” status in customs procedures when procedures to become approved suppliers). moving goods across Paraguay’s borders24. If a member company refuses to be audited or does not meet the agreed standards, it is Integrity pacts subject to exclusion and, in some cases, to public disclosure of the sanction. Needless Integrity pacts focus on procurement and to say, public disclosure of exclusion can contracting processes. They are based on represent a significant reputation risk for formal contracts and establish mutual members of certifying coalitions. Conversely, rights and obligations between a customer a company’s agreement to subject itself to (generally, a government entity or a large such severe provisions clearly demonstrates company) and companies that bid on supply its commitment to anti-corruption efforts and service contracts. Parties desiring and ethical business practices. to increase or secure transparency in contracting for goods and services can use Founded in 2005 with support from or support the use of integrity pacts as a the U.S. Department of Commerce and preventive measure for reducing corruption the Paraguayan American Chamber of risks. To bring increased transparency to Commerce, Paraguay’s Commercial Ethics these projects, integrity pacts apply external Pact (PEC) is a successful example of a monitoring25. External monitors supervise certifying business coalition. The PEC bidding and implementation processes evaluates and certifies its 150 member and apply sanctions when breaches of companies’ compliance with agreed the integrity pact are discovered and duly behavioral guidelines and processes. In demonstrated by the requisite level of proof. addition to training and random audits as The Collective Action contract must be part of the certification process, ethical included in the tender documents before the commitments are bolstered by moral tender is launched. All bidders and, ideally, enforcement as the PEC widely disseminates all subcontractors must sign the contract26. information regarding the ethics policies and practices of its membership. The PEC An Integrity Pact helps to level the playing further advances its general anti-corruption field for companies that participate in goals by promoting corruption awareness, a public or private tender by providing

24. Pacto Ético Comercial 2009. 25. World Bank 2008b: 32. 26. World Bank 2008b: 45. A Practical Guide for Collective Action against Corruption | 21

incentives to refrain from corrupt Other classifications and names of behavior. Incentives can entail bidding Collection Action Initiatives advantages and sanctions. Given that these incentives can be controversial and may Although many Collective Action initiatives, discourage participation in public tenders, especially those involving business entities, it is important to appoint expert external adhere to the WBI framework, other monitors (generally, renowned voices in classifications of Collective Action can be their field). In addition to determining found. Generally, like the WBI framework, whether irregularities have occurred and all classifications distinguish between applying sanctions, monitors are charged short-term and long-term initiatives. Other with supervising meetings, documenting frameworks define categories differently; all transactions, and reviewing contract for example, the framework promoted by performance. Sanctions can entail exclusion the Center for Private Enterprise (CIPE) from tenders for a determined period, the differentiates between “simpler” and “more payment of penalties, and/or disciplinary complex” models29. Nevertheless, this measures. In cases of serious infringements, category is similar to the World Bank’s the external monitor has the obligation to “ethical commitment” and “external inform law enforcement bodies27. enforcement” differentiation. Thus, the CIPE model is, in practice, very similar to the WBI An example of this type of Collective Action model. Figure 2 is an illustration of the CIPE is the “Clean Games Inside and Outside of model and shows its similarities to the WBI the Stadium” initiative. The Ethos Institute model. in Brazil launched this effort with the aim of promoting integrity in infrastructure While appreciating the value of certifying projects for the 2014 FIFA World Cup and business coalitions, CIPE supports additional the 2016 Summer Olympic Games. This activities of business coalitions and multi- initiative is also an example of an “umbrella” stakeholder coalitions, especially to advocate Collective Action project. Under this for policy reform and monitor policy initiative, various host cities and companies implementation. participating in public tenders signed on to a number of distinct integrity pacts and Additionally, Collective Action initiatives related agreements with the Ethos Institute. can be classified according to the type of The umbrella project then offers tools members that are parties of the agreement; and otherwise assists at the local level to there can be “pure” corporate Collective supervise, monitor and control investments Action initiatives formed exclusively by for infrastructure projects28. private sector companies and hybrid models, composed of private-public or private-civil society partnerships.

27. World Bank 2008b: 47. 28. Jogos Limpos 2015. 29. CIPE 2013. 22 | A Practical Guide for Collective Action against Corruption

Figure 2. Tools and Approaches. Source: CIPE

Sometimes, categories under different Activities.” This final category appears to be models are practically identical but are defined broadly so as to include various types named differently. The “Principle-Based of general activities carried out through a Initiative” can be regarded as an equivalent group initiative, such as raising awareness, to the “Standard-Setting Initiative” as used by offering trainings, or holding anti-corruption the Basel Institute30. Actions classified by the and transparency forums. However, the more WBI as “Certifying Business Coalitions” are formal models generally regard these as very similar to actions categorized as “Multi- precursor or ancillary activities to Collective Stakeholder Coalitions” under the CIPE Action. Indeed, they are often undertaken as model. Initiatives defined by the WBI as “Anti- a means for increasing trust among actual Corruption Declarations” are categorized by or would-be partners to an anti-corruption the Basel Institute as “Declarations and Joint declaration (or other types of initiatives).

30. B20 Collective Action Hub 2015 A Practical Guide for Collective Action against Corruption | 23

The survey results and analysis presented Among the types of joint activities covered in this publication show that the lines in this publication, the authors observed between each model are, at times, not clearly initiatives that may be described as joint risk- distinguishable. A number of initiatives are assessments, training programs, capacity- hybrids or adaptations of recognized models. building programs and awareness-building This adaptation and experimentation initiatives. exhibits the flexibility of Collective Action agreements. Some of the surveyed initiatives’ Initiatives among NGOs and IGOs names even indicate categories that appear to be inconsistent with the defined content and Risk assessments undertaken by NGOs and objectives of the Collective Action initiative. private enterprises as part of Collective This is, of course, the consequence of the Action initiatives are conceptually similar diversity of Collective Action dilemmas and to the governance assessments performed governance gaps plaguing the international by international donors such as USAID business community and the numerous and the WCO prior to disbursing program actors (including public and private entities) funds. In addition to these joint governance needed to bring transparent practices and and corruption assessments, the OECD’s norms to bear. Development Assistance Committee (DAC) has spotlighted at least three other areas for The spectrum of types of initiatives is Collective Action between international aid broad and would seemingly leave room for agencies, regional IGOs, local organizations any effort in which the private and public and private parties, including: (i) joint anti- sectors and civil society (or any combination corruption benchmarking (such as the Public of them) work together to solve corruption- Expenditure and Financial Accountability in related Collective Action problems and foster the field of public financial management) collective compliance with legal or ethical that would lay the groundwork for domestic standards. As stated by CIPE: legal reform; and (ii) codes of conduct or good-practice principles for the approval of senior-level decision-makers and roll-out to “Collective Action may include common commitments, country level. mutual support, information sharing, coordinated campaigning, and the pooling of anti-corruption In addition to the work of donor resources. It can be organized either through business organizations and aid agencies to combat associations or multi-sector initiatives at various levels. corruption stemming from the “demand- These collective efforts aim to reduce the incidence side,” governments can collaborate to create of corruption and improve the business environment strategies, norms, and practices to limit through self-regulation and constructive engagement public officials’ exposure to corruption with government31.” risks. As is the case with hybrid models, many initiatives are concerned with raising

31. CIPE 2013. 24| A Practical Guide for Collective Action against Corruption

awareness and educating public and private initial steps and design of a Collective Action actors on the causes, effects, and prevention to create a fit between the specific challenges of corruption. and needs faced with the resources at hand. Participants should be mindful of planned The OECD, together with national goals and expected outcomes once a Collective governments, has done significant work to Action project begins. This will offer current organize collective initiatives as platforms and potential participants in the initiative a for raising awareness and discussing the sense of direction and commit them to abide harmonization of anti-corruption norms. by specific conditions. Examples of these programs include: In conclusion, while there are various ADB/OECD Anti-Corruption Initiative for types and frameworks of Collective Asia-Pacific. Action, this publication refers principally Anti-Corruption Network for Eastern to the categories elaborated by the WBI Europe and Central Asia. for purposes of analyzing the Collective OECD/AfDB Initiative to Support Business Action projects surveyed. These categories Integrity and Anti-Bribery Efforts in allow observers to evaluate initiatives from Africa. temporal (long- versus short-term) and OECD-Latin America Anti-Corruption enforcement (aspirational agreements versus Program. enforceable commitments) perspectives, and OECD/AfDB Initiative Middle East and to analyze the different levels of complexity North Africa (MENA). and alternatives that result from varying SIGMA Program32. combinations of these factors. This typology is also handy for conceptualizing “upgrades” As discussed, Collective Action is a broad to the Collective Action initiatives as they term with no strictly defined borders or evolve over time and develop the confidence common standards. This allows stakeholders and capabilities to adopt agreements with to be flexible both in the envisioned outcome higher commitment levels and expand their and the chosen starting point, adapting the membership by including additional parties.

2.2 Collective Action Today

The exact number of signed Collective impossible to estimate their total number Action agreements worldwide is unknown. with any confidence of accuracy. Despite The variety of definitions and categories these difficulties, the authors compiled employed under the different frameworks a list of initiatives published on several – themselves often vague – and the absence publicly available websites dedicated to of a comprehensive global registry make it sharing information on anti-corruption and

32. SIGMA Program. A Practical Guide for Collective Action against Corruption | 25

transparency Collective Action initiatives. As largest concentration is found in Europe of January 2015, 80 signed anti-corruption with 24 cases (30%), followed by Asia with Collective Action initiatives are listed in 16 (20%), Latin America with 14 (18%), these publicly available databases33. Africa with 9 (11%), and lastly, the United States, Canada and the Middle East with 2 initiatives (3%). Aside from globally oriented Figure 3. Collective Actions by Region Collective Action projects, this data reveals a marked concentration in Europe, significant representation in Asia, Latin America and Africa, and a dearth of Collective Action projects in the U.S., Canada and the Middle East. These results may be somewhat unexpected; however, they may be influenced by the incompleteness of available data.

The vast majority of these Collective Action initiatives are long-term initiatives in the form of principle-based initiatives or declarations (65 or 81%). Arguably, the greater representation of principle-based initiatives in the data set is consistent with the higher concentration of globally focused Collective Action projects (19%). Given the coordination challenges implied in carrying out Collective Action on a global scale, establishing more complex types of initiatives such as certifying coalitions would most likely prove very difficult. Intuitively, the higher percentage of principle-based initiatives could also be attributed in part to the fact that Collective Action initiatives are a relatively new tool, as their use first became significant only around 10 years ago. Therefore, Collective Action efforts may simply have not had enough time to evolve into more mature forms with higher levels of commitment. Moreover, as Of these 80 Collective Action initiatives, suggested by their organizational history 15 (19%) focus their efforts globally. The and by a reading of their Collective Action efforts of the remaining 81% are focused agreements, a number of initiatives seem in different regions around the world. The to have encountered serious obstacles and

33. These databases include: B20 Collective Action Hub 2015; Siemens Integrity Initiative Annual Report 2014; World Bank 2008b; etc. For a complete list, please see Annex I. 26 | A Practical Guide for Collective Action against Corruption

evolved as they carried out their activities Then in the following 5 years (2007-2011), a within the context of the business world. much shorter period of time when compared While these obstacles are not necessarily with the 30-year history of Collective Action, insurmountable, they sometimes take it more than doubled to 24. Next, during the significant time to resolve. three-year period from 2012 to 2014, 34 new Collective Action initiatives were identified. The timeline in Figure 4 below, which details Bearing in mind that the historical record the quantity of Collective Action projects in of initiatives is inevitably incomplete, these each of the relevant periods, reveals a positive figures are likely to include only a portion trend. In the 20 years from 1981 to 2001, only of Collective Action initiatives undertaken 9 Collective Action initiatives were initiated since 1981. The data evidences an increasing according to the data reviewed by the use of the Collective Action model and bodes authors. In the 5 years from 2002 through well for the future of this anti-corruption 2006 the number of Collective Action tool. initiatives increased insignificantly to 10.

Figure 4. Collective Actions Starting Timeline A Practical Guide for Collective Action against Corruption | 27

Siemens Integrity Initiative

On December 9, 2009, Siemens launched the global Siemens Integrity Initiative (SII) which supports organizations and projects fighting corruption and fraud through Collective Action, education and training with over USD100 million in funding. An initial tranche of around USD40 million has been distributed to over 30 projects from more than 20 countries. Under a second tranche, starting in the fall of 2014, up to 25 projects stood to receive approximately USD30 million over a period of three to five years in around 20 countries.

The Siemens Integrity Initiative is part of a comprehensive settlement between the World Bank Group and Siemens AG announced in July 2009. In addition, some projects may be funded on the basis of the European Investment Bank (EIB) – Siemens AG settlement published in March 2013. Details are specified in the relevant Funding Agreements, which can be found at www.siemens.com/integrity-initiative

Sabine Zindera Birgit Forstnig-Errath Vice President Director Collective Action Siemens Legal and Compliance Siemens Legal and Compliance

“We are making good progress. The projects “We conceptualized the Integrity Initiative backed in the first round of funding have so that projects help create alliances and made a tangible difference and we are platforms for dialogue between the public particularly pleased to see more and more and private sectors, strengthening the committed and well-connected supporters rule of law and voluntary anti-corruption rallying to the Collective Action banner and compliance standards, as well as and joining our common effort to fight increasing the use of Integrity Pacts in corruption. This is key to ensuring clean public procurement. We hope that we have business.” thus helped to initiate and seed-fund many different ideas that can be replicated in other countries and sectors.” 28 | A Practical Guide for Collective Action against Corruption

Collective Action: 3 A Description of 28 Initiatives Worldwide 3.1 Highlighted Collective Action Initiatives

This section describes Collective Action Action.” They are good examples of the initiatives involving different regions, experiences of companies, NGOs and other industry sectors, frameworks and collective facilitators in creating and implementing action types. These descriptions are based their initiatives, the kinds of obstacles they on publicly available information and encountered along the way, and what they responses to surveys sent by the UN Global deem important for future work. This group Compact to facilitators of the initiatives. The is not necessarily representative of the many authors selected the cases from among the different initiatives that exist worldwide. A responding initiatives because they provide a summary of the remaining Collective Action rich overview of different activities typically initiatives surveyed can be found in section carried out under the term “Collective 3.2.

3.1.1 Collective Action in the Nigerian Port Sector

Background and Scope motivate and incentivize all stakeholders to contribute and adopt strong anti-corruption Established in 2011 and formalized in 2012, management practices. the Maritime Anti-Corruption Network (MACN) is comprised of vessel-owning MACN sees its role as that of a catalyst that companies and other firms active in the main brings a unique business understanding sectors of the maritime industry, including of the often highly specific drivers of cargo owners and service providers. BSR corruption, such as cumbersome approval (Business for Social Responsibility), a non- processes, overly broad discretionary powers, profit business network and consultancy weak controls, and poor port governance. focused on sustainability, acts as the MACN’s membership will often be able to secretariat and lead facilitator of MACN. The quickly identify the most damaging and network has grown from eight members prevalent forms and drivers of corruption at its inception to more than 50 members in the maritime industry and may also today. MACN is a global business network use their global networks to identify best established to work toward a vision of a practices. Importantly, as a collective of maritime industry free of corruption that significant maritime industry companies, enables fair commerce to the benefit of the the network wields significant commercial broader society. influence and is committed to an industry free of corruption and bribery. As a global business initiative, MACN believes that sustainable, transformational change This initiative demonstrates how MACN requires multi-stakeholder collaboration, seeks to influence the external operating which must provide win-win solutions to environment by catalyzing Collective Action A Practical Guide for Collective Action against Corruption | 29

from a number of stakeholders. The Nigerian in the Nigerian port sector. Through a series port sector is the first example of MACN of consultations and deliberations, the acting collectively. sector had been identified as a candidate for partnering in a first Collective Action Structure activity, and specifically, in a comprehensive risk assessment across six Nigerian ports. MACN initiated collaborative efforts together with UNDP and UNODC to design and With the guidance of UNDP and its risk implement a pilot project that would reduce assessment methodology, the project and prevent corruption at ports. Based on unfolded in four phases with the purpose UNDP’s assessment of critical success factors of identifying specific forms of corruption, such as timing and local commitment from their underlying drivers, and potential the government, Nigeria was selected for the solutions. The risk assessment covered the first pilot project. UNDP attained official ports of Apapa and Tin Can in Lagos, Port commitment, approval and engagement with Harcourt, Onne, Calabar, and Warri. respected local government representatives to conduct the pilot project, an important From the outset, the project recognized step as specific improvement measures are the importance of engaging with all to be implemented at a later stage. relevant local stakeholders to facilitate ownership, engagement, commitment to The Nigeria pilot project was planned to implementation, widespread acceptance of identify problems and issues caused by findings, and future corrective measures. corrupt practices in connection with vessels Specifically, the project was set up under calling at ports, including the handling the leadership of the main Nigerian of cargo and administrative issues such agencies: the Independent Corrupt Practices as customer clearance and canal transits. Commission (ICPC), the Technical Unit on Another program directive is the provision Governance and Anti-Corruption Reforms of recommendations on how to tackle these (TUGAR), and the Bureau for Public challenges in the short and long terms. Procurement (BPP) with the assistance of the Economic and Financial Crimes Commission MACN expected that the lessons learned in Nigeria. The project also stressed the from this pilot project could be replicated importance of training and certifying 70 in other countries relevant to MACN local corruption risk assessors drawn from members. MACN also intended to review the public sector (federal and state levels and the methodology and process of this study from relevant anti-corruption agencies) and with UNDP and other partners to assess its civil society to conduct on-site assessments in potential to stimulate change, as well as its private sector entities, government agencies, relevance and applicability to other sectors and other public sector organizations. and contexts beyond the maritime industry. In a similar vein, the recommended risk mitigation and prevention measures were Implementation developed through a collaborative process that involved the national anti-corruption In 2012 and 2013, UNPD and MACN joined agencies and relevant governmental and forces to undertake a risk assessment study public sector agencies. The process and the 30 | A Practical Guide for Collective Action against Corruption

Status and Impact local assessors benefited from guidance and supervision provided by both local and The risk assessment organized findings into international consultants. three categories: i) industry environment risk, referring to the broader political, Phase 1: legal and operating environments; ii) The first step was to map corruption risks organizational factors, in reference to and issues at ports. The study was to outline the mandates, systems, procedures, and both “low-hanging fruit” as well as to identify controls of various public and semi-public systemic problems or governance issues organizations; and iii) personnel, regarding that require a long-term and fully-fledged skills, tools, and experiences of employees in intervention. these organizations. The risk assessment also made a distinction between general sector Phase 2: and port-specific issues. The study was made public after it was validated at the national level. This provided The main challenges identified by the a good opportunity for UNDP and MACN assessment included weak internal ethics to engage with the government and donor infrastructure, including the lack of codes partners to develop a comprehensive plan of conduct; weak enforcement practices; to address corruption at ports. Validation underdeveloped systems for investigating of the study included extensive stakeholder complaints about demands for bribes or engagement in Nigeria. facilitation payments; and the absence of an effective system to handle grievances and Phase 3: protect whistleblowers. These challenges are Based on the recommendations provided compounded by multiple, often overlapping in the study, TUGAR and the national procedures, ill-defined standard operating authorities developed a “risk reduction procedures, and a lack of coordination plan.” among the agencies. Governmental agencies’ broad discretionary powers result MACN believes that the research studies in an unpredictable operating environment will help to increase transparency and for companies. Additionally, port agency the awareness of challenges that the employees hold broad discretionary powers maritime industry encounters in addressing and sometimes delay the processing of corruption. Based on recommendations documentation, often without repercussions. in the risk reduction plan validated at the national level, MACN developed an action Because of these findings, the risk assessment plan to promote the implementation of study recommended the following action these measures (Phase 3). The project intends points: to implement the recommendations with Capacity-building in designing and financial support from government bodies, implementing an anti-corruption relevant international institutions, and policy. development agencies. Improvement of intra-agency coordination. Strengthening organizational capacity A Practical Guide for Collective Action against Corruption | 31

MACN will remain involved in the initiative through the development of standard and contribute to carrying forward the operating procedures. recommendations proposed in the study, Development of programs to train agency working closely with key stakeholders. personnel. MACN and its members will also maintain Design and implementation of a an active dialogue with national authorities transparent compliance system with and support TUGAR in coordination heightened internal controls. efforts, including the sharing of members’ Development of a complaint mechanism experiences when they call at Nigerian ports. and building capacity to manage the mechanism. In parallel, MACN will continue to work Introduction of IT components to reduce on improving members’ internal anti- human contact and increase transparency corruption management programs and and accountability. practices and seek to align operational Anti-Corruption training and signed procedures to support more consistent policy documents to signal commitment practices when calling at ports in Nigeria. This from the uppermost levels of more consistent, aligned, and collaborative management. approach will enhance the value that MACN Coordination of guidelines and brings to the fight against corruption. instructions among the different port agencies to eliminate duplication and streamline the vessel and cargo clearance process. Links: Maritime Anti-Corruption Network As future implementation activities, the risk assessment also recommended that the Corruption Risk Assessment in the parties undertake training of personnel, Nigerian Port Sector joint evaluations and progress assessments, and external communication to stakeholders Corruption Risk Assessment in the and potential funding partners. The parties Nigerian Port Sector MACN also agreed on the importance of pushing to Executive Summary ensure commitment to change from higher- levels in government. Report of Corruption Risk Assessment in the Ports Sector in Nigeria 32| A Practical Guide for Collective Action against Corruption

Collective Action as Risk Assessment in Regional/Industry Scope Nigeria’s Port Sector Port Sector

Participants Maritime Anti- Facilitator Corruption Network MACN/UNDP (MACN)’s members, TUGAR, UNDP

Substantive Scope of Collective Action / Subject Ethics Committee Matter Covered N/A Identifying corruption risks in the port sector

Time from project start to Collective Action signature 4-5 months

Challenges in implementation Challenges in signing Getting local commitment for funding; Risk Evaluation recommending actions in the integrity plan

Impact Agreed implementation activities Integrity plan’s recommendations for capacity Integrity plan building in fighting corruption

Facilitator’s Statement

“Creating partnerships with international multilateral organizations can and will enrich the value and impact of this program, as well as having the potential practical benefit of integration into already existing in-country anti-corruption and transparency programs. MACN’s Collective Action project team and BSR are, therefore, reaching out to relevant stakeholders, seeking to develop partnerships with those interested in engaging with the private sector to promote good governance and fight corruption through this initiative.” A Practical Guide for Collective Action against Corruption | 33

3.1.2 Customs Brokers’ Anti-Corruption Declaration in Turkey

Background and Scope Loss of the right to use the ethics logo. Debarment. This anti-corruption declaration, initiated by the Turkish Ethics and Reputation Society, Given that the members of the committee covers customs brokerage in Turkey. It is are also competitors on a day-to-day basis, focused on fighting corruption in customs the authority and functioning of the “Ethics operations, and brings together Turkey’s Committee of the Associations of Customs leading customs consultancy firms and the Consultancy” is seen by the membership public sector to address issues including as involving a certain degree of risk. corrupt practices and fair competition. Its Consequently, achieving fully transparent membership is drawn from among local and governance is a paramount issue. Perhaps in national companies, including a number of part for these reasons, feedback provided by MNE subsidiaries. this initiative highlighted the importance of a top-down approach in organizing Through a holistic approach and partnering Collective Action initiatives, stating that NGOs and public and private sector actors, it is essential to show the commitment of the project seeks to fight corruption and company headquarters and the board as this other integrity-related barriers in customs facilitates implementation at the regional operations. Among its objectives are ensuring and local levels. fair competition, environmental protection and promoting human rights. The Collective Status Action agreement was signed six months after work started on the project. Joint The Collective Action initiative is in its activities agreed in the declaration include early stages and is now moving towards training of the parties’ employees; training implementation. It has been well received by of value chain collaborators’ employees; leading customs brokers (consultants) serving joint progress evaluations and assessments; global companies and local conglomerates and communication. with ethics standards and compliance programs. In contrast, its dissemination Structure among brokers serving local companies is rather slow. Another challenge concerning In addition to having acted as initiator of the implementation arises from the legal project, the Turkish Ethics and Reputation constraints of customs trade associations Society now serves as its facilitator and in Turkey. As a result of the provisions of administrator. The agreement provides the Customs and Trade Code under which for an Ethics Committee of five members they are established, they are not purely serving two-year terms, to be selected by the NGOs and are subject to specific regulation. Customs Consultants Association of Istanbul The relevant regulatory provisions and the (IGMD). The Ethics Committee is authorized authorities provided for in the Collective to impose sanctions including: Action agreement are being cross-referenced and undergoing an evaluation to ensure the Warnings. legitimacy of the joint committee’s sanction Suspension of the right to use the ethics powers. logo. 34| A Practical Guide for Collective Action against Corruption

Significantly, government support has in by-laws in order to ease the project’s exceeded expectations. Government actors implementation. have taken concrete steps both technically, with respect to the implementation of electronic customs procedures, and Link: TEiD legislatively by providing for changes

Customs Brokers Anti-Corruption Regional/Industry Scope Declaration in Turkey Customs Brokers in Turkey

Facilitator Participants Ethics and Local companies Reputation Society of Turkey

Substantive Scope of Ethics Committee Collective Action / Subject 5 member Ethics Committee selected for Matter Covered 2-year terms by the Customs Anti-Corruption Anti-trust Consultants Association of Environment Human Rights Istanbul

Time from project start to Collective Action signature N/A

Challenges in implementation Challenges in signing Assurance of legitimacy of sanctions. Board governance No significant challenges transparency is considered a delicate issue

Impact Agreed implementation activities Changes in legislation underway. Awareness and N/A commitment building successful

Facilitator’s Statement

Tayfun Zaman Secretary-General TEiD

“In today’s globalized economy, business oriented initiatives like Collective Action have a multiplier effect on the effectiveness of laws and regulations with global reach such as FCPA and UKBA. A Collective Action in high-risk sectors like customs services proves to be among the most effective ways of combating corruption as such initiatives use the regulatory and economic dynamics of business as leverage rather than socially focused messages. This particular initiative seeks to attack corruption and all integrity related barriers in customs operations with a holistic approach, through a partnership involving NGOs and the public and private sectors.” A Practical Guide for Collective Action against Corruption | 35

3.1.3 Water Pipes, Water and Sanitation in Colombia: Principle-Based Initiative

Background and Scope

Experts estimate that the average bribe 2. Reduce the economic costs generated by or kickback in Colombia in exchange kickbacks. for awarding a contract is 12.95% of the 3. Engage in collective monitoring actions contract value (Probidad - Market Survey - for transparency and fair competition in Confecámaras, Bogota 2006). Further, 91% state procurement. of corporate managers interviewed during 4. Improve the trustworthiness, credibility the first national survey on anti-corruption and reputation of individual companies practices in Colombian companies were and the business sector. of the opinion that company owners offer 5. Develop or strengthen a corporate culture kickbacks in the regular course of business against kickbacks, referred to by the (Transparency Colombia and Universidad initiative as “Don’t pay, don’t offer; don’t Externado de Colombia, Bogota 2008). In take, don’t request.” a third edition of the survey in 2012, this 6. Supplement state enforcement by acting number increased to 94%. The survey also to prevent undesirable commercial showed that 72% of entrepreneurs recognize practices before they occur. the benefits derived from anti-corruption 7. Develop social corporate responsibility practices in the private sector, underscoring practices that promote and encourage their co-responsibility in solving this ethical and transparent business problem. environments to achieve business sustainability. This Collective Action initiative, signed in 2005, is a principle-based initiative This Collective Action involves substantial based on Transparency International’s joint activity and commitments based on the “Business Principles for Countering following premises regarding the principal Bribery” framework. The most important and related Collective Action agreements: topics covered by the agreement are anti- corruption, anti-trust/competition and 1. They are voluntary, as they stem from human rights. From an industry standpoint, each company’s independent decision to it covers water pipes manufacturers and self-regulate and participate. water and sanitation companies nationwide 2. They are private, although the underlying in Colombia. At the outset, nine parties values, principles and results involve signed on to the Collective Action initiative, public goods protected by law and ethics. although membership currently stands at 3. Their scope and content are defined on five members. the basis of the sector’s relationships and characteristics. The objectives of the agreements are to: 4. They are feasible, as they are rooted in practical measures for concrete solutions 1. Carry out effective, feasible and to the sector’s identified risks. solid commitments to correct unfair competition practices in the business sector. 36| A Practical Guide for Collective Action against Corruption

Structure

Transparency Colombia (TpC), in its capacity Depending on the supervisory functions as a qualified, independent, impartial and assigned to it, the Ethics Committee can: duly recognized external actor, acted as facilitator during the definition stage of Engage in monitoring compliance the Agreement. Approximately one year by participant companies with after work on putting the project together commitments under the Agreement. began, the Collective Action Agreement was Receive and manage all claims or signed. Since the Agreement’s signature, TpC complaints regarding possible non- has also acted as the administrator of the compliance or other questions and issues Collective Action. Working toward signing submitted by companies participating in the Agreement required TpC to lead and the Agreement. encourage the process, as well as to provide Evaluate results of the Agreement and specialized information and legal and recommend any necessary adjustments. technical knowledge. The Ethics Committee takes action using TpC also negotiated agreements to work mechanisms or procedures such as: together with the Ministry of Public Housing, which governs the water sector. Visits to participant companies to verify Since companies were initially reticent compliance with commitments, following to sign the Collective Agreement, TpC’s a protocol that respects confidential expertise was vital to the initiative when information as protected by law. calling on companies to participate and Monitoring processes linked to state when liaising with social and institutional contracts awarded to signatories actors and regulatory agencies, especially at of the Agreement by means of: the beginning of the process. The Collective recommendations arising from prior Action project provides for step-by-step studies or documents from past tenders; implementation of training of parties’ corruption risk alerts based on analysis employees, training of value chain employees, of technical studies supporting contracts; joint progress evaluations, assessments active participation in public hearings; of progress and results, and internal and field surveys; requests to suspend public external communication efforts. tenders, advocacy for preventive or investigative intervention by regulators, The participants established an Ethics requests for participating companies Committee comprising three members to carry out technical studies; public appointed by TpC for an indefinite time, statements and press releases; and, in with a yearly review. They are independent general, legal actions established by the and cannot have any relation with any of the Constitution and the Law. parties to the Collective Action Agreement. Additionally, a leader is placed in charge of investigations. A Practical Guide for Collective Action against Corruption | 37

Implementation and Impact exercised by the Ethics Committee. It also depends on good communication with TpC and the participants developed the participating companies. The cases studied following step-by-step program for the by the Ethics Committee generate peer definition and implementation of the pressure to comply with the Collective Action initiative: agreement. Its activities have involved:

Step 1: Preparation of an Action Plan. Drafting written statements motivated by inquiries, claims or complaints regarding With the assistance of TpC as a facilitator, non-compliance with the Agreement or the Group of Delegates, composed of its application to a particular situation. representatives from each member company, Communicating with third parties, defined the activities, responsibilities and domestically and internationally, resources necessary to implement the agreed to encourage compliance with the measures. These activities included: Agreement, create work schedules, and facilitate discussion of potential solutions Documenting and extending to problems encountered in regulating commitments under the Agreement the sector’s activity. to stakeholders such as contractors, Preparing preliminary surveys on distributors and employees. corruption in the sector. Internal company training. Disseminating the Agreement’s Impact and Status substantive content to key players. Designing indicators to monitor Through the initiative’s efforts, in 2009 compliance with the Agreement. COP224 billion were protected from corruption risks in connection with public Step 2: Monitoring compliance with the tenders and contracts for drinking water Agreement and basic sanitation infrastructure needs. This involved assisting certain members To ensure neutrality in monitoring to file complaints regarding tender and management and outcomes, indicators contract processes in different regions of are implemented with the support of the country. Also, the initiative identified TpC, applying its extensive experiential and disseminated information on concrete knowledge. This process generated a mechanisms through which corruption significant number of indicators to measure: operates in the stages of conceptualization, design, and financial modeling of water-supply Corporate commitment to the Agreement. systems in Colombia. These mechanisms Results and outcomes. were identified in a survey conducted by the Management of the initiative. Ethics Committee with support from TpC. The survey was complemented by corruption Step 3: Supervision of compliance with the risk prevention recommendations. These Agreement results and recommendations were most helpful to the membership, considering that The initiative’s credibility and effectiveness scant research has been conducted in this largely depends on the promptness, area and domestic regulation is minimal. seriousness, confidentiality and responsibility 38| A Practical Guide for Collective Action against Corruption

The Collective Action has acquired a continue Collective Action efforts in another significant degree of public and institutional format with the goal of implementing the recognition through the voice and extensive practices and processes described in the activity of its Ethics Committee. As a result, Matrix findings to reduce corruption in the various social and state-owned actors in water and sanitation sector. the country have consulted the initiative regarding the construction of free and fair After seven years, the first of four signatories competition environments. In June 2009 the left the initiative and others began to follow WBI, in the context of the Anti-Corruption suit as they failed to see sufficient benefits Collective Action Award for Practitioners, from their participation. Several others left selected the initiative as the best among the as a consequence of the facilitator’s research 150 Collective Action tools submitted to the findings, formed on the basis of more than contest for consideration. 40 cases studied, that pointed towards the need to eliminate high discount prices and Status to work with the government to open bids to more than one type of pipe material. Marking the initiative’s 10 years of experience working to improve the sector’s reputation The agreement worked well for seven years by fighting corruption, especially through but, during the last four years, government the Ethics Committee as the members’ actors seem to lack the necessary political mutually agreed method of auto-regulation, will and no additional companies have signed the TpC recently published a white paper on to the initiative. Financing the agreement based on its own methodology, titled “Risk with a reduced membership has grown Matrix of Corruption in the Process of Public difficult. While five of the eight original Contracting in the Drinking Water and Basic parties apparently wish to continue to work Sanitation Sector. Recommendations for the on the initiative, one could conclude that Prevention of Corruption.” The facilitator their levels of engagement have diminished. noted that the initiative is bound to change in response to 10 years of experience, developing into a different type of Collective Action initiative. While the members are not likely Link: to continue under the transparency pact Transparencia por Colombia framework, a group of companies is likely to A Practical Guide for Collective Action against Corruption | 39

Water Pipes, Water and Sanitation – Regional/Industry Scope Colombia: Principle-Based-Initiative Water pipes, Water and Sanitation in Colombia

Participants Facilitator Transparency MNE subsidiaries Colombia

Substantive Scope of Ethics Committee Collective Action / Subject 3-member ethics committee for an unlimited period, plus a Matter Covered leader, reviewed on a yearly Anti-Corruption Anti-Trust basis and selected by Human Rights Transparency Colombia

Time from project start to Collective Action signature 1 year

Challenges in implementation Challenges in signing Companies not seeing benefits. Convincing the participants Maintaining government interest.

Impact Agreed implementation activities Important resources protected against corruption. Training of employees of participating companies and Understanding and awareness-raising regarding corrupt their value chain; joint evaluations of progress/results, processes in the sector. Surveys conducted. Model for communication future Collective Action projects in Colombia, World Bank Award winning in 2009

Facilitator’s Statement

Carolina Cadavid Transparencia por Colombia

“Building trust between competitors is a lengthy process that requires persistence and clarity of purpose. The “Acuerdo Transparente entre Empresas Fabricantes de Tuberias y Accesorios” (the Transparent Agreement between Pipes and Accessories Manufacturers) is the most successful Collective Action experience in Colombia to date. In 2009, the World Bank Institute recognized Transparencia por Colombia as the winner of the “Anti-Corruption Collective Action Award for Practitioners” for our participation in this initiative. A sector agreement is a self-control tool used to establish clear rules between industry competitors, aimed at promoting fair and transparent market conditions and preventing corruption in commercial relationships. Through our years of experience with this initiative, we have gained significant knowledge of how corruption functions in water and sanitation public procurement. The reports and studies we generated, in addition to a risk matrix developed in 2015, will lead the work for the four coming years, contributing to the mitigation of corruption risk in this sector.” 40| A Practical Guide for Collective Action against Corruption

3.1.4 Electric Energy Transportation – Argentina: Principle-Based Initiative

Background and Scope the topics to be included and the behavioral standards to be established in the Initiative. Over the past two decades, the electric power transmission industry in Argentina became Along the way, before the agreement a complex and high-risk sector in terms was signed, the initiators encountered of corruption. Fraught with regulatory various obstacles. These included varying challenges and anti-competitive behavior, interpretations of the Collective Action’s companies competing in the industry faced substantive content between MNEs and a variety of challenges to doing business with Argentine companies, a general lack of trust integrity. Prior to engaging in this Collective between these industry competitors, and Action initiative, starting in 2011, industry scheduling conflicts given that all parties actors managed these challenges individually were represented by their CEOs. or through industry associations. During that time, an extraordinary sense of frustration Structure developed among the many industry actors working to combat corruption given a high- Various multinational and domestic degree of mistrust between key industry companies in the industry initiated the players, including concerns about free- project. The initiators approached the riders, a tilted playing field, and an industry facilitator with regard to helping organize trapped in a prisoner’s dilemma-type logic. discussions about the action and a governing agreement. The behavioral standards In late 2011, Siemens, one of the energy consented to by the participants were then transmission industry’s major equipment included in the Collective Action agreement manufacturers, approached the Center for executed by the parties in June 2012, eight Governance and Transparency (the “Center”) months after beginning negotiations. The at IAE, one of Latin America’s leading members clearly stated in the agreement business schools, with a proposal to establish their intent to exchange any information a Collective Action. The Center convened that could eventually lead to a finding of an exploratory meeting with the CEOs of infringement as to anti-trust laws. They five companies covering over 70% of the further agreed on joint training activities, sector. These companies consisted of both internal and external communication of large and small MNEs, plus one Argentine the agreement, and asking the facilitator to company. In the meeting, the companies convene follow-up sessions and to encourage concurred to combine their efforts based on more companies to join the initiative. Later, commitments to be set forth in a Collective an additional local company joined the Action agreement based on a principle-based initiative. initiative. Day-to-day administrative activities are As an initial step toward signing an agreement carried out by a third party. The participants to govern the initiative, the parties began established an Ethics Committee and, to assess the most important problems and after negotiations, agreed on its bylaws. risks facing the sector. In a second step, they Representatives of the members and the established priorities and made decisions on facilitator make up the Ethics Committee, A Practical Guide for Collective Action against Corruption | 41

which serves as a platform for exchanging best Ensuring that their employees, business practices and experiences in implementing partners, and third parties embrace these the initiative. The membership has principles, providing adequate training empowered the Ethics Committee to sanction to that end. any member who infringes the agreement. Trying to avoid doing business with others who do not abide by these principles or As is the case with most of the Collective Action who may jeopardize these companies’ agreements discussed in this publication, reputations. the participants in this initiative are Actively promoting transparency in the principally competitors. Nevertheless, they industry by engaging in coordinated were able to agree to adopt shared standards communication and training efforts as a desirable means for leveling the playing to disseminate information on the field, thus reducing local transaction costs Agreement, so that others become aware and raising the ethical standards commonly of its provisions and align their behavior. observed in the industry. Implementation and Status The following are the 10 standards agreed on in the Collective Action: Challenges experienced to date have included a strong disagreement between two of the Conducting business operations in parties; scheduling meetings due the CEOs’ a fair, honest, transparent manner, hectic schedules; and other difficulties that strictly abiding by all current Argentine have prevented the administrator and parties laws, as well as the principles of the UN from organizing and carrying out planned Convention Against Corruption and training sessions. the Inter-American Convention Against Corruption. In addition to these training sessions for Refraining from paying any kind of bribe the parties’ employees, the participating (direct or indirect). companies agreed to conduct joint progress Refusing to accept bribes or to let others assessments, to communicate their efforts accept bribes on their behalf. on this initiative to internal and external Avoiding bid tampering or engaging in stakeholders and the media, and to hold any form of bid or technical, commercial, follow-up meetings with the facilitator. and/or financial specification tampering. Refraining from making local The participants continue to collaborate in contributions to political campaigns. this initiative. To date, its most significant Maintaining clear, transparent impact has been the participants’ sponsoring and charitable contribution commitment with the Collective Action, policies, recording all donations which has led to a general positive effect on accurately in financial statements. the participating companies’ employees, and Maintaining or establishing effective significant use of the initiative as a platform internal processes to prevent direct or for sometimes-difficult discussions regarding indirect bribery. corruption issues and possible solutions. 42| A Practical Guide for Collective Action against Corruption

Regional / Industry Scope Argentina Energy Transmission Sector: Argentina: Principle-Based Initiative Energy Transmission equipment producers

Participants ABB S.A. Alstom Grid Argentina S.A. Facilitator Arteche S.A. Center for Lago Governance and Transparency - Electromecánica S.A. IAE Business School Siemens S.A. Tubos Trans Electric S.A.

Substantive Scope of Collective Action / Subject Ethics Committee Composed of 7 parties to the Matter Covered agreement selected by the Anti-Corruption, Anti-trust / membership. Competition

Time from project start to Collective Action signature 8 months Challenges in signing i. Varying interpretations of the Collective Action Challenges in implementation initiative’s substantive content i. Spat between two parties between MNEs and Argentine companies. ii. Schedules of CEOs ii. Lack of trust. iii. Training sessions still to be performed iii. Scheduling: all parties are represented by their CEOs.

Agreed implementation activities i. Training of parties’ employees Impact ii. Joint progress assessments i. Planned joint training iii. Communication internally and externally to ii. Positive effect on local employees customers, business partners and the media iii. Platform for open conversations iv. Follow-up meetings with facilitator

Facilitator’s Statement

Center for Governance and Transparency, IAE Business School

“The parties to this principle-based initiative have agreed to making their integrity standards explicit and established 10 clear-cut rules for behavior in their industry sector. Establishing an Ethics Committee with power to impose sanctions brings the initiative to the next level, as the prospect of sanctions and their enforcement exceed pure peer pressure: Expulsion from the Initiative, which has been published, brings negative reputational consequences. The fact that subsidiaries of MNEs, together with local companies, were the initiative’s drivers was on one hand complex as different corporate cultures and practices were difficult to reconcile. On the other hand, and importantly, this dynamic allowed for the participants to address the contextual problems quickly and decisively.” A Practical Guide for Collective Action against Corruption | 43

3.1.5 A Collective Action for Small and Medium-Sized Enterprises (SMEs) in Egypt

Background and Scope Structure

The Egyptian Junior Business Association An Integrity Pledge was developed together (EJB) and the UN Global Compact jointly with a first group of pilot SMEs in a series launched a principles-based Collective of workshops throughout 2013. The Pledge Action initiative supported by the Siemens builds on international best practices, Integrity Initiative (SII) in September 2012 focusing specifically on the challenges to advance anti-corruption practices among of SMEs in Egypt. It has three phases of SMEs in Egypt. The aim of the initiative was increasing commitment; through which to identify key anti-corruption challenges the EJB supports SMEs using different of SMEs and provide capacity building to capacity building tools. During phase 1 SME support them in tackling such issues. senior managers are required to attend a 3-hour, in-person anti-corruption training. In discussions with SMEs and other Furthermore, companies were required to relevant stakeholders it became apparent appoint an Ethics & Compliance Manager that training them on anti-corruption and develop a detailed anti-corruption standards was insufficient. SMEs operating policy. For the first group of pilot SMEs Phase in challenging business environments with 1 culminated in early April 2014 when11 high levels of corruption often believe that SMEs signed the Integrity Pledge in front countering corruption will be too costly or of 150 representatives from the private and even impossible. public sectors, civil society, academia and the media at a conference held in Cairo. Therefore, the concept of an “Integrity Network” was developed, aimed at bringing At this same ceremony, five MNEs and large together SMEs, large corporations and other Egyptian companies pledged to provide relevant stakeholders. This network would incentives to SMEs that successfully and serve as a platform and support system demonstrably implemented the Integrity featuring incentives to make integrity a Pledge. more viable business choice. Implementation The Integrity Network has two main goals: The accomplishments and activities carried Committing SMEs to advance their anti- out to date include: corruption practices by publicly signing on to an Integrity Pledge based on the The stakeholders collaborated in four needs and challenges of SMEs operating workshops held in Cairo in February, in Egypt. May, July, and December 2013 to draft Providing business advantages to SMEs the Integrity Pledge, discuss capacity- that commit to and demonstrably building requirements, and define implement the Integrity Pledge, such relevant commercial incentives and as access to business opportunities, useful monitoring approaches. preferred commercial conditions, access to finance, publicity, etc. 44| A Practical Guide for Collective Action against Corruption

Based on these discussions, the EJB worked Status with partners and the SMEs themselves to develop a publication, “Guidance Manual Motivating a significant number of SMEs to for SMEs in Egypt: Implementing the EJB join the initiative remains a challenge, as Integrity Pledge”. The manual follows losing business due to strict anti-corruption the 10 steps of the Integrity Pledge standards is still a prevalent fear among and provides information regarding a companies in Egypt. Building a strong successful implementation. network of non-SME stakeholders will be A training course for senior management paramount going forward. was developed. Executives from the first SMEs attended several in-person Long-term funding will be necessary to detail workshops in Cairo throughout 2014. and implement some of the crucial provisions With input from various consultations of the Integrity Network (e.g. a monitoring with MNEs, SMEs and other relevant system) that have been initiated in this pilot stakeholders, a document titled phase but will need further development. “Commercial Incentives: What large companies can do to motivate SMEs to The Collective Action completed its pilot commit to an anti-corruption standard” phase with its official launch in April was drafted. This document lays out some 2013. Its participants are currently seeking of the most relevant commercial and to expand its reach. The next phase reputational incentives. involves the implementation of the agreed In a series of workshops with SMEs, principles, training of parties’ employees, discussions were initiated on what the communication of the objectives, and Integrity Network’s monitoring approach assessment of results and progress. should look like. Credibly demonstrating adherence to the Integrity Pledge will be one of the Initiative’s main challenges going forward, as it will be a prerequisite Links: for obtaining access to incentives. Promoting Anti-Corruption Collective Action through Global Compact Local The facilitator reported that these activities Networks inspired behavioral changes among the participating companies. They were effective Egyptian Junior Business Association in leading to a general recognition that companies can and should look to combat corruption in the context of an extremely challenging business environment. A Practical Guide for Collective Action against Corruption | 45

A Collective Action for Small and Medium-sized Enterprises (SMEs) Regional/Industry Scope in Egypt – Principle-based Initiative Multi-sector; SMEs

Participants SMEs (focus) Initiator Facilitator MNEs Egyptian Junior Egyptian Junior Large Egyptian Business Association Business Association companies Civil society

Substantive Scope of Collective Action / Subject Matter Covered Ethics Committee Advance anti-corruption N/A practices among local SMEs through a new “Integrity Network”

Time from project start to Collective Action signature N/A

Challenges in implementation Challenges in signing Obtaining funding The need for solid incentives Fear of publicly committing to fight corruption and Credible monitoring SME capacity to potential consequences on the SMEs’ business implement the pledge

Impact Agreed implementation activities Public signing event with participants’ CEOs creating N/A strong commitment.

Facilitator’s Statement

Qusay Salama Project Director CAP Egypt

“There is a great deal of consensus among businesses in Egypt on the damaging effect that corruption has on the business environment; yet there is also a great deal of skepticism and fear of the consequences of taking an active role in fighting corruption. A major concern is how a commitment to integrity could affect their businesses’ ability to survive under already tough economic conditions. Any CA effort that wants to succeed needs to consider this concern and should work on mitigating these negative consequences.” 46| A Practical Guide for Collective Action against Corruption

3.1.6 Lithuanian “Clear Wave” Initiative

Background and Scope the country, the “Clear wave” logo, for use in commerce to identify the goods and services This initiative was born out of discussions of participating companies. The label is launched in 2007 by the Lithuanian intended to give participants a competitive association “Investors’ Forum,” Civil Society marketing advantage and enhanced Institute, UNDP in Lithuania, Transparency trustworthiness in the eyes of the public. International Lithuanian department, As part of these efforts, a yearly survey of civic combination “Dalios sąskaita,” the each member’s transparency practices is Lithuanian Business Support Agency, as part conducted. of an effort to foment transparent and ethical business practices in general in Lithuania. In While the initiative does not have an ethics addition to fair competition law concerns, committee to enforce compliance with the the initiative is intended to address matters agreement, each company’s membership of tax compliance, labor law and Lithuania’s is published online. Incentives to comply shadow economy. Among its approximately with the agreement are bolstered by public 50 participants are many multinational pressure and by the informal monitoring and domestic companies accompanied by undertaken by NGOs, the media and non- business associations. In addition to the industry watchdogs. Furthermore, signed overall objective of cleaning up the general partnerships with the Tax Inspectorate of business environment, the Collective Lithuania and a local credit bureau allow Action has a number of specific objectives, each to keep track of companies’ practices including: youth education, stopping payroll and compliance with the agreement. The tax evasion through unregistered employee partnership with STT is planned to be signed wage payments; and freeing tenders for in 2015. public projects and goods from corruption. In 2011 the president of Lithuania became This Collective Action initiative, which the patron of the project. functions in large part as a branding initiative, is not based on a formal, Structure traditional written contract signed by each of the parties. Nevertheless, to participate, The Collective Action agreement was companies must agree to comply with the not modeled after any of the dominant initiative’s terms and conditions imposed. frameworks but was developed independently by its facilitators and founding members Implementation in 2007 before the WBI framework was published. Since 2011, the Investors’ Forum The major challenges to signing on companies association has acted as its facilitator. to the initiative are stating the business case for this incentives-based agreement Regardless of the independent framework and clarifying why they should join it. As employed, this initiative has certain to implementation, the challenge lies in characteristics in common with a certifying achieving a critical mass to potentiate the business coalition. Also the Collective Action clear wave branding advantage. Continual intends to popularize the first social label in efforts are made to assess the program’s A Practical Guide for Collective Action against Corruption | 47

progress and results, and to communicate methods for strengthening the internal with the public with respect to the clear control practices of its membership. wave brand and transparency in general.

As recommendations for future projects, Links: the reporter cited communication with Clear Wave (Baltoji banga) - Transparent millennials’ insights as key to promoting Business Labeling Initiative integrity and transparency and stated that its partnership with the government is “CLEAR WAVE” – a transparency business- important to bring credibility and trust to its labelling initiative efforts. Also, there was a recommendation not to overregulate the program, or to make “Ekonovus” joined “Clear Wave” the formal agreement too constraining. It initiative. was also noted that a grassroots approach is necessary to sustain a long-term vision, but BALTIC Investors Forum that top-down efforts are necessary to clarify and implement the agreed framework. For Thematic study on the topic “Prevention example, the reporter suggested that MNEs of Corruption in Eastern Europe and should be involved from the start as they Central Asia” have the economic leverage to bring their entire local supply chains on board. AmCham became the official member of “Clear wave” Status Challenges of Maintaining Business Currently, the Collective Action is growing Integrity were Discussed in Investors’ within Lithuania. In 2015, proponents of Forum meeting with OECD the initiative have plans to extend their efforts into Latvia and Estonia. The initiative is currently exploring and implementing 48| A Practical Guide for Collective Action against Corruption

Regional/Industry Scope Lithuanian Investors Forum: Principle-Based Initiative Lithuania - Nationwide; Cross- Framework: Independent sectorial, plans to extend into Latvia and Estonia in 2015

Participants The initiative’s Facilitator Initiator membership consists The Lithuanian Egyptian Junior of over 50 companies, Investors’ Forum Business Association business associations in Lithuania

Substantive Scope of Monitoring Collective Action / Partnership with State tax Subject Matter Covered inspectorate and a Lithuanian Anti-Corruption, Shadow credit bureau Economy

Time from project start to Collective Action signature N/A

Challenges in implementation Challenges in signing Expanding reach of initiative beyond founders Trust issues and attitude and early participants

Impact Agreed implementation activities i. Raise governance-based compliance standards Results and progress assessments; discussion forum; ii. Creating alliances for clean business. communication Open up dialogue with the Government

Facilitator’s Statement

Andželika Rusteikien Head Clear Wave

“Launched in 2007, the initiative “Clear Wave” brings businesses together to raise awareness of the importance of transparent and ethical business practices. The initiative has spread across the country and opened up dialogue and cooperation between chief executive officers, the president’s office, government ministers, heads of civil society and labor organizations to catalyze actions towards greater change. For instance, the collective action ‘No Country for Shadow’ was organized in 2012 and by 2014, it had spread to 46 cities of Lithuania, with more than 250 participants and covering 30,000 Lithuanian citizens.” A Practical Guide for Collective Action against Corruption | 49

3.1.7 An Overarching Anti-Corruption Awareness Platform in India

Background and Scope in fighting corruption and the value of collective action. Launched and implemented by the Global Facilitating dialogue between the private Compact Network India, this Collective and public sectors and exploring good Action Project (CAP) started its operations in practices in implementing the UN Global January 2011 and completed implementation Compact principles on anti-corruption. in January 2015. Financially supported by the Siemens Integrity Initiative, the CAP aimed Structure at addressing specific corruption-related challenges by bringing together relevant During the development of the project, the stakeholders and establishing a platform Global Compact Network India adopted the for ongoing public-private dialogue, with a role of facilitator and created a platform for focus on anti-corruption intervention and all stakeholders to discuss issues related to ethical governance systems and practices. transparency and governance. Since its start in 2011, the project evolved in an organic Among the business sectors and functions manner both in terms of outreach and covered by the project were public impact. The facilitator noted that a top-down procurement, supply chains, whistleblower approach was more effective as decision- mechanisms for business operations, makers play a pivotal role in adopting and integrity pacts, sports and sports hospitality implementing the anti-corruption agenda. and developing a business case for anti- corruption. The broad issues to be tackled by Though the CAP did not include an ethics the initiative included anti-corruption, anti- monitoring body, it has a Project Committee, trust and environmental problems. Major which guides the CAP and gives direction to cities and regions where the project made its planned activities. its presence felt were New Delhi, Mumbai, Kolkata, Chennai, Bangalore, Hyderabad, and Implementation Bhubaneshwar. Participants of the collective action were principally national and local The project’s activities have included businesses, SMEs, civil society advocates, research studies, seminars, workshops, and professionals from different streams and local and national stakeholder consultations. media representatives. The project also looked at the importance of the UN Global Compact-led Principles for The CAP’s main objectives were: Responsible Management Education (PRME) and engaged with management institutes Addressing the economic implications of and business schools. Additionally, the corruption. Collective Action envisioned the training Exploring how leading companies of employees at companies in their value tackle ethical dilemmas concerning chains, and continuous assessment. These environmental sustainability. activities were also constantly communicated Raising awareness among business both internally and externally. External executives, government officials and the communication was carried out through public about corporate sustainability participation in debates in public forums 50 | A Practical Guide for Collective Action against Corruption

covered by the media, publishing of articles After nationwide consultations on in journals and diverse publications, and transparency and anti-corruption social media activities. measures in procurement, the CAP made recommendations on behalf of the The following are some of the high profile business community in connection with activities carried out by the initiative: India’s Public Procurement Bill of 2012.

A series of stakeholder consultations on Challenges Experienced fraud and bribery held in four Indian cities in 2013, titled “Turning Down the The CAP’s main challenge was the novelty of Demand and Cutting off the Supply.” the concept of collective action in India and a The 12th meeting of the UN Global general lack of awareness about the business Compact Working Group on the 10th case against corruption. Other challenges Principle against Corruption, attended by included were bureaucratic impediments more than 150 public and private sector found in trying to bring public entities companies, was hosted by CAP India on and government agencies on board and April 10, 2013 in New Delhi. overlapping anti-corruption laws in India. CAP India conducted consultations on the UN Global Compact Guide on “Fighting From the beginning, this project was Corruption in Sports and Hospitality: A intended as an all-encompassing anti- practical guide for companies” to obtain corruption platform. Its future endeavors feedback from participants comprised of focus on specific sectors of the Indian businesses, athletes known nationally and economy. As an example of focused efforts, internationally, and sports federations, CAP could apply its abundant expertise in in an effort to strengthen the Guide and anti-corruption matters to the design of ensure its implementation in emerging industry-specific anti-graft tools, training economies. programs and resource materials. Another A B20 meeting was organized during area of focused efforts worthy of exploration the G20 Summit in June 2013 in Russia involves SMEs, which do not have a voice in to exchange ideas on establishing anti- policy-making. corruption “Centers of Excellence” in G20 countries and on strengthening organizations and institutions in Links: emerging markets. CAP India led the Collective Action Project - UN Global discussion following a concept paper Compact, Network India developed by CAP. In partnership with Transparency Promoting Anti-Corruption International, CAP India organized a Collective Action through Global regional meeting in March 2013 in New Compact Local Networks Delhi to facilitate the set-up of a GOPAC national chapter in India. A Practical Guide for Collective Action against Corruption | 51

An Overarching Anti-Corruption Awareness Platform in India Regional/Industry Scope Integrity Pact Multi-sector

Participants Civil society Facilitator organizations; Global Compact Academia; government; Network India business firms

Substantive Scope of Collective Action / Subject Matter Covered Ethics Committee Establishing a platform for N/A ongoing public-private dialogue through the development of a collective action platform

Time from project start to Collective Action signature N/A

Challenges in implementation Challenges in signing Novelty of collective action concept/tool. Lack of N/A business case for anti-corruption

Agreed implementation activities Impact Research studies, seminars, workshops, and national and N/A international stakeholder consultations

Facilitator’s Statement

Shabnam Siddiqui Project Director, Collective Action Project India Global Compact Network India

“CAP India adopted a holistic approach and internalized Collective Action within each business. Starting with the vigilance and compliance officers from public and private enterprises, CAP involved frontline personnel in issues-specific deliberations such as procurement and material management personnel, supply chain managers and finally the HR and Finance persons in quantifying the benefits of anti-corruption tools. The outcome of this effort was that there has been ownership of the Project events and deliberations by stakeholders, from top management to frontline operators.” 52 | A Practical Guide for Collective Action against Corruption

3.1.8 Construction and Infrastructure Sector Integrity Pact in South Africa

Background and Scope would create another bureaucratic layer, given their parallel efforts to make the This Pact covers the Construction and procurement process less onerous. The Infrastructure sector in the Republic of second challenge, from the perspective of South Africa. Parties to the Pact are local companies, was a concurrent government and national companies. The project was investigation in anti-competitive behavior, initiated by the Global Compact Network price-fixing and collusion in the industry. South Africa and the hosting organization, the National Business Initiative. The agreements’ objectives include fighting corruption and working on anti-trust and The biggest challenge to South Africa’s competition issues. For the first two years, governance, both in the public and private while the project was being negotiated, sectors, is corruption and related vices. companies in the sector preferred that Corruption is the most significant challenge the investigations be completed before in the relationship between the public and considering involvement in the Collective private sectors, particularly in procurement Action. With the conclusion of most of the of large public projects. In starting this cases, the sector is now more amenable to Collective Action, the project focused on participating in Collective Action through a that relationship: the greatest source of trusted platform. Most are still nervous about corruption risk. being seen together in closed-door meetings because of the risk of being misconstrued as Based on the above facts, the project pursued engaging in price-fixing. two main objectives: Structure To create and strengthen a platform for the key sectors, including the private The agreement is likely to be signed soon, and public sectors and civil society; four years after initiating the project. In collaborating on anti-corruption to creating the agreement, the initiators demonstrate that best practice is possible applied the TI framework for integrity pacts. through Collective Action models such as The Global Compact Network South Africa Integrity Pacts. acts as the facilitator and administrator of To educate and create awareness through the pact and will continue in this role. trainings and dialogues on how to implement anti-corruption measures. Additional monitoring procedures exist. As a prerequisite to companies’ participation, The facilitator noted that the process of the project has proposed that each industry pursuing these objectives has benefited both association clarify how they enforce their business and government participants. codes of conduct and strengthen their monitoring capacity. This also applies to The main challenge to getting the agreement all companies that sign on to the project. signed was getting government to accept the The proposed Integrity Pact, as it currently project in its generic entirety. Government stands, only provides for the role of an was concerned that external monitoring external monitor during key procurement A Practical Guide for Collective Action against Corruption | 53

projects. Most of the capacity for monitoring has been more productive and expedient. changes and improvements will remain with companies and the industry association level. Status

Implementation During 2014, the fourth year of the project, the Construction Sector, through their key The agreement provides for training of industry associations, in principle endorsed parties’ employees and communication as the Integrity Pact project. Participants of implementation activities. The training that the initiative agreed on the final Integrity has taken place was to prepare companies Pact document after a series of individual to implement stronger internal measures in meetings followed by two joint roundtables anticipation of more stringent requirements at which CEOs from the sector’s most when the Collective Action finally gets important companies were present. A few implemented. More targeted training contentious issues remain such as the scope and information will be done once key of the External Monitor’s role and authority, parties finally sign the Integrity Pact and and how to enforce sanctions, especially implementation begins. when a government actor as the contracting authority commits the breach. So far the biggest achievement has been getting industry to work together on the The industry associations have owned Collective Action, and to endorse the process the process as the lead organizations on of engagement with government. Placing the proposed pilot Integrity Pact. In the sector associations at the forefront of the meantime, after the final document is project was crucial for its success. They have accepted and signed by each participating an unexplored potential to drive change in industry association, the lead organizations, the sector and could be persuaded to lobby led by the Global Compact Network, for clean business. will present the document and a set of recommendations to the government For the same reason, the initial “top-down” through the National Treasury. The initiative approach – focused on efforts to have the intends to continue the process beyond the government impose the pact – did not work life of the current funding cycle and will seek for the Collective Action. As a result, the first additional sources of funding to support two years of work were a lost opportunity. continued efforts. The initiators began efforts with high-level government actors, believing that as the custodians of public funds and the chief procurers of projects, they would buy into Link: this model more quickly given its potential Business Can Lead War On Corruption to strengthen delivery. Driving the project from local companies as providers of services 54 | A Practical Guide for Collective Action against Corruption

Construction and Infrastructure Sector Integrity Pact Regional/Industry Scope South Africa Construction and infrastructure; nationwide

Participants Facilitator Local construction Global Compact companies Network SA

Substantive Scope of Collective Action / Subject Ethics Committee Matter Covered N/A Anti-Corruption; Anti-Trust

Time from project start to Collective Action signature 4 years since initiation of this project, a Collective Action agreement has not been signed.

Challenges in signing Government buy-in: concerns that external monitoring adds a bureaucratic layer Challenges in implementation From companies: ongoing investigations into past N/A wrongdoings, now ebbing and antitrust concerns

Agreed implementation activities Impact Research studies, seminars, workshops, and national and N/A international stakeholder consultations

Facilitator’s Statement

Achieng Ojwang NBI Program Manager Global Compact Local Network South Africa

“Through this project, we introduced a fairly new concept to South Africa’s procurement landscape. It has been a challenging process, having to drive understanding and consensus on the Integrity Pact across different sectors. The uniting factor is that all sectors are interested in clean business and this clear goal keeps the project in focus.” A Practical Guide for Collective Action against Corruption | 55

3.1.9 Hungary: the Integrity Pact for a Nursery School

Background and Scope not established in conjunction with the pact. Work began on the project with a preliminary The City of Budapest XIII District Council planning meeting between the District initiated this integrity pact in 2014 to Council and TI Hungary. At the meeting, the govern the procurement and contracting District Council elaborated on the proposed processes in connection with the renovation procurement program furnished to TI of a nursery school, financed exclusively Hungary in advance. The matters discussed with District Council resources. Initiation extended to general details regarding the of the pact was in recognition of the fact renovation project and the proposed tender; that public procurement is one of the six a draft contract for the implementation principal corruption risk hot spots across phase; internal resources available; the Europe. Acknowledging Transparency draft call for proposal and the details of the International Hungary’s expertise and approval process; and financial resources know-how in combating fraud and collusion available for the project. TI commented in procurement, the District Council called on the validity and feasibility of the plan, on TI Hungary to assist with this project. and furnished the District Council with a TI Hungary’s sees these activities as core proposal on monitoring and a report on to its more general mission of combating contractors interested in participating, or corruption, and as a means for promoting the likely to participate, in the project. general concept of fair and open competition in business in Europe and Hungary in the Implementation public and the private sectors alike. The District Council is the first Council to use the In the initial phase, TI Hungary monitored anti-corruption tool developed by TI. Parties planning of the procurement process to to the Integrity Pact are the District Council ensure that it was designed consistently and local companies, including SMEs. with project needs and local regulations. Additionally, it took action to ensure the Structure neutrality and judgment of all persons participating in the planning phase, making As noted above, the City of Budapest XIII sure they were not compromised by conflicts District Council initiated this program in of interest. Prior to initiation of the project, conjunction with the renovation of a nursery the parties agreed to perform and participate school. TI Hungary served as facilitator and in an assessment of project outcomes. administrator. Only two months passed from the beginning of work on the initiative to Next, as stipulated in the contract between signature of the Collective Action agreement. TI Hungary and the District Council, TI This represents the shortest preliminary performed a legal review of all contractual period among all of the surveyed Collective procurement documents, analyzing aspects Action initiatives. The substantive scope of related to legal compliance, lawfulness, the matter extended to anti-corruption and transparency, and fair competition. Later, anti-trust matters. An ethics committee was TI Hungary’s public procurement experts 56 | A Practical Guide for Collective Action against Corruption

monitored the procurement phase, and different legal settings. On that basis, it TI Hungary also enlisted an independent notes that integrity pacts can be used in engineering expert to assist with engineering- procurement processes not regulated by related issues arising during completion Hungary’s Public Procurement Act. Having of the project and with issues related to been used successfully in connection with supplier’s contract performance. the Water Supply Rehabilitation Project’s of the Council of Ózd, financed by the Swiss TI Hungary monitored all phases of planning Contribution Office, successful completion and implementation, involving the public of the Nursery School Renovation project and to assist, and issued five reports about its two projects of the Hungarian National Bank findings. means that integrity pacts have now been used successfully in several procurement Impact processes in Hungary.

Thanks in large part to the efforts of the Collective Action initiative, the public procurement process was conducted lawfully, Links: in compliance with the integrity pact, and Local Government of the 13th district - consistently with the objective of carrying Transparency International, Hungary out a transparent and fair procedure. The Integrity Pact gave TI Hungary an excellent Kerületi Bölcsöde Felújítása - opportunity, through its efforts, to publicize Transparency Interntional, Magyarország information regarding the initiative and to disseminate information about Collective Kerületi Önkormányzat Action projects and anti-corruption efforts in general to the public. Additionally, in line with Elismert közbeszerzés „tetőtől talpig” - its integrity pact efforts, TI Hungary prepared Media 13 an e-learning tool to instruct participating institutions and their employees on how to Jól vizsgázott az önkormányzat properly use and implement integrity pacts. átláthatóságból TI Hungary notes that because integrity pacts become a meaningless formalism and Integritási megállapodás: Civil additional administrative burden if not used ellenőrzéssel a közbeszerzési korrupció appropriately, this instructional tool was ellen - MLBKT important to the proper performance of the initiative.

TI Hungary noted that the integrity pact framework has shown itself to be flexible in its application and adaptable to many A Practical Guide for Collective Action against Corruption | 57

Integrity Pact for a Nursery School in Hungary

Participants Initiator Facilitator City of Budapest XIII Regional/Industry Scope City of Budapest XIII District Global Compact District Council Nursery school in Budapest Council Network SA Local companies

Substantive Scope of Collective Action / Subject Ethics Committee Matter Covered N/A Anti-Corruption, Anti-Trust

Time from project start to Collective Action signature 2 months

Challenges in signing Challenges in implementation N/A N/A

Agreed implementation activities Impact Training; outcome assessment Contract performance in compliance with provisions of the integrity pact

Facilitator’s Statement

Alíz Szloboda Head of Public Sector Programs Transparency International Hungary

“The City of Budapest XIII District Council was the first Hungarian Council to apply the Integrity Pact (IP), the anti-corruption tool developed by TI. The Council modernized a nursery’s building. The IP was signed between the Council and TI Hungary. Bidders joined the agreement with a statement as part of their bids. Signatories assumed the responsibility to pursue a fair attitude during the procedure. TI Hungary monitored all phases of the procedure, including the implementation, and involving the public as well. The Collective Action, where lots of different stakeholders were involved, fulfilled the requirements of transparent and fair procedure and the Council spent less money than it planned.” 58 | A Practical Guide for Collective Action against Corruption

3.1.10 Integrity and Transparency in the Romanian Business Environment Integrity Pact

Background and Scope The Collective Action project’s scope of activity reaches several sectors including the This Collective Action project was conceived private business in general and SMEs. It also from the need its signatories felt to group focuses special attention on the healthcare around the anti-corruption values they shared sector, the academic sector, and NGOs. The and promoted. No specific issue or event led Collective Action project is centered on to the formation of this initiative. Rather, issues faced by for-profit companies in the the general state of ethics in the Romanian private sector in general. Nevertheless, its economic environment contributed to a participants and initiators were well aware consensus among stakeholders that some of the fact that different types of institutions form of Collective Action was needed to fix face different needs. SMEs, for example, the issues plaguing it. face different challenges than a MNE or its subsidiaries. This is also true for companies At the foundation of this Collective Action in the healthcare sector, civil society are the principles of integrity, transparency, organizations, and academic institutions. compliance, proactivity, honesty and respect. In recognition of these differences, this It covers corruption and related issues such initiative is built around five separate as anti-trust law, fair competition, labor, the Integrity Pacts, one for each type of activity environment, human rights, business ethics, addressed. All pacts share foundational and compliance. By signing the five integrity principles and common values. pacts that comprise this Collective Action, members publicly commit to adhere to these Structure principles and assume the role of promoting them within their sectors, and the sectors The Collective Action activities are organized with which their businesses interact. The around a central “umbrella” or master Collective Action’s objectives with respect to agreement known as the “Pact for Integrity the signatories of the five pacts are as follows: and Transparency in the Romanian Business Environment.” This central pact then Promoting practices consistent with governs four “satellite” pacts that focus ethical behavior and integrity. on specific sectors. These satellites are: Creating a climate of strong cooperation the ECOSOC Integrity Pact among NGOs and mutual trust among the signatories. and Social Partners; the SME Integrity Pact Generating a core of integrity intended to among representatives of the SME sector; the “radiate” to organizations with ties to the Integrity Agreement among Health System signatories. institutions; and the Integrity Pact among academic institutions. The signatories chose this type of Collective Action over others because they felt an The Collective Action project was initiated urgent need to do something from within by TI Romania as part of a larger initiative the system, but had concerns about lone, on business integrity, whose members are individual action. They did not want to be interested in creating ‘integrity islands’ in seen as “breaking the rules.” their respective fields. TI Romania also serves A Practical Guide for Collective Action against Corruption | 59

as the facilitator and the Collective Action is efforts to communicate pact activities and based on TI’s framework for integrity pacts. pact value internally and externally to Whereas the integrity pact34 framework is customers, business partners, suppliers and focused on procurement, this Collective other stakeholders. Action project broadens its scope to regulate business practices and agreed common Because the Collective Action initiative is values that exceed that domain. comprised of five Integrity Pacts designed for application to five different fields of activity, Compliance with the five pacts is monitored the main challenge was establishing a set of by an ethics committee. The committee is common values and rules for all of the Pacts. formed by four members selected by the Each Pact required provisions to address the membership for a period of one year. Possible specific challenges and needs of its specific sanctions are still under discussion and signatories, but also a core set of values and review. So far, the following sanctions have guidelines to bind all participants to the been agreed upon for members who breach agreed ethical behavior and enforcement the agreement: provisions.

Written warnings. Anti-Corruption is not the exclusive focus Temporary suspension of membership. of this initiative. Rather, it takes a holistic Exclusion from membership (exclusion approach to corruption and transparency by requires approval of the General Assembly focusing broadly on the idea of integrity in of Members). business, and the consequences of corruption such as high costs, tarnished reputations and Additional monitoring tools include loss of profit. Another interesting element meetings, internal integrity audits performed is its organization by way of an umbrella by designated entities belonging to the Pact integrity pact applicable to private business and the involvement of “watchdogs” from in general, and four sector-specific Collective the public media. Action projects designed to account for the idiosyncrasies and nuances of each market Implementation and Impact activity.

The membership has agreed on post- signature activities. These agreed Link: implementation activities include training of Centrul pentru Integritate in Business the member companies’ employees, training of employees working for collaborators in each member’s value chain, and extensive

34. Transparency Interantional 2009. 60 | A Practical Guide for Collective Action against Corruption

Romania Integrity & Transparency in the Business Environment

Participants MNE subsidiaries Regional/Industry Scope local companies Facilitator Romania SMEs Initiator Transparency Cross-sector and 4 sector- universities Transparency International International specific Collective Action hospitals Romania Romania projects associations NGOs social partners

Substantive Scope of Ethics Committee Collective Action / Subject 4 members voted by all Matter Covered members for a one-year period Anti-Corruption, Anti-trust; labor Sanctions: warnings, temporary issues, environment, human suspension, exclusion rights, compliance, ethics

Time from project start to Collective Action signature 3 years

Challenges in signing Challenges in implementation Establishing a set of common values and rules for the Meeting needs of subsidiaries of MNEs not causing cross-sector Main Pact and the 4 sector pacts, keeping problems for their HQs: having most MNEs commonalities and allowing for answers to reporting and compliance rules requiring that any sector-specific issues new rule must be added globally

Agreed implementation activities Impact Training of member and external value chain employees Awareness of ethics codes and other integrity tools Internal and external communication (customers, business among member companies has increased. Companies partners, suppliers, other stakeholders are more willing to establish ethics, integrity and compliance programs A Practical Guide for Collective Action against Corruption | 61

3.1.11 The Collective Action Against Corruption Coalition in Thailand

Background and Scope 5. In the initial stages, a prevalent belief that the initiative involved all talk and The Collective Action Against Corruption no action. Coalition, is headed by the Thai Institute 6. Some participants attempted to join of Directors (TIOD), in partnership with the for PR or brand-image benefits without Center for International Private Enterprise having a real commitment to make (CIPE initiative), a Washington, DC-based compliance changes. non-profit organization dedicated to strengthening democracy around the globe Nevertheless, as evidenced by broad through private enterprise and market- adherence to this certification coalition, oriented reform. This initiative is noteworthy consisting of 423 signatories to date, for a variety of reasons, but principally including 240 listed companies and the because of the breadth and depth of its scope, majority of the Thai financial sector, the in combination with its high objectives. TIOD and participants have been able to succeed in the face of these challenges. In 2010, to fight supply-side corruption throughout the Thai business sector Structure supply chain and to improve the economy’s competitiveness, the TIOD began The Agreement’s framework is an amalgam conversations with a number of Thailand’s of the frameworks promoted by the World leading domestic and multinational Bank Institute, Transparency International companies. After four years of negotiations, and CIPE. Beyond the most basic, short- a core group of participants were ready and term objective of setting basic ethical willing to lend their support to the initiative standards and certifying compliance, the and to undergo the certification process. long-term goals of the initiative are among As the TIOD reported, as often is the case the following: certifying compliance with with many Collective Action initiatives, anti-corruption standards, promoting fair participants experienced the following competition by providing tangible business symptoms of Collective Action problems: incentives for cooperating firms; cutting off kickbacks and bribery in supplier companies; 1. Fear of losing competitiveness and drawing governmental attention to the market share to competitors willing to problem; and raising public awareness. engage in bribes and kickbacks to those businesses that engage in corruption. Implementation and Status Concern that compliance could cause 2. additional costs. The TIOD Collective Action is a private Many market participants doubted sector anti-corruption initiative intended to 3. whether joining would result in any be comprehensive of business participants benefit. in all industries and of all sizes. It involves A mindset shared by many companies a rigorous certification process to ensure 4. that private parties cannot solve that participants put into practice the anti- corruption problems. corruption pledges to which they agreed 62 | A Practical Guide for Collective Action against Corruption

by signing on to the Collective Action of the business sector, the coalition needs agreement. The certification process consists additional funding and support from the of a self-evaluation by coalition companies, public to create the political will necessary an external audit to verify this evaluation, to cause systemic changes in the Thai and final approval by a panel of experts. governance system and to stem demand-side As part of the certification process, senior corruption pressures. executives and corporate compliance officers must undergo advanced training programs on matters such as mitigating corruption risk. Links: Thai Collective Action Against Corruption Once certified, companies’ anti-corruption Campaign practices are subject to agreed audit procedures; if they fail to abide by the agreed Tackling the Supply Side of Corruption in practices, their certification is subject to Thailand - CIPE suspension or forfeiture. The initiative also functions as a platform by which participants Private Sector Collective Action Coalition share best practices for implementing anti- Against Corruption - IOD corruption strategies and internal anti- corruption controls. Business Fights Corruption in Thailand - CIPE Still, more work needs to be done to ensure that anti-corruption initiatives are taken Business Shows Clear Commitment to seriously throughout the Thai economy. In Fighting Corruption in Thailand - CIPE addition to the Herculean support of much A Practical Guide for Collective Action against Corruption | 63

Thai Cross-Sectorial: Regional/Industry Scope Certifying Business Coalition Thailand - Nationwide; cross-sectorial

Participants 450+ signatories, including 250 listed companies Facilitator Initiator (70% of Thai capital market) Thai Institute of Directors in Various Thai business and the majority of the partnership with CIPE and trade associations financial sector. 96 companies are now certified

Substantive Scope of Collective Ethics Committee Action / Subject Matter Covered 10 members elected by the Anti-Corruption co-founding organizations

Time from project start to Collective Action signature The project has grown over a 5-year period, with steady increases in the number of participating companies and progress towards certification.

Challenges in signing i. Doubt regarding the benefits of joining ii. Fear of losing competitiveness/market share in Challenges in implementation theirs sector to the bribe payer i. Political will iii. Additional cost of business ii. Resources (Money and manpower) iv. Restricted mindset that corruption cannot be iii. Regulations solved by private parties iv. Support from regulators and public agents v. All talk but no action vi. Expectation of joining for reputation building / brand image only

Agreed implementation activities Impact i. Training of parties’ employees i. Raise governance-based compliance standards ii. Joint progress assessments ii. Creating alliances for clean business iii. Communication

Facilitator’s Statement

“Thailand’s Private Sector Collective Action Coalition against Corruption (CAC) was founded in 2010 by the eight most influential business organizations in Thailand, with a vision to bring effective anti-corruption policies and compliance standards into implementation at corporate and industry levels. To date, more than 450 companies, including 250 listed firms, have joined the CAC, declaring their intention to promote clean business by putting in place anti-corruption policies and compliance standards. At writing, 96 had been certified as having met the CAC’s implementation criteria.” 64 | A Practical Guide for Collective Action against Corruption

3.1.12 Makati Business Club: Project SHINE/Integrity Initiative – The Philippines

Background and Scope Develop an audit and certification program (including training programs Project SHINE began in 2010 as part of a for advisers and auditors) that will larger, long-term integrity initiative, a private offer tools to assist enterprises in sector-led campaign to promote common implementing ethical practices in their ethical and acceptable integrity standards business processes. among various sectors of Philippine society. This integrity initiative, undertaken by the The Unified Code of Conduct for Business Makati Business Club (MBC) and the European (UCCB) sets forth basic principles related to Chamber of Commerce of the Philippines ethical business practices to be followed by (ECCP), looks at “collective action” as an the participants. Topics covered include: alliance of more than one entity to achieve a defined goal or set of goals, sustained by Compliance with the Law (i.e. Anti- the shared commitment of stakeholders Corruption, Anti-Trust, Anti-Competition). benefitting from the synergy of communal Handling of Third Parties. efforts. Treatment of Employees. Environment, Health and Safety. The SHINE project competed for funding Complaints and Monitoring. from Siemens with hundreds of proposals from around the world, and was the only Structure project chosen from the Philippines. The project’s ultimate objective is a certification The target groups of the initiative are industry and accreditation system, similar to the associations that promote transparency ISO, with the goal of providing competitive and ethical business practices, and foreign advantages to participating companies. and local enterprises with an interest Participating companies will be audited, in promoting them. Members of these accredited and certified based on their associations, including their executives and adherence to ethical business practices and owners – in order to establish the tone at the strict integrity standards. top – are invited to sign an anti-corruption declaration known as the Integrity Pledge. The project’s efforts are aimed at ethical Signing the Integrity Pledge represents foreign and local business enterprises craving organizations’ and individuals’ commitment for fair market conditions, and willing to to ethical business practices and good engage in efforts to change the business corporate governance, but companies are culture and revolutionize how companies not screened or required to comply with any do business with government and with one prerequisites before signing the Integrity another. Specifically, Project SHINE aims to: Pledge. Signatories to the pledge are part of a growing group of ethics-conscious Identify key issues affecting the private sector companies spearheading positive change in in terms of integrity and transparency in the country. business transactions. Develop a “Unified Code of Conduct for Business” acceptable to local business entities. A Practical Guide for Collective Action against Corruption | 65

Implementation are available on its website. The website also has an additional feature for new signatories In 2012, Project SHINE conducted several to become members of the initiative by benchmark studies to assess signatories’ providing a secure copy of the Integrity institutionalization of ethical business Pledge for their signature and upload. practices. That same year, the project The initiative’s website also provides for developed the Integrity Compliance monitoring by granting the public access to Framework and Online Assessment Tool. view each participant’s degree of compliance The Integrity Compliance Framework is a with the Pledge (varying between self- tool to aid participants in operationalizing assessment, validation, and certification) by commitments to the pledge and the UCCB. displaying the appropriate symbol beside the The Online Assessment Tool, for its part, was names of the relevant member organization. designed to assist participating companies in assessing the alignment of their existing As the initiative recognizes that fighting policies and practices with the UCCB and corruption and cultivating an ethical culture identifying strengths and weakness (i.e. are not the sole responsibility of business or areas vulnerable to corruption), as well government, it has also organized several as specifying control measures to address events to engage various civil society those vulnerabilities. After the online self- organizations and solicit their help in fighting assessments are conducted to evaluate corruption and promoting an ethical culture. compliance with the UCCB, the results The initiative launched the Integrity Nation can be furnished to an external validator Now (INN) campaign in the last quarter of who independently and rigorously re- 2014. The INN campaign consisted of a series examines the organization’s progress in of events aimed at encouraging non-business institutionalizing the practices propounded sectors to adopt ethical practices and behave by the project and may “validate” the with integrity. The campaign kicked off with assessment. the 4th Integrity Summit last September 19 in Makati City under the theme “Uniting The project also provides training to improve for Integrity.” As expected, the majority of anti-corruption procedures addressing participants were from the business sector. participating companies’ control gaps and However, the program topics also notably has made available a secure online platform attracted speakers and participants from to enable sharing between participating other sectors like government, religious and companies of best practices, policy youth organizations. templates, tools and references. The project has also developed an online whistleblowing Status and Impact system for reporting violations of the UCCB, supported by Punongbayan & Araullo, a Project SHINE is on track to complete local audit and advisory firm and member the commitments it agreed to deliver by of Grant Thornton. Additionally, the project, March 2015, with an approved three-month in conjunction with qualified trainers and extension granted by Siemens AG. The subject matter specialists, has developed principal deliverable of the SHINE program significant additional content such as is a functioning Integrity Certification and learning modules, tutorials and videos that Awards Program. Out of more than 2,000 66 | A Practical Guide for Collective Action against Corruption

signatories to the Integrity Pledge, 156 have has lead to a number of positive developments signed up for the online self-assessment tool; in the last four years. 31 companies have progressed beyond the self-assessment rating stage and have been To sustain the efforts of SHINE after the validated by the Integrity Initiative. Siemens funding is completely drawn down, the Integrity Initiative was incorporated This program, in addition to offering in July 2013. This new entity will own the participants a toolbox to introduce and standards, learning modules, and other implement ethical practices in their business processes and systems developed by SHINE. processes, will develop a pool of trained Revenue streams from certification, training accreditors to conduct visits and spot check fees, accreditation fees, and event registration the degree of institutionalization of integrity fees, etc., will sustain the organizations’ practices via surveys, focus group discussions, activities. and interviews with key personnel. The Integrity Initiative has also agreed to Project SHINE hopes to have a significant work with six ASEAN countries to create impact on the business environment and a common strategy against corruption create a strong and sustainable force to in conducting business, specifically in convert the corrupt business environment developing a standardized ASEAN integrity in the Philippines to an ethical one. It hopes pledge that can build on local pledges, a to realize this goal by becoming a platform common set of anti-corruption standards, for companies to declare a commitment to and a harmonized integrity certification transparency and compliance, providing system. them with materials and expertise to learn integrity and compliance standards, and transforming member enterprises Links: into competitive fair market players, thus Shine Project - Integrity Initiative promoting more trade and investment. Project SHINE wants to see its participants Integrity Initiative become preferred suppliers as a result of their high ethical standards. In conjunction Articles - Integrity Initiative with the combined efforts of the Philippine government and other private sector anti- Media News - Integrity Initiative corruption programs, the Integrity Initiative A Practical Guide for Collective Action against Corruption | 67

Regional/Industry Scope Project SHINE, Integrity Initiative The Philippines / Southeast Asia, Cross-sectorial Facilitator Participants The Makati Business Companies and Club (MBC) and the industry associations European Chamber of Commerce of the Philippines (ECCP)

Substantive Scope of Collective Action / Subject Ethics Committee Matter Covered N/A N/A

Time from project start to Collective Action signature Not furnished

Challenges in implementation Challenges encountered in meeting some project management requirements attributed Challenges in signing to communication and coordination difficulties N/A encountered by the project management team given the number of partners and stakeholders involved in the collective action Impact Of 2,000 plus signatories to the Integrity Pledge, 156 have signed up for the online Integrity Agreed implementation activities Self-Assessment tool. 31 of those self-assessment Adherence to the Integrity Pledge and the Unified Business ratings have been validated by the initiative. Code of Conduct The combined efforts of the government’s anti- The Integrity Self-Assessment corruption agenda, the Integrity Initiative, Certification and accreditation system and other parallel private sector anti-corruption The Integrity Nation Now (INN) campaign programs have resulted in a number of positive developments in the last four years, as evidenced by the Philippines’ improved position in recent global transparency rankings.

Facilitator’s Statement

The Integrity Initiative

“Businesses in the Philippines are now leading the fight against corruption by signing an Integrity Pledge, a commitment that includes zero tolerance for bribery in all activities, maintaining a code of conduct to guide employees toward ethical behavior, and developing an internal system to prevent unethical conduct among employees. The initiative calls for collective action among ethical foreign and local business enterprises that are committed to establishing and sustaining fair market conditions in the country.” 68 | A Practical Guide for Collective Action against Corruption

3.1.13 Oživení Public Procurement Systems Collective Action in the Czech Republic and Slovakia

Background and Scope participants from both the public and private sectors. Its membership includes Oživení was established in 1997 in Prague subsidiaries of MNEs, national companies, as a not-for-profit organization dedicated SMEs, academics and the media. The primarily to promoting sustainable mobility, initiators of this project – a group of MNEs, cycling and reducing car traffic in cities. After SMEs experts, politicians, and NGOs focused the year 2000, the organization’s watchdog on transparency in public procurement activities began to develop a more important that predated the project – also acted as role. In late 2010, Oživení partnered in an its facilitators. Through the coordination anti-corruption initiative with Transparency of Oživení, the efforts of this group have International Slovakia and the Economics combined with those of a group of MNEs, Institute of the Academy of Sciences of the referred to within the project as the coalition Czech Republic with the broad objectives for transparent business, established to lobby of (i) increasing the transparency and the state for the adoption of anti-corruption effectiveness of public procurement and (ii) reforms. reducing the risk of corruption in Czech and Slovak public procurement markets. Challenges and Implementation Numerous analyses, studies and frequent scandals evidenced public procurement as Upon the first round of monitoring near the the area most affected by corruption in the outset of the project, the main challenges Czech and Slovak republics. The project was encountered were that (i) some members based on three pillars: (i) establishing an anti- did not fully understand the implications corruption business platform, (ii) changing of membership and joined the coalition public procurement regulation, and (iii) solely to burnish their image and (ii) increasing the transparency and quality of powerful groups initiated strong lobbying anti-corruption controls. against transparency efforts, speaking out publicly against amendment of the Public The main causes for corruption in Procurement Act pushed by the initiative, procurement in the Czech and Slovak designed to established much more republics are weak laws and lack of transparency and competition in public oversight. As a result, the project’s central contracting. Once implementation was well focus was to propose legislation based on under way, the main challenges involved economic research and legal analyses of large sections of the business community in their legal systems and their corruption risk advocacy activities for better legislation and weaknesses. Furthermore, the project aimed convincing public officials of the desirability at identifying legal loopholes and assessing of reforming the state’s public procurement government procurement practices and policy. government oversight of private business in procurement practices. Status and Impact

Structure Like many other initiatives, this project raised awareness about transparent and The initiative is cross-sectoral and involves ethical business practices and corruption A Practical Guide for Collective Action against Corruption | 69

risks in public procurement. The project reduced procurement costs by more than raised awareness through efforts like a 5%, leading to savings of approximately €37 September 2013 seminar on ethics and million. Electronic public procurement anti-corruption policy with a focus on boards in the Czech and Slovak republics procurement organized by Transparency now allow for better public monitoring International Slovakia together with the of tenders. In particular, the project National Union of Employers in September supported new functions allowing for 2013, and a report developed by Oživení on advanced searches and providing links the efforts of its “Coalition for Transparent to specific tenders. Additionally, it Business” to implement ethical business developed the first ever summary analysis principles. and a best practices manual on the use of e-auctions in the Czech Republic. The Most notably, however, the project applied project also developed three workshops its know-how to bring about improvement in in Slovakia to encourage using e-auctions public procurement policy, legislation, and in public procurement. the institutional framework, and developed a web portal allowing for better monitoring Additionally, the project carried out research of public procurement processes. These and analyses regarding: achievements included: Current trends in the public procurement A new Public Procurement Law was market, including the frequency of adopted in Slovakia in March 2013, no competition tender procedures reflecting a number of recommendations and the impact of e-auctions on the submitted by Transparency International competitiveness of public tenders. in Slovakia and supported by the The quality of state oversight of the public project, including raised transparency procurement in the Czech and Slovak requirements for procurement processes republics. involving lower value contracts, strengthening regulators’ powers, and Currently, economic research conducted lowering the administrative burden by the project’s participants supported its necessary to take action when corruption general recommendations that open tenders, is suspected. transparent electronic auctions, and clear Oživení’s recommendations on improving and unambiguous evaluation criteria can public procurement policy were included increase the efficiency of public spending. in the government’s official anti- Based on this research and with the support corruption strategy. of the anticorruption business platform, Oživení became a member of an advisory the project plans to present additional ideas board to a governmental anti-corruption for legislative and procedural reform to the committee that regularly comments on Czech and Slovak parliaments. The project anti-corruption policies in the Czech is also developing an official electronic Republic. tender bulletin to publish comprehensive A number of e-auction procedures information on public tenders, enhancing were adopted in line with the possibility of public control by raising Transparency International Slovakia’s awareness among the media and the general recommendations. As a result of the public. enhanced competitiveness, the project 70 | A Practical Guide for Collective Action against Corruption

Links: About the coalition - Coalition for Transparent Business

Oživeni

Siemens Integrity Initiative Annual Report 2013 (pages 66-67).

Facilitator’s Statement

Martin Kamenik Chairman Oživení o.s.

“Our project aimed at improving the public procurement systems in the Czech and Slovak republics. The project activities focused on business involvement in the issue of transparent and ethic business, analysis of public procurement markets, participation in the public policy process and promotion of good practices in public procurement. We influenced public procurement law in greater transparency and we have become a respected independent authority on public procurement issues. We brought forth a new concept of national public purchases policy based on foreign good practices. Some of our recommendations have become part of current government policy (e.g., centralized purchasing). We launched an online tool for easier monitoring of public tenders and supported the operation of a business platform to promote more transparent and ethical business practices.” A Practical Guide for Collective Action against Corruption | 71

3.1.14 Clean Games Inside and Outside of the Stadium in Brazil

Background and Scope During the general elections of 2012, through an initiative of the Clean Games project, the In 2009, when Brazil began to get ready to mayors of the 2014 World Cup host cities host two of the world’s biggest sporting committed to improve transparency in events, the 2014 FIFA World Cup and the connection with the investment of public 2016 Olympic and Paralympic Games, there funds by signing on to a Local Administration was growing concern in Brazilian society Transparency Pact. These pacts35 were used regarding how public funds earmarked for as a basis for establishing a dialogue between the events would be spent. In this context, civil society and government and to press for the UN Global Compact and the Ethos local regulations to foster compliance with Institute launched the “Clean Games Inside the Access to Information Act of 2012 (similar and Outside of the Stadiums” Collective to the United States’ Freedom of Information Action project, with support from the SII, Act). to contribute to the challenge taken on by Brazil in organizing these mega-events. The Another initiative of the Clean Games project saw that this was a rare opportunity project was to create a tool to evaluate the to create a legacy for Brazil, not only in terms level of transparency of the 2014 World Cup’s of infrastructure, but above all, in terms of expenditures. These indicators measure and improving social control and developing a show transparency levels in a simple and business environment with greater integrity objective way. Along with these indicators, in dealings between companies and the observers noted a significant improvement government. in the transparency of data available on World Cup projects, especially in regard to Structure municipal projects. This was partly due to the project’s advocacy strategies. Presently, The project involves a number of distinct the Clean Games project is adapting anti-corruption and transparency initiatives. the indicators to assess transparency in One initiative is to put together voluntary connection with the expenditures for the agreements between competitors to 2016 Olympic Games. establish bribery prevention measures. For example, the Clean Games project is The Clean Games project established currently coordinating the creation of committees to monitor and control two agreements, one between Healthcare investment and expenditures in the 12 World Equipment producers (Orthotics, Prosthetics Cup host cities. Working with these local and Special Materials) and another one entities, the Clean Games project forwarded between companies that sponsor sports and a number of complaints and demands to sporting events. various public authorities. Except for Rio

35. Local Administration Transparency Pact 72 | A Practical Guide for Collective Action against Corruption

de Janeiro’s committee, which will host the While some specific tasks or activities have 2016 Olympics, the local committees were been delayed or modified due to changes dissolved after the World Cup. in context and/or strategies, the project managed to achieve all of its goals during the The project also formed four national past years. Despite the success of the project, committees. The first one assists the the organization of broader Collective Action project in legal matters. The second one initiatives such as sectorial agreements brings together investors and companies have proven much harder to achieve than sponsoring the 2014 World Cup and the expected. 2016 Olympics. This committee helped draft a guide, “Fighting Corruption in Sport The project found collective negotiations Sponsorship and Sport Related Hospitality,” quite challenging. Finding common ground jointly with the UN Global Compact. The within a given group sometimes leads to a third and fourth committees are the Sports standard that does not properly embody and Athletes Committee and the Media desirable anti-corruption practices and Committee, respectively. ethics, which defeats the purpose of the agreement. Nevertheless, the project has Challenges and Implementation not found sectorial agreements impossible to achieve, but has encountered complex To stimulate social control, in addition environments shaped by formal rules and to transparency indicators, the initiative informal embedded behaviors that are hard developed tools and resources to help to change in the short term. The complexities businesses understand the anti-corruption encountered by the project in attempting to issues related to contracts and public organize sectorial agreements have led the management of sports. Some examples are: institute to learn many important lessons, which it intends to apply in continued efforts UN Global Compact’s guide on “Fighting even after completion of the Clean Games Corruption in Sport Sponsorships and project. Sport Related Hospitality: A Practical Guide for Companies”36; Sectorial agreements have been difficult to Jogo Limpo x Jogo Sujo (Fair Play versus Foul achieve due to particular external factors. Play), a booklet about proper procedures For example, in 2013 the media published for clean government procurement37; several articles about investigations over the How to Read Public Contracts, a guide to formation of cartels connected to companies be released in 2015; that were key to developing the sectorial National Integrity System, a study agreements. Also, 2014 was greatly impacted developed in partnership with UN Global by the World Cup and Brazil’s presidential Compact, to be released in 2015. elections, which exposed the Collective Action agreement to much more public scrutiny.

36. UN Global Compact 2013 37. Clean Goverment procurement A Practical Guide for Collective Action against Corruption | 73

Status and Impact Fostering Social Control: To stimulate social Sectorial Agreements: The project made control, the project published a series of great progress in gathering companies to studies to raise awareness regarding pressing create two main sectorial agreements, one transparency issues and to disseminate involving Healthcare Equipment producers information on existing anti-corruption and another for companies that sponsor mechanisms, legal processes, and tools and sports. At one point, the initiative was also their effective use. quite close to reaching an agreement with the energy sector. Bringing competitors to One of the most important factors for the the same table to discuss corruption marked Clean Games Project’s success was the a milestone for anti-corruption strategies in strategy of using Collective Action to engage Brazil. Although not necessarily smooth, the different types of organizations, including process is making progress and the project companies, government and civil society, in believes that the organization of sectorial the fight against corruption. As explained agreements will become easier after the first in more detail in a recent Siemens Integrity positive example is achieved. Initiative Annual Report, this was proven not only by the achievement of the project’s Local Administration Transparency Pact: main objectives, but also by its success in As a result of successful efforts to establish convening and engaging with a number dialogue between different sectors, the of organizations to build momentum and project was able to increase transparency pressure to accelerate the improvement in public expenditures under the Access of Brazil’s anticorruption regulatory to Information Act. This facilitated the framework. publication of articles on the topic by mainstream media, which allowed the public For instance, approval of the law on Access to not only access, but also to understand the to Information was key for the project to importance and meaning of the data. establish and develop a set of rules and indicators on how transparent governments Local and State Administration: the should be, to measure the level of transparency transparency indicators created by the project in each government, and to lay out strategies became an important assessment tool that to improve transparency in government provided a useful “photograph” of Brazilian expenditures. The same can be said of the institutions; first locally, then at the state- approval of the Anti-corruption Law, which level. This simple and objective tool revealed was a result of engagement and Collective serious deficiencies in Brazilian institutions, Action, mainly on the part of the business putting pressure on the government to make sector. In addition to engaging the business institutional reforms and provide greater sector to support the Anticorruption Law, public access to information. This tool also we promoted several discussions and tools to led to the development of a new project, help companies organize their compliance called Transparent City, in partnership with departments. Amarribo Brasil, the Brazilian chapter of Transparency International. Transparent The project also provided different tools to City will adapt these indicators to evaluate assist civil society in monitoring governments. the transparency of public expenditures in These tools helped to raise awareness and all Brazilian state capitals. urge to action, assigning responsibility 74 | A Practical Guide for Collective Action against Corruption

to all actors targeted in the Clean Games through the transparency indicators, initial project. The more society showed interest in and follow-up assessments performed in all understanding government expenditures, World Cup host cities and states showed a the more the government was forced to marked improvement in the organization respond to society regarding how public and availability of relevant information. funds were being spent. For this purpose, As supporting proof for their success, the the project’s creation of tools and guides to Transparency Indicators were adapted aid social control of public expenditures was and, following the end of the World Cup, important to empower civil society in seeking will continue to be applied in most of the further information. The organization of cities where they were implemented. This local committees in World Cup host cities continued implementation will be carried to stimulate public discussion and actions out through the Transparent City project to increase transparency and foster social in partnership with the Brazilian chapter of control was effective in encouraging local Transparency International. and national entities to engage in the fight against corruption. The Municipalities Pact was also very effective in achieving commitments from The project’s supporters highlight that its local mayoral candidates to the transparency strategies were well chosen, especially in the agenda during their mandates. This pact Brazilian context, and that every strategy to was subscribed by the leading candidates for combat corruption should take into account mayor in 11 of the World Cup’s 12 host cities. the political structure of a country, including The project’s practice of conducting meetings its regulatory framework and other aspects. with leaders aiming to improve transparency As a pioneering example of a customized policies was also important to reinforcing strategy, the project was the first to use commitments to fight corruption. The the World Cup as an opportunity to boost mayoral candidates’ commitment to the transparency through the Transparency transparency pact may have resulted in Indicators. the municipalities’ rating improvements suggested by the Transparency Indicators The indicators served a number of important assessment. functions. For instance, they served as a checklist for governments to improve their The project’s experience during the 2014 websites and information channels. They World Cup has shown that Collective Action were also used to produce a transparency can increase public awareness about social index, which facilitated the circulation issues, especially concerning transparency, of information to the press and became a integrity, and social control. Notably, even widespread point of reference and put pressure during the playoffs, Brazilians continued on governments to make improvements. The questioning the social impact of the finished creation of these indicators at the municipal and unfinished World Cup infrastructure. and state levels was important for measuring All works were to be delivered before June the transparency of public information 2014; however, the new schedule disclosed about the 2014 World Cup. The project’s by states and municipalities revealed that experience suggests that such indicators can some would not be ready until 2016. Based be used successfully elsewhere. on these experiences, the federal, state, and municipal governments should open Underscoring the success of monitoring channels of dialogue with society to discuss A Practical Guide for Collective Action against Corruption | 75

how and where public funds should be continued improvements in ethics and invested. In addition, the experience showed transparency in the wake of the 2014 World the potential effectiveness of using the Cup. Access to Information Law to enhance the transparency of public spending. The project and momentum built by its outcomes Link: have doubtlessly contributed to the legacy Jogos Limpos of Brazil’s fight against corruption and

Regional/Industry Scope Clean Games Inside and Outside of the Stadium Brazil; Sporting events, construction and public works

Participants Local / national companies from the Facilitator Energy, Healthcare, and Ethos Institute Sports industries; public sector

Substantive Scope of Ethics Committee Ethics Committee was not Collective Action / Subject established but a Legal Committee Matter Covered was established to analyze legal Anti-corruption; matters related Transparency in public spending to the World Cup

Time from project start to Collective Action signature N/A

Challenges in implementation Challenges in signing Collective Action initiatives such as sectorial N/A agreements proved to be much harder to achieve than expected

Agreed implementation activities Impact N/A N/A

Facilitator’s Statement

Jorge Abrahão President Ethos Institute

“The Project Clean Games Inside and Outside of the Stadiums has achieved its main goals: it has increased transparency of investments in the World Cup host cities, which can be measured by well-developed indicators; it fostered integrity in public-private relations by means of sectorial agreements; and it stimulated social control by promoting debates and dialogue and by developing tools to support citizen action. This is a very important legacy for the fight against corruption in Brazil and we hope to keep pushing this agenda forward and expanding it, benefiting from the Olympic Games in Brazil and, hopefully, reaching Russia and Qatar in the next World Cup editions.” 76 | A Practical Guide for Collective Action against Corruption

3.1.15 Nigerian Economic Summit Group (NESG) Initiative

Background and Scope understanding signed by the Nigerian Economic Summit Group (NESG) as facilitator This Collective Action project began in Nigeria of the project, the UN Global Compact, and in 2011 to engage business, government and the Foundation for Global Compact. Cash civil society in advocacy and related activities flow issues were a major challenge for the to foster a clean business environment, initiative. Additionally, the embedded and driven by transparent transactions and pervasive nature of corruption in Nigeria involvement in government procurement makes creating awareness among businesses processes. It was formed in partnership on collective action engagement is a serious between the UN Global Compact and its challenge. facilitator, the Nigerian Economic Summit Group (NESG), a leading non-partisan private Status and Impact sector economic think-tank and advocacy group formed of business leaders from key The project organized a series of public and sectors of the Nigerian economy. private forums, training sessions, workshops, conferences and other events. Audiences The initiative, as a forum for dialogue targeted by these events included various on business ethics, worked on forming stakeholders including top executives, policy partnerships between private and public makers, government agencies, the media sector actors and other stakeholders. and reporters, and corporate ethics and It has focused on forging ties between compliance officers. The project made strides businesspeople and public officials dedicated towards building an alliance of business to fighting corruption and capacity building. leaders and public officials, like-minded Additionally, it has explored, researched and in their desire to fight corruption and to assessed national corruption problems and create a sustainable long-term platform for how to bring about greater transparency collaboration to address Nigeria’s corruption- and integrity in business through Collective related challenges. The initiative was also Action. Often, the initiative advanced its successful in increasing publicly available goals by hosting forums and by lending information and awareness on Collective support to other efforts to advance corporate Action among businesses. The project governance reforms and anti-corruption is now in its fourth year and in its final practices among Nigerian companies phase. All four phases enjoyed a successful through innovative Collective Action and implementation. Following an audit, the public-private partnership initiatives. project will be concluded and wound up.

Structure and Challenges Link: The NESG and UN Global Compact organized The Nigerian Economic Summit Group their efforts under a memorandum of A Practical Guide for Collective Action against Corruption | 77

Regional/Industry Scope Nigeria – NESG Initiative Nigeria, not Industry-Specific

Participants Facilitator NGOs NESG

Substantive Scope of Collective Action / Subject Ethics Committee Matter Covered N/A Anti-Corruption; Transparency in public spending

Time from project start to Collective Action signature N/A

Challenges in signing Challenges in implementation Awareness building Funding Culture

Impact Agreed implementation activities Awareness and capacity building N/A Support of other initiatives

Facilitator’s Statement

Feyi Fatona Ajayi Nigerian Economic Summit Group

“Implementation of the Siemens’ initiative has revealed that businesses in Nigeria desire a corruption-free environment and as such, quite a number of firms have made commendable efforts to clean up their operational practices and have extended this practice to their supply chains, primarily made up of SMEs. What you then have, as a result, is a sort of chain reaction in the fight against corruption.

I think one of the other significant achievements of this project is built around the training sessions, where participants acquired tools to perform risk assessment and then set out measures for guarding against corruption rather than the old fashioned way of “shutting the gate after the thief has escaped.” This is indeed changing the landscape in the fight against corruption.” 78 | A Practical Guide for Collective Action against Corruption

3.2 Summary and Synthesis of other Collective Action Projects’ Feedback to the UN Global Compact Survey

In addition to the projects described in influences such as tightened regulation and Section 3.1, the authors received responses enforcement to shake up an industry and from 13 other programs. Their information incentivize Collective Action. It may also is summarized in this section. indicate that the most relevant motivator of participation in Collective Action is the 1. Europe’s Aerospace and Defense Common bottom line. Clearly, having more to lose Industry Standards Initiative38 as a result of non-compliance with anti- corruption legislation raised the cost of In the context of increasingly strict domestic free-riding, giving companies additional regulations of a global industry known for incentives to work together to fight demand- being rife with corruption, in 2006 Europe’s side corruption. Aerospace and Defense Industry Association, ASD, created the European Ethics and Anti- 2. Transparency International Romania’s Corruption Task Force to develop a common Collective Action in Academic Institutions39 set of principles designed to tackle the issue of corruption. This led to the development The initiative arose out of a generalized of the Common Industry Standards (CIS), a negative feeling among stakeholders, body of minimum norms companies must including Romanian universities and implement concerning anti-corruption research institutes, that concrete action measures. In 2007, more than 400 European was needed to solve corruption problems companies adopted these principles. The hindering the Romanian academic sector. CIS call for zero tolerance, detailed control Although this initiative is too new to assess procedures, and training for employees. The its efficacy, its members are enthusiastic, procedures, which offer a toolbox to assist active and dedicated to the Integrity Pact’s companies with compliance, are regularly principles. In agreeing to implement the updated to reflect changing regulations and pact’s code of conduct, members agree to: international business norms. In 2010, the task force was converted into a permanent Promote ethical behavior. body of the ASD known as the Business Ethics Discourage practices that lack integrity Committee, charged with implementing and within their institutions. monitoring the program. Create a climate of cooperation and mutual trust among institutions. Long beset by Collective Action problems Promote integrity among signatories and given the high-value of aerospace sales their partners. transactions, the dominance of government clients, and the lack of transparent costs The participants chose to implement an and pricing structures, these developments Integrity Pact over other types of initiatives speak volumes to the ability of external based on their conviction that it is the

38. Europe’s Aerospace and Defense Common Industry Standards Initiative 39. Europe’s Aerospace and Defense Common Industry Standards Initiative A Practical Guide for Collective Action against Corruption | 79

best method to achieve their objectives of While this initiative is headquartered in increasing their credibility among their Switzerland, its aspirations are global. collaborators and the general public, and Starting in 2014, the International Road ensuring the membership’s commitment Transport Union (the IRU), a global trade to high ethical standards. The membership association, and the UN Global Compact believes that the initiative will create the joined forces to address the globally critical mass necessary to produce a real and ubiquitous problem of corruption in the lasting growth of academic integrity in the road transport sector by launching the Romanian academic environment. Global Anti-Corruption Initiative (GACI) during the Global Compact’s annual meeting 3. Animal Nutrition Industry’s Principle- marking the UN Anti-Corruption Day, in Based Initiative, Argentina December 2013. This initiative is notably different from many of the others reviewed A number of competitors in the animal in this publication as its scope is much more nutrition sector coordinated through an limited in terms of duration and industry industry association in 2012 to form this sectors covered. Collective Action initiative, which they eventually signed in 2013. Aimed at unfair As corruption in road transportation hurts competition and trade practices, as well as at transport companies and their drivers, labor and environmental issues, in addition the idea behind the GACI is to enlist the to corruption matters, the initiative’s scope assistance of transport companies and is broader than many other initiatives’ their operators to collect information on purview. Motivated by their general interest cases of corruption, bribery, and extortion in preserving the industry’s reputation and along major global road transport corridors the integrity of its products - but challenged on the five continents. Once this data is by individual incentives to “defect” from collected via online surveys and analyzed the mutual best interest - this initiative by experts, the results will be sent to the may be illustrative of cases where ethics governments of the countries involved enforcement mechanisms are desirable to with specific recommendations on anti- industry actors. The production, marketing corruption activities in international road and quality controls processes involved in transport. The initiative also makes available animal nutrition products are complex. a global map indicating country-by-country Ensuring the long-term commitment variances in corruption levels. This program necessary for securing lasting changes will was officially presented to the participants demand continued efforts on the part of the of the UN Anti-Corruption Day in December initiative’s membership. Doubtlessly, strong 2014. involvement from the industry association, CAENA, increases the probability of enduring success. 5. The Argentine Health Sector’s Principle- Based Initiative

4. International Road Transport Union’s Of the reviewed initiatives that could Global “No Bribes at the Roads” Initiative40 potentially involve a vast multiplicity of

40. No Bribes at the Roads Initiative 80 | A Practical Guide for Collective Action against Corruption

actors, this is among the most focused in its launched three new projects in 2011 with the scope. That is to say, its scope is limited given goal of bolstering involvement of the public that it only applies to a single economic sector. and private sectors in Collective Action In contrast, its possible reach is quite broad activities through education and training. in terms of its potential application to private The projects were also aimed at facilitating and public hospitals, health management private actors’ compliance with the 10th organizations, medical insurers, physicians, Principle of the UN Global Compact. clinics, equipment companies, and other participants in the health sector. One of these efforts is known as the “Public- Private Partnership for Probity in Public The membership is interested in and Procurement Project,” which seeks to reduce committed to cleaning up the industry’s vulnerabilities to corruption in public ethical practices. The participants agreed procurement systems and to bridge gaps to undergo periodical assessments of their between the private sector and government implementation of the initiative. They are procurement institutions. committed to work together and with the facilitator, aiming at improving the common Another project, the “Incentives to Corporate standards set in the Collective Action Integrity and Cooperation in accordance agreement in which they stated their will with the United Nations Convention against to evolve over time into a certifying business Corruption,” was launched with the goal coalition. of creating systems of legal incentives for companies, encouraging business to report 6. Honest Business Declaration, Slovenia internal incidents of corruption. Both projects had a global component and two The Ethos Initiative’s main objective is to country-based components in Mexico and impart knowledge and good practices to India. the business community and stakeholders, laying the foundations for fairer and more The third initiative consisted of an effort sustainable practices of governance that by the UNODC Mexico to amplify the two properly take into account the unique previous projects through a partnership Slovenian social, political and economic with the Local Global Compact Network environment. Accordingly, the Ethos to implement activities. Doing so allowed Initiative develops tools and programs that UNODC to gain the trust of local businesses and help individuals in the business community entrepreneurs aligned with Global Compact to identify, resist and root out corruption Network. Mindful that implementation of and other threats posed to integrity and anti-corruption programs are a sensitive good business governance. topic in Mexico (as elsewhere) and that the public sector is likely to withdraw from open 7. Risk-Assessment and Awareness Raising discussions, this effort facilitated UNODC’s Initiative, Mexico and India assessment of the best ways to approach the private sector regarding anti-corruption With USD 3 million in funding from reforms. the Siemens Integrity Initiative, UNODC A Practical Guide for Collective Action against Corruption | 81

8. State Owned Enterprises, Hungary41 a Corporate Governance Rating System seeks to leverage access to the capital market as a Launched in early 2013, this three-year tool for advancing corporate governance and project started with TI Hungary’s decision anti-corruption among listed companies. to evaluate and rank state-owned enterprises The rating system was designed to allow (SOEs) in terms of their transparency and investors to easily distinguish companies disclosure practices, as well as certain with good corporate governance. To monitor integrity mechanisms. TI gathered compliance and accuracy, the system uses information on a number of indicators an ethics committee. In addition, all listed from the websites of 66 SOEs and conducted companies are required to comply with the in-depth interviews on transparency and NSE’s Code of Corporate Governance. integrity with SOE. Next, TI Hungary organized multi-stakeholder working group 10. Integrity Alliance, Vietnam43 discussions (with representatives of SOEs, the National Authority for Data Protection The 2013 VCCI Provincial Competitiveness and FOI, representatives of owners, such Index reports that foreign enterprises as the National State Holding Company consider Vietnam less attractive than its and the Hungarian Development Bank, neighbors as a result of corruption and and government decision makers from regulatory burdens. Over the last few years, various ministries) to harmonize minimum the role of the business sector in addressing transparency and compliance checklists, corruption risks has received increasing based on legislative requirements and attention in the dialogue between Vietnam OECD corporate governance guidelines. This and its international allies. initiative expects to conduct an assessment The Vietnamese Integrity Alliance was and to publish the results in 2015. conceived as a platform in which enterprises can engage supply chain partners, local 9. Initiative to Reform the Financial Sector, and international business chambers and Nigeria42 public sector stakeholders and to serve as a springboard for more concrete actions, such The Nigerian finance reform program is as integrity pledges, policy and legislative noteworthy for its success in implementing improvements, and capacity-building a corporate governance rating system, which activities. is mandatory for companies listed on the Nigerian Stock Exchange (NSE) and was 11. SHTP Business Integrity Action, Vietnam 44 well received and implemented by other companies. The project was launched in This Collective Action project’s genesis traces full in November 2014. The NSE had started back to an August 2007 agreement executed the project 19 months earlier, with the by SHTP, owner of a high-tech industrial park Convention on Business Integrity acting as in Ho Chi Min City, and Intel Vietnam, one its facilitator. The project’s establishment of of its tenants. The agreement expressed a

41. State Owned Enterprises, Hungary 42. Initiative to Reform the Financial Sector, Nigeria 43. Integrity Alliance, Vietnam 44. SHTP Business Integrity Action, Vietnam 82 | A Practical Guide for Collective Action against Corruption

“commitment on business ethics and code implementation of a Code of Conduct for of procedure to align with regulations, overseas employees of a state-owned company commitment to anti-corruption […] and and established a compliance system in other forms of abuse of power.” By the end one of China’s biggest privately owned of 2013, thanks in large part to support from automobile enterprises. Additionally, NATC the World Bank, this initiative had convinced has successfully brought policymakers and more than a dozen additional companies to leaders from Chinese companies into closer show interest in promoting transparency and contact by supporting an ongoing dialogue integrity by signing the integrity agreement. on ethical compliance in China through the SHTP and Towards Transparency are working establishment of the “Executive Compliance together on a Collective Action project to Club,” with members ranging from persuade more companies to demonstrate government officials to business executives. their commitment by strengthening their In addition, NATC has published two books on own corporate integrity programs to the compliance conduct of global companies. proactively manage risks, to help safeguard The initiative also facilitated information their businesses and to work towards the exchange and in-depth communication by development of a fair business environment. launching a website dedicated to compliance topics. In connection with these efforts, 12. NATC’s Collective Action Initiative, more than 800 participants have attended Fostering a Better Business Environment, training workshops, and semi-annual and China annual forums offering training on corporate compliance, internal risk control and general When the NATC’s (Beijing New Century law issues. The workshops have served as a Academy on Transnational Corporations) platform to disseminate the publications Collective Action project began in and to provide opportunities for networking 2009, its goals were twofold: to provide and interdisciplinary exchange. practical training to Chinese companies on compliance issues and to develop 13. TI’s Bulgaria’s Collective Action and present recommendations on anti- Initiative45 corruption law and business regulation to Chinese policymakers. During the course TI Bulgaria started this project in 2009 of the project, the initiative submitted with the objective of enhancing integrity seven policy recommendations to relevant standards and transparency in the awarding central government departments. As a result of contracts involving a significant public of one policy recommendation furnished interest, through policy change in Bulgaria. in connection with pharmaceutical sales The project has successfully implemented and purchases, the Director of Discipline integrity pacts in public procurement Inspection Office instructed its legal processes engaged in by three different department to revise the Blacklist System. government ministries. These integrity This policy recommendation also contributed pacts were conceived as an identification to the improvement of legislation and and early warning system about potential law enforcement in the healthcare and problems. In each of the tenders, a “white pharmaceutical industries. NATC achieved list” was developed to disclose the ethical

45. TI’s Bulgaria’s Collective Action Initiative A Practical Guide for Collective Action against Corruption | 83

commitments of all parties to the Integrity for efficient civil monitoring of public Pact. The list represents a concrete incentive procurement. Also, as part of this initiative, for ethical behavior and its application TI Bulgaria has led discussions with public may be used increasingly to stimulate good administration and business organizations management practices and fair business to assess the results of the various integrity conduct. TI Bulgaria also analyzed the pacts. The initiative has developed materials Bulgarian legal framework for procurement for six training seminars, supported by and developed a manual on integrity local business organizations, attracting 329 indicators and contracting with transparency representatives from local governments, to provide NGOs with vital knowledge businesses, NGOs and the media. 84 | A Practical Guide for Collective Action against Corruption

Analysis of the 28 Collective Action 4 Projects’ Answers to the Survey

This section summarizes the information aspects about the practical experiences at reported by the Collective Action initiatives every stage of their initiatives, from the that responded to the survey. We have preparation to the signing of the agreements endeavored to highlight those individual to the execution of the projects and the actions with outstanding characteristics. achievement of results. The facilitators’ comments reveal interesting

4.1 Geographic and Industrial Scope and Initiators

A majority of the initiatives are single- Other efforts are not limited in scope by industry initiatives or began as such. Of industry, but by their geographic scope. For these, as could be expected, all but one were example, the Slovenian Ethos initiative was directly initiated by private sector companies founded to obtain ethical commitments from or industry groups. actors engaged in different industry sectors within Slovenia. This dynamic is similar to Within this group of Collective Action the Hungarian SOE initiative. projects, 14 are more focused on their sphere of application and were initiated by In contrast with geographically restricted or businesses. Three initiatives that reflect this industry-bound Collective Action initiatives, are the principle-based initiatives involving those projects with aspirations exceeding such the animal nutrition and health sectors boundaries were driven almost exclusively in Argentina and the Romanian initiative by nonprofit groups, including NGOs, quasi- focusing on the academic sector. governmental organizations and other civil society groups. Two Nigerian efforts aimed Unique among this group is the Common at attaining a profound and immediate Industry Standards born from the efforts of impact in Nigeria’s business community Europe’s Aerospace and Defence Industry were initiated by two organizations, the Association (ASD), which began as an Nigerian Economic Summit Group and the internal effort but later rapidly expanded Nigerian Stock Exchange, whose raisons to other industries. As an example of its d’ệtre exceed a single industry. While most of broad application, its membership includes these programs do focus their efforts in one a significant number of small and medium- or more countries, all have broad objectives sized enterprises. Another unique single- to influence business ethics and none limit industry initiative is the International Road their sphere of action to one single industry. Union’s “No Bribes on the Roads” initiative. For example, programs in Mexico and India Although, like the other industry-led efforts, initiated by UNODC are focused on raising its focus is on a single industry, the goals awareness, educating public and private of the initiative are global, with efforts actors, and creating discussion between concentrated in Europe and Asia. these stakeholders. A Practical Guide for Collective Action against Corruption | 85

The reasons for this observed tie-in between a set of international norms for ethical the identity of the initiator and the scope commerce. Reflecting the industry’s desire of the program is likely twofold: whereas to vie for business on the basis of competitive businesses’ expertise and interests tend advantages rather than unethical practices, to be focused on their own industries, both associations signed these non-binding international agencies tend to have a greater principles in 2009. interest in extending their efforts beyond one industry. Another unique program from the point of view of the number of initiators involved is As noted, the geographic scope of many the Vietnam Integrity Alliance. Its founding initiatives is limited to a single country. Of members include EuroCham Vietnam, the 28 programs reviewed, 21 are limited the British Business Group Vietnam, the to their national borders. Nevertheless, as Australian Chamber of Commerce Vietnam, proven by the ASD’s CIS program and the the Canadian Chamber of Commerce IRU’s anti-bribery program, at least certain Vietnam, the Delegate of German Industry & types of initiatives are appropriate for Commerce in Vietnam, the United Kingdom’s global application. For example, the ASD is Department For International Development, currently expanding its efforts on a global and Towards Transparency (Transparency scale, working together with its American International’s National Contact in counterpart, the Aerospace Industries Vietnam). This implies an enormous amount Association of America (AIA), to establish of institutional support. the Global Principles of Business Ethics,

4.2 Time to Signature

Most Collective Action initiatives took Collective Action agreement. Five projects roughly a year from when discussions were concluded in six months or less, two started to the signing of an agreement. did not specify how long they took, and Variations were significant among the nine projects were completed in seven to 12 various initiatives: while some projects were months. The data did not indicate a pattern four years in the making, an Integrity Pact in suggesting any relationship between type of Hungary was completed in just two months. Collective Action and a longer or shorter lead- The reasons behind the longer gestation time to signature. Of the six projects where periods for some agreements merit further the agreement’s signing was delayed by more analysis. Several factors can delay reaching than a year, three national projects took a formal agreement, such as a complex four years (being two cross-sector Collective environment, insufficiency of funding, or a Action initiatives), two international projects lack of consensus on the proposed structure took three years and one sector-specific of the agreement and the initiative. national project took 17 months. Similarly, no relationship between the geographic In roughly 25% of the initiatives analyzed, location or scope of the initiative and time to there was more than one year’s delay signature was observed. between project start and the signing of a 86 | A Practical Guide for Collective Action against Corruption

4.3 Substantive Scope / Subject Matter Covered

Not surprisingly, most projects declare dignified treatment. The Argentine animal fighting corruption as their overarching nutrition industry’s agreement is primarily goal. In contrast, few programs report their aimed at tackling unfair competition intent to deal with additional problems. practices and labor and environmental For example, the Nigeria Financial Reform issues, considering public corruption as only program stated its goals as fighting one issue among others facing the sector. corruption, combating unfair competition The IRU program is unique among anti- practices, and supporting human rights. corruption initiatives in being dedicated to The SHINE Project in the Philippines the exclusive cause of identifying, tracking stated additional goals of environmental and reporting individual cases of bribery in protection and employee health, safety and road transportation.

4.4 Results and Practical Impact

Measuring the results and impact of anti- listed interesting observations. Notable corruption activities is difficult, as it would examples from the analyzed initiatives, require a comparison of corruption levels which are worth taking into consideration before and after the activity. For obvious when setting goals and planning for future reasons, corruption is not freely admitted Collective Action projects, include the or openly acknowledged anywhere and following: this comparison is practically impossible to perform. Therefore, in analyzing a LITHUANIA (“Clear Wave”): Collaborative Action initiative’s impact, observers are largely limited to subjective A private label for participants, perceptions and educated guesses. symbolizing certification by the initiative Accordingly, one must be cautious when and a high-level of transparency, earning attempting to attribute causal relationships higher customer recognition and a between Collective Action programs and stronger reputation in the market, and eventually diminished corruption levels. encouraging companies to maintain Nevertheless, the activities undertaken their standing and to act responsibly in by Collective Action projects do result in order not to lose the certification label. observable outcomes, which can be assessed Periodic surveys on the transparency of and compared with program objectives. participating businesses. These results can be divided in two groups: process-related (soft, mostly behavioral EGYPT (“Collective Action for SMEs”): related) and outcome-related (hard, concrete facts) results. Public signing of an “Integrity Pledge” by the CEOs of the participating SMEs Regarding outcome-related results, many after undergoing a mandatory training of the facilitator’s responses to the surveys session, having established an anti- A Practical Guide for Collective Action against Corruption | 87

corruption policy, and appointing an ARGENTINA (“Health Sector Principle-Based Ethics and Compliance Manager. Initiative”):

COLOMBIA (“Waterpipes Principles-Based Establishment of an industry-sector Initiative”): association to manage the Collective Action, formed with the objective of Surveys conducted by the ethics committee enlarging membership and leading this with results disseminated along with principles-based initiative’s evolution recommendations on how to manage into a certifying business coalition. corruption risks. These are especially A formal platform for discussion in the helpful in countries lacking research on sector. the topic and weak regulations. INDIA (“Collective Action Project”): NIGERIA (“Initiative to Reform the Financial Sector”): Legislative reforms involving whistleblower protection and other Public disclosure of all government matters. procurement cases. A formal platform for the public sector, Strengthened law enforcement the private sector and civil society to mechanisms and anti-corruption policies. discuss anti-corruption issues in an Implementation of a Corporate honest and trusting environment. Governance Rating System, generating a high-degree of media attention and MEXICO AND INDIA (“Risk Assessment and incentivizing companies to be part of the Awareness Raising Initiative”): system. Four major studies on public procurement PHILIPPINES (Makati Business Club SHINE and incentives for corporate integrity in Project) Mexico and India. Recommendations to both national Combined efforts with the government governments based on the study’s results. on its anti-corruption agenda. The Mexican government accepted several Improvement of the Philippine’s position recommendations to prevent corruption in global economic rankings (WEF Global in the private sector in its 5-year plan. Competitiveness Index). The leading industry chamber, A functioning Integrity Certification and CONCAMIN, developed social Awards Program. responsibility commissions. Integrity Pledge signed by more than 2,000 signatories. HUNGARY (“Nursery School Integrity Pact”): Online Integrity Self-Assessment Tool and (voluntary) third-party verification. The public procurement process was Workshops on developing Company lawful and fulfilled the requirements of a Integrity Action Plans for partner transparent and fair procedure. organizations. The contracts executed in connection 88 | A Practical Guide for Collective Action against Corruption

with the public procurement process The frequent reporting of process-related were performed in compliance with the results such as awareness-building, trust- provisions of the integrity pact. building and enhanced visibility seems to stem from the fact that these were ROMANIA (“Integrity Pacts”): Collective Action projects still in early stages of development. Awareness and trust are The cross-sector integrity pact served essential to Collective Action projects, as as umbrella for four sector-specific they are necessary conditions for attracting pacts and increased the awareness and companies’ attention to the tool as a means willingness of companies to implement to improve trust among its members and internal integrity, ethics and compliance to overcome the prisoner’s dilemma, one programs. of the most important obstacles in fighting corruption in the private sector. However, the EUROPE (“Aerospace and Defense Industries”): effectiveness of awareness-building, trust- building and enhanced visibility is difficult Adhesion by about 400 companies from to measure. various industry sectors. Production of a Collaborative Action This perception is consistent with the data toolkit. set forth in Figure 4 above, which suggests Sharing of Best Practices. that Collective Action is a relatively young instrument that has only recently begun to Regarding process-related results, these are be used more widely. At present, process- consistently focused on two words: awareness related results are more significant for the and trust. The most frequently reported development of Collective Action projects achievements, shared by all responses to than concrete, measurable outcomes. This the survey, are awareness-building, trust- is also a plausible explanation for the building and their “side-effects,” such as great variety of types and approaches that improved dialogue with actors within the are currently being employed. Regardless government and/or within the involved of this characteristic, the mere fact that industry sector. Facilitators reported that the the increased use of Collective Action as a positive effects of these processes included problem-solving instrument is resulting in improved employee motivation, increased higher public awareness, trust, and visibility public visibility for the Collective Action is an important step forward in the fight and its activities, enhanced sharing of best against corruption. practices among stakeholders, etc. A Practical Guide for Collective Action against Corruption | 89

4.5 The Role of Facilitators

Respondents reported a diversity of involved in the Collective Action initiative. approaches to determining the role and For example, in undertaking the “No identity of the facilitator. In some cases, the Bribes on the Roads” initiative, which was initiators who started to work on a Collective implemented globally by the International Action project ceded the role as organizer Road Transport Union in conjunction with and coordinator to an existing third party or the UN Global Compact, the IRU did not to a new entity or body specifically created to enlist the assistance of a facilitator. take charge of this function (e.g., a task force or coalition, etc.). Most commonly, though, An examination of the identity and there is a complete overlap as the roles of principal characteristics of facilitators and initiator and facilitator are typically played initiators makes evident that multilateral by the same organization from start to organizations are most frequently finish. The Thai Coalition against Corruption responsible for driving the organization of (CAC), the MANC’s project in Nigeria, and Collective Action initiatives. The Collective the declaration carried out by the Ethics and Action projects analyzed that were initiated Reputation Society of Turkey are examples and facilitated by multilateral organizations of initiatives where the role of the facilitator involved IGOs, such as the UN Global was carried out by the initiator. Compact (Nigeria, India, South Africa) or the UNDP; global NGOs and think tanks such as All private sector programs reported the Transparency International, CIPE, and the involvement of a neutral facilitator from World Economic Forum; as well as trade or civil society. For example, UNODC, the UN industry associations, such as the MACN Global Compact, the Convention on Business and the IRU. In general, but especially in the Integrity, the Center for Governance and case of initiatives involving both global and Transparency at IAE Business School, and local projects, again and again, multilateral Transparency International all served as organizations are observed as driving efforts facilitators for programs under private to organize Collective Action. Without agreements. In the case of the CIS program, these organizations and their ongoing there are multiple facilitators, including the support in terms of material and human (ASD), Professor Sergio Maria Carbone and resources as well as networking capabilities, François Vincke, as an independent lawyer. these initiatives would probably not have taken place, as program participants have In many other cases, projects do not have a generally acknowledged. The archetypical single facilitator, but rather a group of them. facilitator then is one of a global nature that Often, this is the result of the origins of the is able to find partners and develop different project and the involvement of a number of projects based on its extensive reach, and the parties acting as coordinators of the initiative. success of its projects largely depend on the For example, the MACN Nigeria initiative implementation efforts of local co-facilitators. benefited from the facilitation of the project In some cases, these local co-facilitators are work by an organization with global reach local chapters or branches. In other cases, (MACN) in addition to a local organization they are like-minded local organizations (TUGAR). In a small number of cases, strongly committed to supporting anti- respondents reported that no facilitator was corruption efforts and business ethics. 90 | A Practical Guide for Collective Action against Corruption

The SHTP initiative and VIA have notable Local facilitators that start and carry on distinctions from the other projects as they Collective Action independently of a larger concern facilitators and administrators. In regional or global initiative are a minority. the case of VIA, facilitation activities are Nonetheless, observers have noted that, performed by a steering committee made up in addition to IGOs and NGOs, local and of representatives of the parties. For SHTP, regional business associations and academic the signatory companies, in combination institutions (e.g. business schools) have with SHTP’s board of management, make up started to actively promote Collective this committee. The members are volunteers Action initiatives with the aim of changing from among the membership and are not current practices in specific business sectors. subject to term limits. The members of the Doubtlessly, the awareness and exposure SHTP initiative have neither considered created by globally led efforts have given rise granting the Steering Committee assessment to these locally based efforts. authority, nor have they ruled this out. In the SHTP program, the Steering Committee In many, but not all cases the facilitator also carries out the role of administrator. Along served as the administrator. This was the case with assistance from Towards Transparency, with most of the programs initiated by NGOs in the VIA program, the Steering Committee and IGOs. In stark contrast, in all privately has a Working Group comprising EuroCham, led programs, the roles of facilitator and TT and UK DFID. administrator were not assigned to the same person.

4.6 Participants / Members

Of the initiatives in which Collective Action and the Makati Business Club SHINE Project agreements were signed, the programs in the Philippines, which gathers more involve multiple signatories. The membership than 2,000 organizations and industry of the single-industry programs is limited associations. The Slovenian ETHOS program, to private sector companies doing business at 53, also boasts a large membership. For in those sectors and generally includes initiatives focused on raising awareness and a mix of MNCs (including HQs and local risk-assessments, agreements typically run subsidiaries and large national and smaller between the founding NGOs, but a similar local companies). The largest memberships mix of private sector companies participate reported correspond to the ASD CIS program, as targets of those efforts. which boasts approximately 400 signatories, A Practical Guide for Collective Action against Corruption | 91

4.7 Ethics Committees and other Monitoring Tools

Only a minority of Collective Action initiatives way of supervising the functioning and have established Ethics Committees. Thus, implementation is through feedback received “strong-commitment” initiatives are the by the facilitator from the participants. exception to the rule. When initiatives do Where multiple parties are involved as co- decide to set up an Ethics Committee, they facilitators, one of them – most often the generally establish a system of progressive local one – is charged with receiving these sanctions (from less to more serious ones) to complaints (e.g., in the case of the MACN be applied in case of a party’s infringement initiative, the Nigerian TUGAR unit received of one or more of the agreed principles. the suggestions). The SHINE Project also Among the most frequent sanctions are conducted several studies to assess how warnings, temporary suspensions, and signatories have institutionalized ethical debarment/exclusion. Some initiatives even business practices in their organization go so far as to authorize public disclosure of through the use of an Integrity Compliance a party’s exclusion (e.g., the three Collective Framework and an online assessment tool, Action initiatives from Argentina and the the results of which may be examined Ethics and Reputation Society’s initiative by external auditors. Additionally, some from Turkey). Generally, the facilitator initiatives have procedures requiring regular and the parties are members of the Ethics reports from their participants to assess Committee. This configuration is potentially progress and development of the programs. problematic as the parties are generally Although they do not have a formal structure direct competitors. Thus, running the in place that would review compliance and Ethics Committee in accordance with good apply sanctions to parties infringing the governance principles and transparency agreement, as part of these evaluations, becomes essential to keeping all parties they receive suggestions, recommendations convinced of the Committee’s independence and complaints. In many cases, program and impartiality. In this respect, many participants, and even facilitators, Ethics Committees have internal by-laws to acknowledge that the initiatives are not regulate their functioning (generally, these mature enough to implement sanctions and procedures remain confidential). With other penalty-like measures, leaving the regard to the duration of the term served by possibility of enforcement mechanisms to a each of the elected members of the Ethics future stage and/or phase of the initiative’s Committees, tenure varies widely between development. Some initiatives adopt an Collective Action projects. In some cases, intermediate position, creating technical terms are not time-limited but are subject to working groups that evaluate the progress a periodic review of their status as a member of the projects. This is most common when of the committee (mostly on a yearly basis). In the facilitator is a multilateral organization, other cases, committee membership changes as is the case, for example, of the UNODC’s every year or every 2 to 3 years. “integrity training” projects in Mexico and in India. When an initiative lacks a formal Ethics Committee or monitoring body, as in the In the way of additional monitoring tools, MACN’s Nigeria initiative or the IRU’s the Nigerian finance reform program is anti-bribery initiative, the most common noteworthy for its success in implementing 92 | A Practical Guide for Collective Action against Corruption

a corporate governance rating system, which and global institutions tend to monitor is mandatory for companies listed on the their impact and voluntary adhesion to Nigerian Stock Exchange and well-received their initiatives by mechanisms such as and implemented by other companies. soliciting periodic feedback from companies Another example of additional monitoring as to their best practices and conducting tools comes from the SHTP Collective Action case studies. Indicative of this dynamic, initiative, where in addition to the monitoring the Hungary TI initiative stated that it activities of its Steering Committee, the intends to monitor improvement in SOE initiative will gather and publish certain transparency and disclosure policies with a transparency and anti-corruption metrics to pre-set methodology, and that targeted multi- be reported by companies joining the SHTP stakeholder discussions in a pre-defined Collective Action. format contribute to receiving regular feedback on improvement in integrity-based The loftier, aspirational programs corporate governance within Hungary’s undertaken by civil society organizations SOEs.

4.8 Post-Signing Activities

The most commonly agreed post-signing making processes to increase the probability activities are (1) training of the member- of ethical outcomes. companies’ employees, (2) communication of the Collective Action Agreement, and The feedback regarding monitoring and (3) monitoring, and/or in some cases, assessments, as well as on results and assessment of the achieved results. Although impact, reveals the difficulties of monitoring a majority of initiatives share at least one and assessing the results, success or impact of these activities, their scope and reach of Collective Action in fighting corruption. vary significantly between Collective Action This is complicated by the fact that even initiatives. formal achievement of measurable objectives gives a necessarily incomplete picture of Although there are exceptions, most changes achieved by an initiative. One of the initiatives aim at extending training most important results of anti-corruption efforts beyond their own staff to include Collective Action initiatives is not readily personnel employed by companies from each measurable, as it involves the change in participant’s external value chain, especially mindset and attitude of executives and in the case of distributors. employees and the companies comprising their value chain. Moreover, these “soft,” Unfortunately, the respondents did not difficult to measure changes that occur specify the kind of training performed along the way during the implementation or many details as to its content, the process may be more important than the methodology used for instruction, or its initiatives’ achievement of formal objectives. frequency or duration. Aside from corporate Therefore, as we further discuss in section 5, culture, education and training are the most highly effective training - both in terms of important aspects for enhancing decision- method and content - will be crucial to the A Practical Guide for Collective Action against Corruption | 93

material success of Collective Action, and the objectives. These communication efforts fight against corruption in general. are a positive sign for Collective Action projects as they underscore the importance Monitoring and assessment processes varied of the tool and its perceived value to the widely among the Collective Action projects participating companies. To some extent, and ranged from self-evaluations to mutual some of the communication activities are assessment and third party assessments. In clearly intended as marketing tools. Even if a number of initiatives, multi-stakeholder such activities are self-serving and designed discussions conducted according to a to positively impact the companies’ bottom predefined format also provided regular lines, they are still a positive sign given that feedback on improvement in integrity- they demonstrate the companies’ belief that based corporate governance among a reputation for teaming up with others to program participants and throughout improve the ethical climate in the business their value chains. This method, used to world, and to fight corruption, can be a track improvement in transparency and valuable asset. accountability of state-owned enterprises in the Hungarian Collective Action, could prove In addition to demonstrating progress and to be an indirect but promising approach. In signaling management’s commitment to the end, this indirect method of perception- the initiative by setting the tone at the top, based monitoring may be the best surrogate internal communication works indirectly for hard data in the absence of direct to commit the entire organization to stay measurement capabilities. the course as it preserves the Collective Action project’s credibility with employees. Other attempts to measure effectiveness Nevertheless, external communication were employed by various initiatives. In the aimed at customers and the public is probably Colombian Waterpipes Initiative, indicators the most important communication effort, were developed to monitor the compliance as these stakeholders are the “target” of with the agreement. These indicators most initiatives. These efforts support the were devised with the intent of measuring intended perception that Collective Action corporate commitment with the Collective members will act as a solid block closed to Action, the quality of management, and corruption; they are, therefore, an effective achievement of the intended outcomes of the weapon against extortion in defense of SMEs, initiative. An impact assessment study was which are more vulnerable to demand-side conducted in India’s CAP initiative. In one corruption. of the Argentine initiatives, the facilitator conducted one-on-one interviews with the Both internal and external communication participating companies’ CEOs to discuss efforts are important to fostering the the principal impediments to compliance willingness of potential donors needed with the Collective Action agreement and to fund the Collective Action projects’ possible solutions to those obstacles. These activities over an extended period of time. difficulties and their potential solutions Typical communication channels reported were then discussed in a meeting among the are emails, websites, social media, public participants and the facilitator. debates, speeches, participation in academic activities, and one-on-one communications All initiatives that responded to the survey with customers, important distributors, reported extensive internal and external suppliers, and business partners. communication of program efforts and 94 | A Practical Guide for Collective Action against Corruption

4.9 Experiences and Recommendations

Taking into account the wide variety of the role of the facilitator as a cultural Collective Action types analyzed and different mediator and go-between is a key element for business sectors and regions involved, along success that was highlighted by a number of with the many distinct experiences and respondents. recommendations observed, a number of common experiences were identified. One The facilitators should be able to understand comment repeated in several responses is the different terminologies used and the importance of follow-up activities. A big “languages” spoken and understood by big challenge to Collective Action projects seems MNCs and their subsidiaries, on one side, to be post-signing complacency: participants and SMEs, on the other. Even assuming that tend to act as if work on a Collective Action the various parties share a common lexicon, initiative is complete once the agreement different cultures and experiences – with has been formalized. Hence, focusing on respect to compliance programs or anti- and determining post-signing activities is corruption efforts, for example – can lead important to maintaining the momentum to the attribution of different meanings and necessary to make the agreement work. understandings to the same terminology. Otherwise, the Collective Action agreement As stated in the Romanian cross-sector runs the risk of becoming just one more initiative’s response to the survey, special code of conduct or run-of-the-mill ethics attention must be paid to identify a common document buried in a filing cabinet. language and common values among participants. Collective Action initiatives bring different stakeholders together. Participating Misunderstandings lead to misinterpretations companies often come from different and distrust, which are fatal to initiatives industry sectors and have divergent origins requiring and based on Collective Action. and cultures. In the case of Integrity Pacts, NGOs must understand that business government procurement departments are organizations have a different understanding necessarily involved and program activities of time than the world of civil society: are often facilitated by NGOs. Regarding everything is supposed to happen much Integrity Pacts, Transparency International faster. If action fails to take place quickly, Hungary, facilitator of the Hungarian the momentum necessary for maintaining nursery school integrity pact, stated that the interest in the initiative might fade away. fact that the Collective Action agreement was signed by all of the diverse stakeholders, The involvement of industry and trade in addition to the facilitator and the associations can be helpful. The SHINE government agency, was of fundamental Project in the Philippines is an impressive importance. Collaboration and commitment example how business associations can have among all stakeholders is necessary to solve a decisive impact. Industry associations have Collective Action problems encountered at the potential to drive change in the sector the intersections of business, government, given their relationships throughout an and public services. But the heterogeneous industry. Given their focus on representing nature of these would-be collaborators the best interests of the entire membership, implies a potentially explosive mixture industry associations can be persuaded to prone to misunderstandings. Consequently, lobby for clean business. Another interesting A Practical Guide for Collective Action against Corruption | 95

aspect regarding the involvement of the self-regulatory aspects of an initiative. industry associations suggested by various Accepting regulators as members can help to respondents refers to the potential of monitor compliance and motivate member Collective Action initiatives to evolve into companies to stay the course, thus avoiding self-regulatory systems and mechanisms. free-riding and defection. In Lithuania, This aspect is discussed in further detail the Collective Action signed a partnership below in Section 6, which addresses the with the tax authority, in addition to the future of Collective Action. Credit Bureau, to monitor the behavior of companies joining the initiative. A list of the Two initiatives made similar recommendations membership was posted online (on a website regarding the potential use of self-regulatory and social media) along with an email mechanisms. These recommendations came address for direct communication with the from two different projects in different regions administrator, enabling public comments (Lithuania and Nigeria). Involving government and input regarding the members’ business bodies to make the Collective Action a practices and ethical behavior. public-private partnership strengthens

4.10 Major Challenges

The most frequently cited challenge in the Widespread hypocrisy, a long history of failed responses was potential participants’ lack anti-corruption efforts, and a plethora of of awareness of the Collective Action tool codes of conduct that amount to no more than and its usefulness in fighting corruption. empty words, make it difficult to convince Not only are there still stakeholders who companies to collectively support further underestimate corruption risks; many attempts to change the status quo. This is stakeholders are not aware of anti-corruption true in general but is of particular relevance tools like Collective Action. Where awareness when dealing with small companies, as was high, the most frequent challenge was engagement in Collective Action would the lack of a sufficient degree of mutual force them to make changes they may view trust. The absence of these two key elements as potentially life-threatening. Accordingly, resulted in major difficulties for the initiator it may be advisable to approach the goal of and the facilitator in persuading companies a Collective Action initiative in incremental to commit to and participate in initiatives. steps, starting with low-level commitments, such as allowing for mutual observation, to Especially in markets with high corruption build trust among stakeholders over time. levels, companies generally perceive the commitment to abide by ethical principles Another challenge experienced by initiators and to fight corruption as a potential threat in convincing companies to participate is to their competitiveness and, in some cases, the relative newness of Collective Action. even to their survival. This perception is Many companies are not familiar with stronger among the more vulnerable SMEs. what Collective Action initiatives stand for In such cases, Collective Action is often and what their limitations are. However, perceived as a worthy aspiration, but also as one potential concern that is sometimes an objective that requires too high a degree cited by experts as a potential impediment - of risk to be taken. antitrust law and the risk of being perceived 96 | A Practical Guide for Collective Action against Corruption

as having engaged in unlawful market Action, measures taken at the beginning of collusion - was named as a major challenge work on an initiative are key. Examples of only by a small minority of respondents. these are selecting a credible and experienced Of course, implementing and maintaining initiator/facilitator, choosing “doable” issues the necessary organizational structure and to be covered, and selecting achievable -yet follow-up activities, such as training and challenging- objectives. Guidance on setting communication, requires resources. Several objectives can be found in publications respondents highlighted the difficulties of related to SMART goals46. maintaining funding for these activities over an extended period of time. Considering the many challenges confronting Collective

4.11 Top-down vs. Bottom-up Approach to Collective Action

The survey asked respondents their opinion Other responses stated that the ideal approach regarding whether a “top-down” approach involves a combination. Bottom-up efforts (one initiated by global headquarters secure local personnel’s alignment with the followed by adherence and replicated by initiative and top-down efforts ensure the regional and local subsidiaries) or a “bottom- commitment of organizational resources up” approach (one driven locally by MNEs as necessary for proper implementation subsidiaries and sometimes local SMEs, with (the maritime Collective Action in Nigeria any regional and/or global integration taking benefitted from this combination of vertical place subsequently) is more effective when and horizontal propulsion). For the facilitator organizing and implementing Collective of the “Clear Wave” Collective Action in Actions. Responses were mixed. Lithuania, this determination depends in part on the country in question. A grassroots A narrow majority indicated an inclination to approach seems more sustainable to securing favor top-down approaches. The arguments a long-term vision and commitment, but included the pivotal role of decision-makers a top-down approach helps to clarify the in organizing activities (the case of India’s framework under which organizational CAP Collective Action) and headquarters’ resources are dedicated to the initiative as active participation in the initiative’s necessary to make it work. commencement, so that the entire organization is authorized to contribute A third group considers a bottom-up toward the Collective Action (the case of the approach the most effective. This reasoning Customs Broker Collective Action in Turkey). is based on the premise that, at the local For the capacity to create more visibility in a level, organizations have better knowledge shorter period of time, the response provided of the problems that must be addressed and by the Nigerian Collective Action declared their relative urgencies. Thus, where inside top-down efforts as its favored approach. knowledge and familiarity with local terrain

46. Publications related to SMART goals A Practical Guide for Collective Action against Corruption | 97

are key, bottom-up approaches are arguably a global reach. The effort automatically the best place to start. Furthermore, this acquires high visibility and demonstrates approach will lead to the adoption of better, a company’s commitment when the ever- “customized” standards at the local level. crucial tone at the top indicates the initiative Local leadership is better positioned to is a high priority. On the other hand, a recognize and define the local corruption headquarter-based approach necessarily “landscape” and define suitable standards. neglects regional and local differences Standards at the local level are less likely and priorities. Corruption is not a globally to encounter local resistance, as they are a homogeneous phenomenon, but manifests better fit for the contextual problems and itself in different forms regionally and even priorities perceived by the local subsidiaries. locally within regions. Different levels of The Business Environment Integrity Pact in sophistication and different priorities at Romania (section 3.1.10) and the Argentine the local level can render a global approach Electric Energy Transportation Collective ineffective for local purposes. Globally Action initiative (section 3.1.4) are examples imposed actions and processes face a greater of this dynamic. risk of encountering local resistance and being perceived as just another among many It also bears mentioning that locally driven inadequate global tools that fail to account efforts are not incompatible with broader- for local circumstances and realities. based ones, as they can subsequently be integrated into regional or global An alternative solution to coordination frameworks. Where local initiatives occur, problems between headquarters and local they generally should be fostered by global subsidiaries could employ global mandates actors, and when feasible, integrated into a from corporate headquarters agreed by regional or global map of Collective Action a number of parent entities in a global projects. A two-step approach first begun at Collective Action declaration, giving the the local level could support the formation go-ahead to local or regional Collective of global initiatives that are not detached Action initiatives based on centrally agreed from the different realities on the ground in frameworks for objectives and procedures, their different regions of operation. but imbued with an important degree of flexibility for local adaptation. This approach Consistent with the divergent ideas would benefit from the strong showing of and distinct responses presented by the commitment at the highest corporate level respondents, there may be no generalized and the dedication of resources necessary correct answer. What is the best approach for implementation, without suffering from seems to depend on the facts and the downside of local noncompliance and circumstances of each situation. On one hand, resistance arising from the failure of the initiating a Collective Action at headquarters tool and agreed activities to align with local is probably the fastest way to come to terms realities and needs. with other stakeholders and quickly achieve 98 | A Practical Guide for Collective Action against Corruption

Practical Recommendations for Setting up 5 Collective Action Initiatives

The rich literature on Collective Action more companies on board. The greatest programs includes a number of guides on disadvantage to having a large number of designing and implementing initiatives, in initial participants is that it can complicate both academic and non-academic works. the negotiation of an agreement. This The WBI’s guide stands out as the most undeniably increases the risk of being comprehensive47. Familiarity with this guide able to agree only on a watered-down is recommended before starting a Collective text with a low-level of commitment. If a Action project. sector-based Collective Action is chosen, the membership should be comprised of This section addresses additional practical companies of different origins and size. A recommendations drawn from the broad “mixture” of subsidiaries of MNEs facilitators’ responses to the survey and from different regions and local companies the authors’ experience. The first order of will increase the credibility of the effort business in setting up a Collective Action among participants, customers, regulators, project is for the initiators and facilitators public administration, and the public in to define the objectives and boundaries of general. Participants’ divergent views and the initiative, including its industry sector perceptions regarding corruption problems and geographic scope, the commitment in their sector or country and how they affect level desired, monitoring and enforcement the different companies must be addressed mechanisms to be employed, the time and reconciled at the outset of an initiative horizon for the activities, and the project’s to ensure its credibility for all participants. specific objectives. Prior to agreeing on standards and activities, The greater the market-share represented the prospective membership can perform by the initial participants in the starting an exploratory corruption risk assessment48 group, the more powerful and convincing specific to the industry if further information the Collective Action will be. Its perceived is needed to determine the list of priority weight and importance will help to bring topics to be covered.

5.1 Resistance to the Initiative

As identified in the literature on Collective Action either because they are not Action and in the answered surveys, some familiar with it or because of a general of the major lines of resistance proffered by distaste for “bureaucratic” projects that companies and other potential stakeholders only lead to more paperwork culminating asked to start or join an initiative are: in “just another code of ethics.”

1. Distrust in the Collective Action tool. 2. Distrust in one or several of the Generally, companies distrust Collective participating companies and other

47. World Bank 2008b 48. UN Global Compact 2013a A Practical Guide for Collective Action against Corruption | 99

type of stakeholders. If a participant is business out of fear that this could put emerging from a recent scandal or is their business at partial or total risk, as under investigation, other members they fear losing business to bribe-payers might not want to risk being associated and becoming unsustainable. with that party in the public eye, especially considering they may harbor Overcoming these challenges can prove doubts about the party’s commitment to difficult. Whether doing so is feasible depends changing its ways. to a large degree on the respect and trust the parties have in the facilitator. The facilitator 3. Distrust among companies caused by must be able to understand and manage the cultural differences. This distrust is parties, considering their mutual distrust, observed when MNE subsidiaries hold divergent interests and broad cultural discussions with local SMEs against the differences between large corporations and background of their distinct “corporate SMEs. Consequently, facilitators must act languages” and experiences. SMEs may as trustworthy, independent and impartial fear being outplayed by, or not having mediators capable of bridging knowledge their arguments and concerns taken as and cultural gaps to build common ground. seriously when in the presence of, mighty They should constantly seek to convince the international corporations. parties of the value of the Collective Action. Given this role as intermediary between 4. Different ethical codes and practices diverse parties, the facilitator will benefit on special subject matter (e.g., gifts from being familiar with working in multi- and hospitality policies) arising from cultural settings and an understanding of different histories and cultural settings different cultural notions of time, speed, and in diverse geographic regions and/or expectations regarding results and objectives industry sectors. by big and small companies and NGOs.

5. Lack of willingness on the part of companies to change their way of doing

5.2 Meetings

From the moment conversations begin, Facilitators, for their part, should set a meetings should be attended by high-level positive, neutral and objective tone for the representatives from the companies and other meetings and, without controlling the topics organizations interested in participating in of discussion, coordinate the exchanges of the initiative. Not only are meetings more ideas and experiences, subtly managing effective in resolving problems and setting nuanced differences between the parties. priorities when companies are represented In the first meeting, the facilitator should by their CEOs. Their attendance also signals address whether the parties want to assure the importance assigned to the project and the confidentiality of the discussions by the company’s commitment from its top entering a confidentiality agreement. As a management. preliminary matter, the facilitator should 100 | A Practical Guide for Collective Action against Corruption

forewarn the parties that they should avoid are viewed by participants as being “doable.” discussing certain market data that could Although doing so does not necessarily imply expose the parties to accusations regarding a sea change, it offers a greater chance of violations of anti-trust norms. In addition to success and initiates a trust-building process confidentiality agreements, parties may sign in which parties can observe one another’s a special agreement committing to avoid all compliance with the Collective Action’s goals discussion of market and pricing data and and commitments. Participants can later any other information related to antitrust build upon initial successes by modifying violations. the agreement to broaden or deepen its scope and can also enter into additional Potential participants should take advantage agreements. of initial meetings to explore the challenges, risks, and opportunities with respect to the Between meetings, the parties will need particular sector and/or project in question, time for internal discussions to explore and to offer possible alternatives for alternatives for resolving the relevant organizing their initiatives. The participants problems and building internal consensus. should list the topics and risks in order of However, allowing for too much time (more priority and choose the subject-matter to be than three weeks) between discussions could covered by the Collective Action agreement. potentially harm the flow of negotiations Parties should initially limit the agreement and risk losing momentum. to commitments that, while challenging,

5.3 Training Activities

Signatories to Collective Action projects Training is among the most important sometimes fail to take into account, and activities undertaken during the simply overlook, the fact that Collective implementation phase, and it should be Action initiatives do not end with signing an included generally as part of a Collective agreement. Parties can become complacent Action initiative. Collective Action intends once they publish information about the to change the methods by which business agreement on their respective websites is actually practiced on a day-to-day basis. and have communicated it to customers, This requires changing behavior. After suppliers, government agencies, and awareness–building, education and training regulators. are the single most important steps toward making behavioral change happen. In fact, an agreement should only be a second starting line. If, as is sometimes the case, the Many initiatives have been based on concrete parties close the book on the project and actions to educate and train people in return to business as usual without engaging order to change age-old business practices in additional efforts, the project is likely and behaviors. These efforts are not always doomed. If, on the contrary, the difficult and successful. Old-fashioned, unidirectional laborious work of implementation is begun, approaches to training do not deliver initiatives have a fighting chance at success. satisfactory results. They are ineffective in A Practical Guide for Collective Action against Corruption | 101

any environment and have to be changed; are often forced to bear the burdens of not only at universities, where the change is operating in the informal economy and of already underway, but in companies as well. resolving “outsourced” integrity challenges. Indeed, Collective Action should promote Education should focus on training executives the inclusion of companies’ value chain and employees to make the right decisions actors into their initiatives as a means for in difficult situations, such as when under combating this “risk outsourcing.” extortion, temptation or pressure. Third parties along companies’ value Training and education must then be central chains are among the groups that are most to all Collective Action initiatives that want vulnerable and exposed to corruption risk; to have impact. Going the extra mile towards suppliers at this level are often SMEs that driving real change in an industry begins generally do not have the same resources with each organization participating in as MNEs and do not benefit to the same an action, by giving internal stakeholders extent from internal compliance programs. the opportunity to undergo transformative Moreover, they normally do not receive education and training so as to perfect a the same training as MNE’s employees and change in the manner in which they approach although many international companies do and handle ethics dilemmas. Collective endeavor to keep tabs on their supply chain, Action initiatives should especially direct their control of independent suppliers is training to the parts of their workforces that necessarily more diffuse than control over are most directly affected by the agreement’s employees. Another potential problem provisions, including its objectives, targets with suppliers is that they may tend to and standards. In most cases, but not be unaligned with the Collective Action necessarily exclusively, the sales force is the agreement and see it only as a hindrance most affected group. Observers should note to their sales goals. The thought and real that personnel belonging to an initiatives’ possibility of misalignment with a Collective membership is not the only group that Action’s objectives throughout participating should be targeted for training and companies’ value chains should be reason education programs, but that these efforts enough to persuade stakeholders of the are also of particular importance within the importance of education and training companies comprising their value chains, activities. These efforts should include, both upstream and downstream. However, and ideally start with the participating as in many cases substantial portions of companies’ high-level executives and third companies’ sales efforts are outsourced, parties with relative bargaining power, as training should not stop with the internal these are the actors responsible for setting workforce but should extend to participants’ the “tone at the top” and who are crucial to agents, representatives, and distributors. convincing and cajoling middle-management and rank-and-file employees’ to commit and This is a special challenge for Collective buy into the Collective Action. Action projects acting within markets exposed to significant levels of corruption Optimally, training should be incorporated risk. In high-risk markets, focusing on the into Collective Action projects as one of practices of the entire value chain including their core activities, and should hinge on suppliers, distributors, clients, business an inductive, interactive learning process partners, intermediaries and other actors that engages parties as proactive partners is particularly important as these actors under a learning-by-doing model. Focusing 102 | A Practical Guide for Collective Action against Corruption

integrity training on inductive learning Hence, this approach also breaks away from provides initiatives with an advanced traditional business instruction in that it training mechanism to drive participants’ strays from the hierarchical notions of the top- ethical development, and marks a decisive down view that management is responsible turn from traditional deductive-learning for a company’s ethical values, which should approaches. This more traditional training be conveyed downward throughout an involved the study of ethics guides, manuals, organization. This new inductive approach rules, codes, etc., followed by an analytical opens the playing field to let employees use and theoretical discussion of these works their cognitive skills in evaluating how to and the principles they espouse. guide the organization through and make decisions regarding ethical dilemmas. In contrast, the inductive approach is based on discussion of real-world ethical dilemmas Through continuous, recurring training arising from business cases. Under this programs, educators look to establish a method, education is not premised solely feedback loop between companies and on the recitation of ethical principles to employees to facilitate their learning from be memorized in a mechanical, detached one another. Under the most extreme manner. Rather, with the assistance of version of this view, training never ends as case materials, training participants are a continuous feedback loop is developed introduced from the outset to hypothetical through sustained, periodic debate on situations based on real-world circumstances ethical dilemmas and corruption risks faced. in which corruption unfolds. Typically, the proponents of this approach must apply a variety of tools, including To elicit the best possible ethical decisions the study of more traditional business case from an assortment of viable courses of studies, group analysis of concisely described action, modern training also includes group ethical dilemmas, participant illustrations discussion designed to explore and vividly of real-world situations described by address real-life details, including the moral participants, group simulations, and grey areas often encountered. Training has presentations and conversational exchanges also improved through the incorporation of directed by business leaders. new theoretical and practical frameworks originating in behavioral economics. Role-playing and other methods that actively Other fields of research offer innovative engage course participants and serve as a methodologies to help people understand medium for open discussions are effective their personal decision-making processes tools to improve business ethics instruction. and why they often fail to make ethical Conversational methods are also useful for decisions. several reasons: as participants speak their points of view and listen to those of their In other words, ethical training is not meant peers, collective and individual awareness is to instruct employees on the optimal ethical raised on relevant ethical issues, enriching decision in a given situation, but rather, the perspectives and knowledge of each to present them with ethical dilemmas, participant. Further, while serving as a rich leaving them to devise solutions by applying source of learning, open idea exchanges in their independent judgment and their an educational environment demonstrate knowledge of personal and organizational that each person’s point of view is important ethical guidelines (including current laws, to solving corruption problems. It also regulations, and internal and external rules). contributes to building the psychological A Practical Guide for Collective Action against Corruption | 103 safety necessary to have frank discussions cognition is not static but can be developed, on corruption and business ethics, helping so that an individual progresses from lower improve the design and operation of to higher stages. This development can be Collective Action projects. driven and positively influenced by several factors, guiding individuals to adopt less While several authors have expounded upon self-centered decision-making framework this inductive approach to ethics instruction, that keeps both immediate and more distant only a few of them have specifically designed environments in view. By comparing and instructional tools devised to disseminate evaluating the daily behavior of company this method across companies. Babson personnel and their experiences in resolving College Professor Mary Gentile, creator of the ethics dilemmas against the directives of “Giving Voice to Values” (GVV) program, is ethics codes, such as corporate policies and one of these few. She designed this program procedure manuals, an inductive approach based on her argument that ethical training to ethics training facilitates the development should be aimed at developing employees’ of a company’s values or “ethical conscience” moral “competencies” so that they can as its employees’ moral reasoning progresses practically and efficiently grasp and resolve along the moral development spectrum. the dilemmas they confront. Prof. Gentile advocates a move from a “thou shall not” to a Interactive consideration and design of “can do” approach. This involves a shift away ethical solutions to corruption dilemmas from approaches with a focus on banning motivate program participants to explore and punishing to a new focus on empowering moral reasoning and develop their own anti-corruption behavior and reinforcing “ethical competencies” in alignment with notions of good business ethics by reviewing their organization’s and the Collective specific situations, stories, and examples of Action project’s goals. Therefore, a process- effective solutions employed by real-world based ethics education encompassing a executives from all organizational levels. broad range of continuous training activities will be more likely to permeate and influence Moral development theory developed by, the practices of a Collective Action project’s among others, psychologist Lawrence membership in both the mid- and long-term. Kohlberg49, underlies this overall outlook to new instructional methods and substantive Another benefit of ongoing training efforts content. This theory describes a six-stage is maintaining the importance of corruption moral cognitive development spectrum awareness as a top-of-mind issue. In that encompasses a range of stages of moral accordance with research findings50, when reasoning, where at one extreme individuals’ a training’s effectiveness depends on its moral decisions are driven by obedience degree of interactivity and on the company’s concerns from an egocentric point of view corporate culture, sessions should focus on (e.g., fear of punishment), and at the other, practical cases, the resolution of ethical where a person’s moral decisions are driven dilemmas, and advancing individuals’ by a concern regarding the potential impact progress along the moral reasoning their decisions on others in their surrounding spectrum, instead of focusing narrowly on environment, both inside and outside of their rules, policies and processes. closest circle. According to this theory, an individual’s degree of moral reasoning and

49. Kohlberg, L; Levine, C.; Hewer, A. 1983. 50. Ethics and Resource Center 2008; Navex Global 2014. 104 | A Practical Guide for Collective Action against Corruption

5.4 Monitoring

Another important aspect of Collective that the Collective Action project does not Action implementation is monitoring. All lose pace or track of its progress towards implementation phases should include some its goals, the monitoring process requires sort of monitoring program. Monitoring can a formal framework including agreed be performed internally by each participant milestones, target dates, and assessment (self-monitoring), by other participants with (at least, self-monitored) of completion agreements to exchange and share findings of agreed milestones by each of the (mutual monitoring), by the facilitator, or by participants. Achievement of results should an NGO or audit firm. Monitoring processes be assessed on a yearly basis. This assessment are not necessarily static. Collective action should be part of an overall evaluation of initiatives can move from self-monitoring the Collective Action initiative and should to professional monitoring conducted by include an assessment of the desirability of an outside organization as participants any adjustments to the original Collective develop mutual trust and confidence in their Action agreement or its objectives. Ideally, respective abilities to comply, or as external these continual assessment processes would or internal incentives to make deeper lead to an evolutionary process in which commitments increase. formal commitments made in the relevant Collective Action projects, such as the In monitoring progress, facilitators and stringent ethical and auditing commitments participants should endeavor to measure made in connection with certifying results against pre-set progress milestones in business coalitions, grow stronger along recognition of the fact that Collective Action with the informal commitments of their agreements’ objectives can generally only be memberships. reached over long-time horizons. To ensure

5.5 Further Activities

Collective Action initiatives can open new entrants are limited to the simple choice their doors to add interested stakeholders, of adhering to the existing agreement or not. including additional industry competitors, When periodic assessment reviews show that other value chain collaborators, and public the initiative has made progress and that the sector actors, to expand the membership at parties have advanced substantially toward any time after signing the Collective Action achievement of implementation objectives, agreement. In certain cases, this may prove the participants may consider incorporating the best method to grow participation in new objectives or upgrading to a type of the initiative, as new entrants are not in Collective Action requiring a greater degree a position to renegotiate the agreement of commitment. already signed by the original participants; A Practical Guide for Collective Action against Corruption | 105

5.6 Final Note

These recommendations are intended only as distinct actors and faces unique challenges suggestions to be considered when exploring and issues. Accordingly, in designing measures to organize a Collective Action Collective Action projects and devising initiative, and do not imply that any rigid set strategies to achieve their desired outcomes, of rules or best practices exist for undertaking planners should be creative while keeping in a Collective Action. Parties will innovate and mind that pre-determined structures have incorporate new ways to avoid pitfalls and been used successfully to organize Collective accomplish their common objectives. Just Action initiatives and give them a sense of as each Collective Action initiative has its direction and a specific framework. own origin and development, each involves 106 | A Practical Guide for Collective Action against Corruption 6 New Paths for Collective Action As has been noted by experts51, public initiatives as many have begun adopting discourse regarding Collective Action began measures related to environmental, labor, mainly as an academic and theoretical human rights, and anti-discrimination (by discussion and then gradually led to gender, religion, etc.) issues. This trend is in the development of Collective Action keeping with the push for a comprehensive initiatives and their transformation view of sustainable economic and social into practical, organizational tools to be development advanced by initiatives such as employed by companies, NGOs, multilateral the UN Global Compact and its 10 guiding organizations, and other actors. As formation Principles52. Many of the problems and of new Collective Action projects has become challenges associated with those issues more frequent, the global reach of Collective can in fact be seen as the direct or indirect Action initiatives has expanded. These global consequences of a lack of integrity and Collective Actions appear to be developing good governance generally associated with into a set of islands of industry self-regulation corruption problems. Solving corruption and composed of diverse types of initiatives with transparency problems should lead hand- differing degrees of enforcement. In an in-hand to the resolution of many of these effort to extend their individual companies’ issues. In line with these remarks, many of fights against corruption to key projects the Collective Action projects’ responses and entire industry sectors across the globe, to the survey reported that the substantive compliance and ethics officers should be scope of their initiatives included labor, active in constantly exploring possibilities human rights and environmental topics in for collaborating with competitors and addition to anti-corruption issues. other stakeholders within Collective Action frameworks. As they identify institutional Another developing trend brings great weaknesses and other obstacles to ethical potential for innovative developments practices on the ground, compliance and in the Collective Action field, in terms ethics officers can look to Collective Action of both formation and implementation. projects to compensate for these weaknesses Increasingly, private companies are teaming by employing self-regulation to combat up to collaborate in Collective Action efforts corruption. with public international institutions and actors from the academic world. In this Another path to expansion of Collective regard, the creation of the Anti-Corruption Action that may be a developing trend Working Group and the Anti-Corruption involves the expansion of the substantive Toolkit prepared by the United Nations- scope of issues covered. As the business ethics led initiative known as Principles for field has incorporated more and more new Responsible Management Education can topics, Collective Action initiatives appear to be seen as a leading case for replication be following them at close distance. No longer in other instances. The idea behind these is anti-corruption the exclusive focus of these contacts is that academics will incorporate

51. Pieth 2012a 52. United Nations Global Compact 2015. A Practical Guide for Collective Action against Corruption | 107

the theoretical and practical tools necessary and similar institutions working in target to fight corruption into business schools countries alongside MNEs and/or industry curricula, including the Collective Action associations. Recently, local actors have taken framework and general instruction in anti- an active role initiating Collective Action corruption matters and business ethics. initiatives. As described above, “grassroots” The assistance of academics is sought in initiatives have some advantages over top- conducting new research and in developing down approaches. Additionally, local efforts new conceptual frameworks. To ensure that should be viewed as a special source for Collective Action stakeholders stay current innovation in Collective Action. Through local with regard to new concepts, theoretical efforts unique frameworks and perspectives frameworks, and methodologies, NGOs and are likely to be created in response to the civil society organizations with a mission special assortments of challenges faced and of fomenting Collective Action should resources available on site. seek to maintain and expand ongoing dialogues with academia, universities and Finally, another apparent trend – observed other education and research-oriented from the multiplicity and diversity of examined institutions. At present, one of the main initiatives around the world – appears to be objectives for academia is the study and the adoption of more fluid organizational contribution of quantitative and qualitative frameworks, and the departure from an almost metrics to accurately measure the impact of exclusive emphasis on signed agreements these initiatives. Without reliable measuring and other types of documents. While these tools, it is very difficult to account for the documents are certainly important, they are effectiveness and impact of Collective Action sometimes – in an apparent contradiction – efforts. This limitation restricts stakeholders viewed as both the core organizing element from developing and replicating Collective and the final objective of an initiative’s efforts. Action tools in a more effective and This change in emphasis demonstrates that comprehensive way. the Collective Action tool is flexible enough to be molded for application to a diversity An additional trend is the emergence of of situations and for the achievement of an Collective Action initiatives originating assortment of different goals. In this regard, from the efforts of local or regionally- it is desirable that Collective Action avoids a based actors. The majority of Collective narrow focus on formal agreements and shift Action projects today have arisen from efforts towards observable or measurable efforts led by international actors such as impact such as training, monitoring and global multilateral organizations, NGOs, other practical pursuits. 108 | A Practical Guide for Collective Action against Corruption

In sum, the evolution of the Collective Action Arguably, corruption is a human seems to be leading to changes in the four phenomenon that will always exist, as its aspects described-above: roots lie in human behavior. As the fight against corruption is likely to always remain The broadening of the substantive scope a challenging endeavor, Collective Action of issues covered from anti-corruption tools need to evolve over time and must be issues to other business ethics-related adapted constantly and in a timely fashion matters such as environmental, labor, to fight corruption effectively. Nevertheless, human rights, and discrimination more than arriving at an ideal endpoint, concerns. what may matter most in undertaking a Closer collaboration between NGOs, IGOs Collective Action is the process, its spillover and academia. benefits, and the anti-corruption innovation New Collective Action frameworks and and learning acquired along the way. solutions stemming from locally- and regionally- based projects, particularly from emerging markets. Formation of more fluid, practical Collective Action initiatives. A Practical Guide for Collective Action against Corruption | 109

About the Center for Governance and Transparency at IAE Business School

The Center for Governance and Transparency approximately 500 practitioners and at IAE Business School, based in Buenos academics from more than 100 companies. Aires, Argentina, fosters business ethics and The Center holds regular workshops and compliance through research, education, conferences for practitioners, academics, and provides support to companies, locally lawyers and other specialists, addressing and regionally. The Center promotes compliance challenges they face daily and furnishes instruction in compliance in their professions. The Network has and business ethics, especially in the progressively become a point of reference for context of anti-corruption teaching in all compliance in Argentina, allowing for the open programs at IAE Business School. exchange of best practices and experiences as The Center also offers joint certification well as the creation of a community of like- programs for specialists (with ECOA) and minded and committed professionals. The compliance programs for senior executives Center also helps companies in designing, (with IESE Business School). With regard implementing and measuring the impact to research, the Center conducts surveys of compliance programs, tools, and training on transparency and compliance policies sessions. It has facilitated several Collective in companies in Argentina and the region; Action projects, fostering the dissemination publishes technical notes, cases, and papers of this tool to assist companies in the fight and articles on compliance and integrity for against corruption. journals and media outlets; and participates in conferences and panel sessions. The Center has served as co-chair and is currently an active member of United Founded in 2008, during the first five years Nations-led Principles for Responsible of its existence, the Center set up the first Management Education (PRME)’s Anti- Best Practices and Compliance Network Corruption Working Group. in Argentina with the participation of 110 | A Practical Guide for Collective Action against Corruption

About the Authors

Matthias Kleinhempel is a full-time professor of Business Policy at IAE Business School and its Center for Governance and Transparency in Buenos Aires, Argentina. He teaches in the MBA and the Executive Education programs and is the Academic Director of several international programs.

He holds an MBA degree from IAE Business School and a Law Degree from the University of Hamburg, Germany. His research deals with Corporate Governance, Good Business Practices and the implementation of Compliance Programs, Regional Strategies and the Organization of International Companies in Latin America. He has authored numerous articles, case studies, technical notes and book chapters on compliance related topics.

He is a member of the UN-PRME Working Group on anti-corruption: “Developing anti- corruption guidelines for curriculum change”. He is the City of Hamburg’s honorary Representative (HamburgAmbassador) in Argentina. He serves as a member of the Board of the Argentine-German University Center, and of FUNDES Argentina. He has served as President of the Argentine-German Chamber of Commerce, as Vice President of the EU Business Group in Argentina and as President of IAE’s Alumni Association

Gabriel Cecchini is Coordinator of the Center for Governance and Transparency at IAE Business School in Buenos Aires, Argentina. Mr. Cecchini has a B.A. in Communication from the National University of Córdoba in Argentina and an M.A. in Social Sciences from the University of Chicago, United States. Mr. Cecchini coordinates research and support to companies in the field of Business Ethics and Anti-Corruption at IAE Business School and has been instrumental in setting up the First Argentine Best Practices and Compliance Network. He is an active member of the UN-led Principles for Responsible Management Education initiative’s Working Group on Anti-Corruption. Mr. Cecchini also frequently contributes to national and international media outlets and participates in the Open Government Partnership (OGP) / World Bank Webinar Series.

Micah Miller is a U.S.-licensed attorney and a 2012 MBA graduate of IAE Business School. He also holds a J.D. (University of Texas, 2009) and a B.A. in Political Science (University of Texas at El Paso, 2003). Micah advises foreign shareholders on corporate matters and focuses his work on cross-border mergers and acquisitions, joint ventures, and financial transactions in the international transactions group at Wiener, Soto, Caparrós, a Buenos Aires law firm. Prior to moving to Argentina, he represented clients in diverse business, real estate, commercial, and bankruptcy matters at a leading law firm in El Paso, Texas. A Practical Guide for Collective Action against Corruption | 111

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Annex I: List of Collective Action Initiatives

TITLE SECTOR FACILITATOR MEMBERS COUNTRY/ REGION

Agreement to Heavy Transparencia por Asociación Colombia Prevent Corruption manufacturing, Colombia Colombiana de within the Piping Light Ingeniería Sanitaria Market Sector manufacturing, y Ambiental Public works, (ACODAL) members Utilities

Aerospace and Arms, defense and The Aerospace & Major European Global/Belgium (HQ) Defence Industries military Defence Industries aerospace and Association of Association of defense industry Europe (ASD) Europe (ASD) associations Common Industry Standards Alliance for Integrity Multi-Sector, Civil Deutsche Organizations from India (AfIn) society Gesellschaft für the private and Internationale public sectors as Zusammenarbeit well as from civil (GIZ) GmbH society

Anti-corruption Garbage AVA GmbH AVA’s direct Germany declaration among contractors contractors at AVA GmbH

Arusha Declaration Customs sector World Customs WCO’s members Global of the Customs Organization (WCO) Co-operation Council Concerning Integrity in Customs

Basel Art Trade Art, antiques, The Basel Institute The Basel Institute Global/Switzerland Guidelines (Draft) auctioneers on Governance on Governance; (HQ) auction houses and various international art dealers’ associations

Berlin-Brandenberg Construction, Public Transparency Flughafen Berlin- Germany International works International Schönefeld GmbH Schönefeld Airport Germany (FBS), Transparency Integrity Pact International Germany, bidding companies, independent monitor

BnEI - Banknote Banking and finance Institute of Business Arjowiggins Security Global/Belgium (HQ) Ethics Initiative Ethics SAS; Crane Currency – a division of Crane & Co., Inc.; De La Rue plc; Giesecke & Devrient GmbH; KBA-NotaSys SA; Note Printing Australia Ltd; 116 | A Practical Guide for Collective Action against Corruption

Brazilian Business Multi-Sector Ethos Institute Ethos Institute for Brazil Pact for Integrity Business and Social and Against Responsibility, Corruption Patri Government Relations and Public Policy, United Nations Development Programme (UNDP), the United Nations Office on Drugs and Crime (UNODC), Brazilian Committee of the UN Global Pact, over 200 signatories

BSR - Maritime Anti- Multi-Sector, MACN/UNDP Maritime Anti- Global/Denmark Corruption Network Transport Corruption Network (HQ) (MACN) (MACN)’s members

BSR - Maritime Anti- Multi-Sector, Business for Social Maritime Anti- Nigeria Corruption Network Transport Responsibility (BSR) Corruption Network (MACN) (MACN)’s members, TUGAR, UNDP

Building Trust Multi-sector Nigerian Economic Nigerian Economic Nigeria through Public- Summit Group, UN Summit Group, UN Private Dialogue on Global Compact Global Compact Anti-Corruption – UN Global Compact Nigeria

Business Action Finance CBI Local/national Nigeria Against Corruption companies (BAAC)

Centre for Ethics in Multi-sector Center for Ethics in Angolan and Angola Angola - Principles Angola (CEA) multinational for Ethical Business companies, Angolan Chamber of Commerce and Industry (CCIA), Angolan Industrial Organisation (AIA)

China Business Multi-sector International International China Leaders Forum’s Business Leaders Business Leaders Business Integrity Forum (IBLF) Forum (IBLF), Handbook Renmin University School of Public Policy, Chinese domestic companies and global multinationals A Practical Guide for Collective Action against Corruption | 117

Clean Games Inside Construction, Public Ethos Institute Ethos Institute and Brazil and Outside of the works business companies Stadium and federations/ chambers

Clear Wave (Baltoji Multi-Sector Investor’s Forum 50 domestic and Lithuania banga) - Transparent international Business Labeling companies active in Initiative Lithuania

Coalition Against Multi-Sector Makati Business Members from Philippines Corruption (CAC) Club academia, the business sector, civil society organizations, and the Church in their fight against corruption

Coalition for Multi-sector The Coalition Over 30 local and Czech Republic Transparent Assembly multinational Business companies active in the Czech Republic

COCIR Code of Pharmaceutical and COCIR COCIR Member Belgium Conduct healthcare companies, (HQ/Europe) including Agfa Healthcare, Bosch, IBM, General Electric Healthcare, Hitachi Medical Systems Europe, Philips Healthcare, Siemens, Toshiba Medical Systems

Collaborative Multi-Sector, Public Kemitraan Kemitraan - The Indonesia Leveraging of works Partnership for E-Procurement Governance Reform; Accountability, LKPP (National Nexus and Integrity Public Procurement for the Newfound Agency); APINDO Governance (Indonesian Workers (CLEANING) Association); Master of Economics of Development Faculty of Economics and Business - University of Gadjah Mada (MEP UGM) 118 | A Practical Guide for Collective Action against Corruption

Collective Action Animal nutrition Prof. Matthias Alltech Argentina Agreement in the Kleinhempel (IAE Biotechnology SRL, Animal Nutrition Business School) APSA Internacional Sector in Argentina S.A., Bedson S.A., Cladan S.A., DSM Nutritional Products S.A, Ensol S.A., Elanco S.A., Novus Argentina S.A., Núcleo 3 S.A., Nutrefeed S.A, Porfenc S.R.L., Provimi Argentina S.A., SAF Argentina S.A., and Teknal S.A.

Collective Action Energy Center for ABB S.A., Alstom Argentina Agreement in the Governance and Grid Argentina S.A., Electrical Power Transparency - IAE Arteche S.A., Lago Transmission Business School Electromecánica Industry in S.A., Siemens S.A., Argentina Tubos Trans Electric S.A

Collective Action Legal services Transparency Association of Argentina Agreement to Program of the Law Corporate Counsel Promote Integrity in Department, San (ACC) Latin America, the Legal Professions Andrés University. Argentina Chapter Prof. Guillermo members Jorge

Collective Action for Construction Association de la ACQ’s members Canada Integrity in Quebec’s Construction du Construction Québec (ACQ) Industry

Construction Sector Construction, Public CoST Multinational Global/United Transparency works companies, NGOs Kingdom (HQ) Initiative (CoST)

Corporate Financial sector Humboldt- Nigerian Stock Nigeria Governance Rating Viadrina School of Exchange System Governance

Cross-Sectorial Multi-Sector, Ethics and TEID’s members Turkey Collective Action Agriculture, Reputation Society Initiative - Turkey Arms, defense of Turkey (TEID) and military, Art, antiques, auctioneers, Banking and finance

ECOSOC Integrity Civil Society Transparency Civil society Romania Pact International organizations and Romania social partners. A Practical Guide for Collective Action against Corruption | 119

Energy and Energy, Transport Basel Institute on ABB, Alstom, Global/Switzerland Transport Sector Governance Bombardier, GE, (HQ) Integrity Working Siemens Group

Ethics management Bauindustrie Bayern 33 construction Germany system of companies the Bavarian construction industry

Ethics Standards of Banking and Ethics and Republic of Turkey Customs Brokers finance, Consulting Reputation Society Turkey, Ministry and Sectorial and advisory of Turkey (TEID) of Customs and Compliance Pact services, Customs Trade; Ethics and brokers, Transport Reputation Society of Turkey (TEID); Istanbul Association of Customs Consultancy; Izmir Association of Customs Consultancy; Ankara Association of Customs Consultancy; Bursa Association of Customs Consultancy; Mersin Association of Customs Consultancy

Extractive Industries Mining, oil and gas The Extractive 29 Compliant Global/Norway (HQ) Transparency Industries countries (countries Initiative Transparency meeting all Initiative (EITI) requirements in the EITI Standard), 17 Candidate countries (implementing EITI, not yet meeting all of the requirements)

Fighting Corruption Multi-sector University of Cairo, Egypt and Fraud through Center for Economic Collective Action and Financial Research and Studies

Honest Business Multi-sector United Nations Local/national Slovenia Declaration - Ethos Global Compact companies Initiative Slovenia

IFPMA Code of Pharmaceutical and IFPMA Research-based Global/Switzerland Practice & IFPMA healthcare pharmaceutical, (HQ) Code Compliance biotech and vaccine Network companies 120 | A Practical Guide for Collective Action against Corruption

Indonesia Business Multi-Sector Multinational Indonesia Links (IBL) Business companies, NGOs Ethics Initiative

Incentives to Multi-sector UNDOC Offices in MNCs, local/national India and Mexico corporate integrity India and Mexico companies, SMEs and cooperation

Integrity Agreement Pharmaceutical and Transparency Healthcare Romania within the Health healthcare International companies in System Romania Romania

Integrity Pact within Academia Transparency Academic sector Romania the Academia International members Romania

Integrity Pact Public procurement Transparency Local/national Hungary Hungary International companies Hungary

International Multi-Sector International 8 organizations Russia Business Leaders Business Leaders including Forum’s (IBLF) Forum (IBLF) multinational Industrial Company and Russian Working Group companies, as well (ICWG) as representatives of public authorities, including the Government of Moscow, the State Duma, and Federal Antimonopoly Services

International Multi-Sector International Over 250 members Global/France (HQ) Chamber of Chamber of from 40 countries Commerce (ICC), Commerce - multinationals, Commission banks, law firms, on Corporate trade associations Responsibility and and SMEs Anti-Corruption

International Arms, defense and International Forum Over 20 major Global/Belgium (HQ) Forum on Business military - Civilian on Business Ethical defense and Ethical Conduct for aerospace Conduct (IFBEC) aerospace industry the Aerospace and companies from Defence Industry around the world (IFBEC) A Practical Guide for Collective Action against Corruption | 121

IRU/UN Global Transport International Road International Global/Switzerland Compact Global Transport Union Road Transport (HQ) Anti-Corruption (IRU) Union (IRU), UN Initiative (GACI) Global Compact, World Customs Organization (WCO)

Korean Pact for Multi-Sector, Transparency Civil society, as well South Korea Anti-Corruption and Banking International Korea as public, private Transparency and finance, (South) and political sector Pharmaceutical and representation healthcare

Maala’s Corporate Multi-sector Maala Business firms Israel Social Responsibility Collective Voluntary Anti-Corruption Standard Program

Medicines Pharmaceutical and UK’s Department Governments, Netherlands (HQ) Transparency healthcare for International pharmaceutical Alliance (MeTA) Development (DFID) companies, civil society; UK Department for International Development (DFID), World Bank, World Health Organization (WHO)

MedKompas Poland Medical sector The Polish Chamber POLMED’s members Poland of Commerce of Medical Devices

Memorandum of Customs sector National Customs Customs’ sector Uruguay Understanding - Office members Nations Customs Office

NABIS (Northeast Education Federation of Academic sector South Korea Asia Business Korean Industries- members Integrity School) International Management Institute (FKI-IMI) 122 | A Practical Guide for Collective Action against Corruption

NATC’s Collective Multi-Sector NATC Diverse companies China Action Initiative – Fostering a Better Business Environment in China

Integrity Agreement Multi-Sector National Anti- 30 members in South Africa within the Health Corruption Forum total, of which 10 System (NACF) representatives each from civil society, business and government

Partnering Against Multi-Sector World Economic World Economic Global/Switzerland Corruption Forum Forum corporate (HQ) Initiative (PACI) partners

SME Integrity Pact - Multi-Sector Romania Romania

The Anti-Corruption Multi-Sector Russia Charter of the Russian Business

Pacto Ético Multi-Sector Paraguayan Paraguayan Paraguay Comercial (PEC) American Chamber American Chamber of Commerce of Commerce’s members

Principle-Based Pharmaceutical and Prof. Matthias Local companies, Argentina Initiative Agreement healthcare Kleinhempel (IAE distributors and in the Orthopedic Business School) product companies Medicine Industry

Programa Probidad Multi-Sector Colombian Association Colombia (Probity Program) Government of Colombian Colombia Chambers of Commerce

Promoting Multi-Sector Egyptian Junior Egyptian Egypt Collective Action in Business Association Junior Business Egypt Association, government, civil society, businesses

Promoting Integrity Multi-Sector Transparency Public Bulgaria through Advocacy International administration Bulgaria members

Recolección de Solid waste Poder Ciudadano (TI Municipality of Argentina Residuos management Argentina) Morón, companies (Waste Collection)

Russian Compliance Multi-Sector Russian Compliance No formal members Russia Alliance Alliance A Practical Guide for Collective Action against Corruption | 123

SHINE Project Multi-sector Makati Business Makati Business Philippines Club Club, European Chamber of Commerce of the Philippines, international and local Filipino firms active within the country

SME Integrity Pact - Multi-sector Transparency Romanian SMEs and Romania Romania International organizations active Romania in Romania

SME Policy Advocacy Multi-sector CIPE Chamber of Russia in Russia Commerce and Industry of the Russian Federation (RCCI), Russian Union of Business Associations (OPORA), Saratov Chamber of Commerce and Industry, 18 regional chambers of commerce, 200 business associations, U.S. Agency for International Development, Center for International Private Enterprise

State-Owned Multi-sector Transparency Local/national Hungary Enterprises Hungary International companies Hungary

Strengthening Multi-sector GIZ Chengdu Chamber China Business of Commerce, Membership Hunan Provincial Organizations for Chamber Fighting Corruption

Social Witness Multi-sector Transparencia Mexico / Integrity Pact Mexicana in Government Procurement - The Mexican Experience

Integrity Pact for Public Transport Transparency TI Mexico, Mexico Suburban Train International Government project Mexico 124 | A Practical Guide for Collective Action against Corruption

Sustainable Green Sector Transparency Italy Procurement International Italy

Thai Collective Multi-Sector CIPE Thai Institute of Thailand Action Against Directors (IOD); Corruption nearly 300 Thai Campaign companies and multinational companies active in Thailand

The Anti-Corruption Multi-Sector Russian Union of Russian Union of Russia Charter of the Industrialists and Industrialists and Russian Business Entrepreneurs Entrepreneurs (RUIE) (RUIE), Chamber of Commerce and Industry of the Russian Federation (CCI of Russia), All-Russia Public Organization “Delovaya Rossiya” (Business Russia), All Russian Non- Governmental organization of Small and Medium Business “OPORA Russia”

The Business Multi-Sector Saigon Hi-tech Government, MNEs, Vietnam Integrity Platform Park’s Management MNEs, local/national Board and group of companies, SMEs, hi-tech companies associations, NGOs, international donors

The Hanoi Construction - APEC APEC members Vietnam/APEC Principles: For Engineering region Voluntary Codes of Business Ethics in the Construction and Engineering Sector

The Pact for Multi-Sector Transparency Romania Integrity and International Transparency in Romania Business in Romania A Practical Guide for Collective Action against Corruption | 125

The Wolfsberg Banking and finance Basel Institute on Banco Santander, Global/Switzerland Group Governance Bank of Tokyo- (HQ) Mitsubishi UFJ, Barclays, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, JP Morgan Chase, Société Générale, UBS, Transparency International, Basel Institute on Governance

UN Global Compact Multi-sector UN Global Compact UN Global Compact India - Collective Action India India, civil society Project India groups, academia, government, business

UN Global Compact Public Works The United Nations UN Global Compact South Africa South Africa - Global Compact South Africa, National Business Local Network in National Business Initiative South Africa Initiative, South African and multinational companies

Vietnam Integrity Multi-sector European, British, European, British, Vietnam Alliance Australian, Australian, Canadian, German, Canadian, German, U.K. chambers of U.K. chambers of Commerce / Towards Commerce / Towards Transparency Transparency 126 | A Practical Guide for Collective Action against Corruption

Annex II: Questionnaire for Collective Action Facilitators/Project Leaders

1. Type of Collective Action a. Anti-Corruption declaration b. Principle-based initiative c. Certifying business coalition d. Integrity pact e. Others (describe) Please attach the Collective Action Agreement in copy, if not con fidential

2. Framework upon which initiative was based (if any; e.g., UN Global Compact, World Bank, TI, WEF)

3. Sector/Function/cross-sector covered

4. Region/country covered

5. Parties to the AC a. MNE HQs b. MNEs subsidiary c. Local/ national companies d. SMEs e. Others (describe)

6. Initiator a. Facilitator b. Party c. Government/public sector

7. Facilitator (e.g., NGO, academic institution, think tank, etc.)

8. Time from project start to AC signature

9. Current status

10. Topics covered a. Anti-Corruption b. Anti-trust/Competition c. Labor issues d. Harassment e. Environment f. Human rights g. Others (please specify) A Practical Guide for Collective Action against Corruption | 127

11. Ethics Committee established (Y/N) a. If yes: i. Number of members ii. From parties to the agreement or third parties iii. Who selected the members? iv. Term of the members v. Established possible sanctions vi. Internal procedures (Please attach copy)

12. Other types of monitoring tools

13. Administrator for the Collective Action named (Y/N) a. If yes, who: i. Party ii. Facilitator iii. Third party

14. Main challenges encountered in getting Collective Action signed

15. Activities agreed in the Collective Action for its implementation a. Training of parties’ employees b. Training of value chain´s employees c. Joint evaluations of progress d. Assessment of progress/results i. If yes, what type of assessment (for example, outcome assessment, long-term impact assessment, etc.) e. Communication i. Internal ii. Customers iii. Business partners and suppliers iv. Public v. Other stakeholders (please specify)

16. Link to Collective Action’s website/online portal (if there exists so) and references in the media about its results

17. Main challenges encountered for Collective Action’s implementation

18. General and specific impact of the Collective Action

19. Recommendations for future Collective Action projects

20. In your opinion, which approach is more effective for a successful Collective Action implementation?: Top – down from HQs of envisioned participants, spreading the Collective Action after signing down to national/regional/local levels, or a grassroots’ approach, starting directly at the regional/local (operational) level? 128 | A Practical Guide for Collective Action against Corruption

21. Can you mention other initiatives in your region and/or globally that are addresing similar problems?

22. Are you aware of the UN Global Compact’s Business Partnership Hub (https:// businesspartnershiphub.org), specifically the anti-corruption collection action hub (https://businesspartnershiphub.org/anti-corruption/) to post information about your Collective Action project and match with potential partners? a. Do you agree to showcase the Collective Action in the UN Global Compact’s Anti-Corruption Collective Action Hub? b. What other online platforms you have used to share information about the Collective Action or look for potential partners?

23. Any other additional comments? Please explain.

A Practical Guide for Collective Action against Corruption | 129

Annex III: List of Respondents

1. Collective Action in the Nigerian Port Sector (Risk Assessment) 2. Customs Brokers Anti-Corruption Declaration, Turkey (Anti-Corruption Declaration) 3. Waterpipes, water, and sanitation, Colombia (Principles-Based Initiative) 4. Electric Energy Transportation, Argentina (Principles-Based Initiative) 5. A Collective Action for SMEs, Egypt (Principles-Based Initiative) 6. Clear Wave Initiative, Lithuania (Principles-Based Initiative) 7. Anti-Corruption Awareness Platform, India (Integrity Pact) 8. Construction and Infrastructure sector Integrity Pact, South Africa (Integrity Pact) 9. Nursery School Renovation, Hungary (Integrity Pact) 10. The Business Environment Integrity Pact, Romania (Integrity Pact) 11. The Collective Action against Corruption, Thailand (Integrity Pact) 12. Makati Business Club Project SHINE,The Philippines (Principles based Initiative) 13. Oživení Public Procurement Systems Collective Action, Czech Republic (Principles based Initiative) 14. Clean Games Inside and Outside of the Stadium, Brazil (Integrity Pact) 15. Nigerian Economic Summit Group Initiative, Nigeria (Principles-Based Initiative) 16. Europe’s Aerospace and Defense Common Industry Standards (Principles-Based Initiative) 17. TI Romania’s Collective Action in Academic Institutions, Romania (Integrity Pact) 18. Animal Nutrition Industry’s Principles based Initiative, Argentina (Principles-Based Initiative) 19. International Road Transport Union’s Global “No Bribes at the Roads” (Principles- Based Initiative) 20. Argentine Health Sector’s Initiative, Argentina (Principles-Based Initiative) 21. Honest Business Declaration, Slovenia (Anti-Corruption Declaration) 22. Risk Assessment and Awareness Raising Initiative, Mexico and India (Risk Assess ment) 23. State Owned Enterprises, Hungary (Integrity Pact) 24. Nigerian Initiative to reform the Financial Sector (Principles-Based Initiative) 25. Integrity Alliance, Vietnam (Principles-Based Initiative) 26. SHTP Business Integrity Action, Vietnam (Principles-Based Initiative) 27. NATC’s Collective Action Initiative, fostering a Better Business Environment in China (Principles based Initiative) 28. TI’ Bulgaria’s Collective Action Initiative in Bulgaria (Integrity Pact) The Ten Principles of the United Nations Global Compact

The UN Global Compact asks companies to embrace, support and enact, within their sphere of inﬂ uence, a set of core values in the areas of human rights, labour standards, the environment, and anti-corruption:

HUMAN RIGHTS Principle 1 Businesses should support and respect the protection of internationally proclaimed human rights; and Principle 2 make sure that they are not complicit in human rights abuses.

LABOUR Principle 3 Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining; Principle 4 the elimination of all forms of forced and compulsory labour; Principle 5 the effective abolition of child labour; and Principle 6 the elimination of discrimination in respect of employment and occupation.

ENVIRONMENT Principle 7 Businesses should support a precautionary approach to environmental challenges; Principle 8 undertake initiatives to promote greater environmental responsibility; and Principle 9 encourage the development and diffusion of environmentally friendly technologies.

ANTI-CORRUPTION Principle 10 Businesses should work against corruption in all its forms, including extortion and bribery.