Anti-corruption guidelines (“Toolkit”) for MBA curriculum change July 2012 A project by the Anti-Corruption Working Group of the Principles for Responsible Management Education (PRME) initiative, United Nations Global Compact Contents Foreword ........................................................................................................................................................... 3 Overview ........................................................................................................................................................... 4 How to Use this Toolkit ..................................................................................................................................... 8 1. Core Concepts ............................................................................................................................................. 9 2. Economics, Market Failure and Professional Dilemmas........................................................................... 16 3. Legislation, Control by Law, Agency and Fiduciary Duty .......................................................................... 18 4. Why Corruption: Behavioral Issues .......................................................................................................... 21 5. Conflicts of Interest .................................................................................................................................. 27 6. International Standards and Supply Chain ............................................................................................... 33 7. Managing Anti-Corruption Issues ............................................................................................................. 47 8. Functional Area and Anti-Corruption Issues ............................................................................................. 58 9. Truth and Disclosure ................................................................................................................................. 68 10. Whistle Blowing ........................................................................................................................................ 71 11. The Developing Global Anti-Corruption Regime ...................................................................................... 73 12. Learning Methods ..................................................................................................................................... 93 13. FAQ ......................................................................................................................................................... 121 Contributor Biographies ................................................................................................................................ 131 2 Foreword The mission of the Principles for Responsible Management Education (PRME) initiative is to inspire and champion responsible management education, research and thought leadership globally. The PRME are inspired by internationally accepted values such as the principles of the United Nations Global Compact. They seek to establish a process of continuous improvement among institutions of management education in order to develop a new generation of business leaders capable of managing the complex challenges faced by business and society in the 21st. century. While many initiatives have committed themselves to participation in responsible management, practical tools relevant to such practices, in particular at the academic level, are still emerging. To that effect, the PRME in collaboration with the UN Global Compact, have set up an academic Anti-corruption Working Group for a four-year project to integrate anti-corruption values into core curricula of leading business schools. The project aims at promoting ethical decision-making and anti-corruption competencies at the post-baccalaureate level by offering business schools and management-related academic institutions substantive anti-corruption guidelines for curriculum change with the aim of teaching students to take effective and ethical decisions that benefit both business and society. In this direction, the Anticorruption Working Group has developed comprehensive anti-corruption guidelines for curriculum change for business schools and management-related academic institutions around the world. The guidelines integrated into a single “Toolkit” provide the tools to address the ethical, moral, and practical challenges students will face in the marketplace. The toolkit integrates different topics as modules which constitute the “menu” instructors can choose from for organizing stand-alone courses and/or course modules. The toolkit provides guidance and step by step approaches on successful guidelines, methods, techniques, mechanisms and processes for effective changes in responsible management curricula. By drawing lessons and experiences from several sources around the world, the Toolkit describes various methodologies and strategies. The toolkit relies on these elements: • It is easy to use • There is a process for ongoing updating • It can be adapted for local use • Modules can be adjusted to course subject matter and time constraints • The course focuses in part on core topics that are essential for global discussion • The subject matter is sufficiently concrete and practical to enlist collaboration with the private sector, and governmental and non-governmental organizations Following the publication of this The PRME Secretariat will identify and select pilot business schools around the world which will be responsible for initial toolkit implementation. This process will enable adaptation for local use and improve core elements. The PRME Secretariat would like to thank the Anticorruption Working Group members – especially the sub- working group facilitators and Matthias Kleinhempel at IAE Business School - for their valuable contributions to the toolkit’s development. We look forward to their continued involvement in assessing its effectiveness. This project is supported by Siemens as part of the Siemens Integrity Initiative. Jonas Haertle Head, PRME Secretariat UN Global Compact Office 3 Overview 1. The Problem Concerns about high levels of corruption and a lack of public and private sector transparency and accountability continue to dominate both public and private sector agendas. These issues are seen as major contributors to the global financial crisis that we are experiencing, and the impact has been demonstrated by various high profile major company ethical failures. At academic and practice levels, two global anti-corruption and transparency trends are emerging. First, management is gaining recognition as a profession that has generally accepted standards of admission and appropriate conduct. As this consensus develops, business practice will increasingly be governed by ethical principles to which practitioners are expected to adhere (see for example, the Harvard Business School MBA Oath). Second, there is a shift in the prevention, detection, and enforcement burdens from government to business enterprise brought about by the privatization of norm-making first promulgated by the United States Federal Sentencing Guidelines through governmental incentives. Variations of this approach are now pursued in such diverse jurisdictions as Australia, Italy, the United Kingdom, Switzerland, Canada, South Africa and Korea.1 Understanding of these trends is crucial for practitioners, as they will greatly influence business practices in the near future and will require managers to have an appropriate set of skills to ensure transparency and accountability. Including business ethics course material in the Undergraduate and Graduate management education curricula is a key step in ensuring an effective business response to this growing private enterprise compliance role. As an organized body of knowledge, this educational enhancement is of recent origin and to which experienced managers may have not been exposed, Executive Education students can supplement the Master’s and Bachelor’s business education that they received with timely, issue specific materials. Traditional liberal arts subjects such as economics and political science can be enriched with research and discussion that focuses on the many facets of corruption and efforts to curtail it. In sum, there is a need for teaching and research guidelines for this growing body of knowledge that includes suggested content, methodology and framework for administering it in the B-schools at different levels of Management and liberal arts education. 2. PRME’s Solution The mission of the Principles for Responsible Management Education (PRME) initiative is to inspire and champion responsible management education, research and thought leadership globally. The primary objective of the PRME working group on anti-corruption is to develop a toolkit for use by business schools to design or adapt anti-corruption modules, or to integrate anti-corruption content with existing curricula, with specific reference to MBA programs. A free-standing course is vital to the successful integration of anti-corruption topics into the management curriculum. Fifteen to twenty years ago, when business ethics was emerging as a credible discipline and one to which students should be exposed, the initial method (where it could be found) was to discuss the ethical dimensions of issues that arose in existing subjects. These treatments were superficial because they lacked