BUILDING A CORPORATE ETHICAL CULTURE. TRACKER Unit of measure 1 Footnote SOURCE: Source 2 MALAYSIAN TRANSFORMATION PROGRAMME ANTI-CORRUPTION INITIATIVES

BUILDING A CORPORATE ETHICAL CULTURE

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MALAYSIAN TRANSFORMATION PROGRAMMEANTI-CORRUPTION INITIATIVES

Introduction To Malaysian GTP and aspiration

Corruption Perception Indexes (CPI,GCB,BPI)

Corporate Integrity Pledge (CIP)

How and Why Corruption Perception Exist???

Integrity Pact (IP)

ETPETP

Malaysia’s 10th & 11th Plan Malaysia’s 10th & 11th Plan

To achieve the 2020 Vision, Malaysia introduced…

People First

Performance Now

2009 2010 2011Target 2015

2020 target

0% / Neutral

As percentage of GDP (rebased figures)* forecast**2015 Target as per 10th Malaysia Plan

6.6%5.6%

4.8%3%

4.5% 4%

2012*Target 2013

Gradual Reduction in Fiscal Deficit…

Under Act 637 of the Loan (Local) Act 1959, and Act 275 of the Government Investment Act 1983:

Combined loans raised domestically should not exceed a ceiling of 55% of the nation's GDP. Current figure:

53%

Act What it says

Note: 2012 MoF estimate

Malaysian National Debt is Governed by Law

&

To Become A High-Income Nation,

We Need:

We need “Drivers” to ensure focus on high-impact areas

FOCUS

NKEAs

We Need “Enablers” To Ensure

Competitiveness

COMPETITIVENESS

51 Strategic Reform Initiatives 12 National Key Economic Areas

SRI: Competition, Standards & Liberalisation

Competition Act Enforced on 1 January 2012

Remove Anti-Competitive Agreements

Remove Abuse Of A Dominant Position

X

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People First Performance Now

1MALAYSIA

Fighting Corruption

Low Income Households

Reducing Crime

EducationRural Basic

Infrastructure

Urban Public Transport

1 2 3

4 5 6

The Government Transformation Programme (GTP) launched to support Malaysia’s transformation into developed & high-income nation

GRAND CORRUPTION

• Prevent the abuse of power and

public resources by politicians and

senior civil servants

*Enhance the delivery of justice

against corruption

GRAND CORRUPTION

• Prevent the abuse of power and

public resources by politicians and

senior civil servants

*Enhance the delivery of justice

against corruption

GOVERNMENT PROCUREMENT

• Reduce leakage in the funds allocated for

national development and

operations

* Ensure fairness in the award of

contracts

GOVERNMENT PROCUREMENT

• Reduce leakage in the funds allocated for

national development and

operations

* Ensure fairness in the award of

contracts

REGULATORY/ ENFORCEMENT

AGENCIES

• Regain public confidence in our

enforcement agencies

* Enhance competitiveness of

Malaysia as a place to do business

REGULATORY/ ENFORCEMENT

AGENCIES

• Regain public confidence in our

enforcement agencies

* Enhance competitiveness of

Malaysia as a place to do business

Sub NKRA

ASPIRATIONSReduce corruption through enforcement and compliance

Enhance transparency to improve our score in Corruption Perception Index (CPI)Improve public perception on the integrity of the government and civil service

CORRUPTION = POWER + DISCRETION – ACCOUNTABILITY – TRANSPARENCYCORRUPTION = POWER + DISCRETION – ACCOUNTABILITY – TRANSPARENCY

Integrity of Civil Service

Legal and regulatory framework

Detection, prosecution and punishment

• Strong commitment and message from our leaders -

‘Zero Tolerance’ for corruption

• No political interference in public administration and

perverting the course of justice

• Checks and balances to uphold independence of

judiciary, legal and law enforcement institutions

• Efficiency and effectiveness of law enforcement agencies

• Transparency and accountability in public

administrations, politics and the business sector

Political Will

Legal & Institutional

Reform

Effective Enforcement

Public Participation

Civil Service Reform

Freedom of Press

• Allow access to information to promote public scrutiny

• Increase awareness of the rights of the people

• Provide channel for people to voice out opinions

• Comprehensive and robust systems and processes to

ensure check and balance

• Institutionalize culture of excellence and integrity

• Strong voice from People to endorse leaders who drive

positive change

• Serve as watchdog to ensure governance

• Report corrupt practices, and assist investigations

Top Down Framework Bottom Up Framework

Base: All respondents (n=640).Q. Which one of these are you most concerned about?

Source: Frost & Sullivan, 2012

Rakyat perceived Grand Corruption, Government Procurement andEnforcement Agency as their Key Concerns

Grand Corruption,

35%

Government Procurement,

17%

Political Financing,

17%

Corruption in enforcement

agencies,

17%

Corruption in regulatory agencies, 6%

Corruption in the Judiciary system, 8%

2010

131%131%

2011

Results have been encouraging!

109%109%

2012

121%121%Overall composite scoring

Reducing Crime

Anti-Corruption

Rural Basic Infrastructure

Urban Public Transport

Low Income Household

Education

Cost of Living

CorruptionCorruption

Figures: 2010, 2011, 2012,2013

Whistleblower

Protection

Corruption Offender

Database

Integrity Pacts

Corruption Courts

Government

Contracts Corporate Integrity

Pledge

6,688government

contracts published online

14 corruption courts

Reduces

600Backlog cases

Whistleblower Protection

11,665reports received,

191Awarded protection

142,268 Integrity Pacts have been signed

1,172corruptionoffenders Publishedin MACC website

441 Companies Signed CIP

Building Blocks showing encouraging results

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Integrity Pact (IP)

CORRUPTION PERCEPTIONINDEX (CPI)

What is the Corruption Perceptions Index (CPI)?

The CPI ranks countries/territories based on how corrupt their

public sector is perceived to be. It is a composite index, a

combination of polls, drawing on corruption-related data

collected by a variety of reputable institutions. The CPI reflects

the views of observers from around the world, including

experts living and working in the countries/territories

evaluated.

Transparency International Malaysia

Is the country/territory with the lowest score the world’s most corrupt nation?

No. The CPI is mostly an assessment of perception of administrative and political corruption. It is not a verdict on the levels of corruption

of entire nations or societies or of their policies and activities. Citizens of those countries/territories that score at the lower end of the CPI have shown the same concern about and condemnation of corruption as the public in countries that perform strongly. Further, the country/territory with the lowest score is the one where public sector corruption is perceived to be most prevalent among those

included in the list. There are more than 200 sovereign nations in the world, and the 2011 CPI ranks 183 of them. The CPI provides no information about countries/territories that are not included.


1 - 56th place/178 countries

Score – 4.4

Constituent Survey - 9

1 - 56th place/178 countries

Score – 4.4


2011 - 60th place/ 183 countries

Score – 4.3


2011 - 60th place/ 183 countries

Score – 4.3


CorruptionCorruptionImproved Transparency International Results

49*

* Score under new methodology is 50/100

Malaysia’s CPI Ranking:

2013: 532012: 542011: 60

2013

50

GLOBAL CORRUPTIONBAROMETER (GCB)

Personal experiences of bribery • The survey asked people if they had come into contact with 1 of 9 identified

services in Malaysia.

• For each of these services they were then asked if they had paid a bribe, identify the services where people were most likely to pay a bribe and the % of people paying a bribe for each service is given as a proportion of people who had accessed that service.

• Those people that did not come into contact with each service were excluded from the analysis.

• The results by service were then aggregated such that a bribe payers was considered someone who had paid for any one or more of the services in the last 12 months.

• Only 1.2% of people have paid a bribe to one of 9 service providers in Malaysia.

BRIBE PAYERS INDEX (BPI)

However, only 2 questions on corruption was taken into CPI survey which dragged us down with the percentage of 2.7%.


Source: Global Corruption Barometer 2010. Percentages are weighted. Figures are calculated for respondents who paid a bribe to the service providers. Groups were defined using cluster analysis.

Countries Rank

Netherlands 1

Belgium 3

Japan 4

Australia 6

Canada 6

Singapore 8

United Kingdom 10

France 11

South Korea 13

Malaysia 15

Hong Kong 15

Taiwan 19

Saudi Arabia 22

Argentina 23

Indonesia 25

Mexico 26

China 27

Russia 28

Malaysia is ranked 15th out of 28 countries with a score of 7.6 out of 10 sharing with Hong Kong, Italy and South Africa.

Survey is about Malaysian traders who paid bribe when doing business abroad.

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Integrity Pact (IP)

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LACK OF TRANSPARENCY

INCONSISTENT ACTION

BAD OR DELAYED DELIVERY SYSTEM

NOT RESPONSIVE TO COMPLAINTS

LIVING BEYOND MEANS

WHY CORRUPTION PERCEPTION EXIST?

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1. Receiving and giving gratification as reward or inducement for favors.

2. Using documents which contain false material particulars for certain pecuniary advantage.

3. Using office or position for personal interest.

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To become A Developed Country

with High Income Nation,

We need to MANAGE

the CORRUPTION PERCEPTION.

HOW???

Encourage Transparency And

Good Governance

Inculcate Good Values

Within The Organisation

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Integrity Pact (IP)

Corporate Integrity Pledge: proposed tools

1i

ii

• unilaterally entered into• pledge to uphold Anti-

Corruption Principles

• To be endorsed by members of Roundtable

• Made available on websites of Bursa and IIM

• bilateral, between parties committing to each other to uphold the Principles

• Target contracts relating to national development etc. – e.g. under Economic Transformation Programme

Appendix I - Integrity pledge

Appendix II - Integrity agreements

Anti-Corruption Business Principles

CORPORATE INTEGRITY PLEDGE (CIP)

31

“a voluntary unilateral declaration –a written commitment by a company that it will

not commit corrupt acts, will work toward creating a business environment that is free from

corruption and will uphold the anti-corruption principles in the conduct of its business and its interactions with its business partners and the

government”

“a voluntary unilateral declaration –a written commitment by a company that it will

not commit corrupt acts, will work toward creating a business environment that is free from

corruption and will uphold the anti-corruption principles in the conduct of its business and its interactions with its business partners and the

government”

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Initiative overviewInitiative overviewTHE CORE PRINCIPLES OF CORPORATE INTEGRITY PLEDGE (C.I.P.)

To promote principles of transparency, integrity and corporate governance

To include anti-corruption elements to strengthen its internal procedures

To adhere to the anti-corruption laws

To eradicate all forms of corruption

To support anti-corruption initiatives by the MACC and the Government

1

5

4

3

2

Corporate Integrity Pledge: proposed governance mechanism

Principles published on Bursa/ SC / CCM/ IIM website

Companies that sign on listed on Bursa website

Agreements signed and accounted for under GTP/ ETP and published on PEMANDU website

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1. Committed in promoting values of integrity, transparency and good governance2. Strengthening internal systems that support corruption prevention3. Compliance of the laws, policies and procedures 4. Zero tolerance on corrupt practice5. Support MACC anti-corruption initiatives.

ANTI-CORRUPTION PRINCIPLES FOR CORPORATIONS

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ENTERPRISE POLICIES AND GUIDELINES ON :

• GIFT RECEIVING

• POLITICAL CONTRIBUTIONS

• CHARITABLE CONTRIBUTIONS/ SPONSORSHIP

• FACILITATION PAYMENTS

• GIFTS/HOSPITALITY AND EXPENSES

• CONFLICTS OF INTEREST

• REFERAL POLICY CORPORATE SOCIAL RESPONSIBILITY (CSR)

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RAISING CONCERNS AND SEEKING GUIDANCE

• Provide secure and available channels through which employees and others able to raise concerns and whistle-blow (without retribution)

(i.e establish an integrity unit)

• Provide guidance in respect of the interpretation of the Principles/ Code

Code of Ethics and Code of Conduct

is a must

71 companies had signed CIP • Among those are:

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SIGNEES OF C.I.P. UPLOADED IN CISM PORTAL

NO

1

2

3

4

5

6

COMPANIES/BODIES SIGNEES

MULTI NATIONAL COMPANIES (MNCs)

GOVERNMENT LINK COMPANIES (GLCs)

PRIVATE LINK COMPANIES (PLCs)

SMALL MEDIUM ENTERPRISES (SME)/INDUSTIRES

NON GOVERNMENT ORGANISATION & OTHERS

GOVERNMENT BODIES

TOTAL

35

47

19

59

4

15

179

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Integrity Pact (IP)

Ministry of Finance issued Integrity Pact directive on 1st April 2010; guidelines on 16 December 2010

• Official invitation to participate in tender/quotations

• Declaration of abstention from bribery – by all parties, at all stages of contracting (including registering as a supplier/ firms)

• Formulation of Code of Conduct

• Contractual provision to abstain from bribery

1

2

3

4

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WHAT IS AN INTEGRITY PACT (IP)?

42

“an agreement between the government, or a government department (the authority, the

project owner) and all bidders for a public sector contract”

“an agreement between the government, or a government department (the authority, the

project owner) and all bidders for a public sector contract”

- An IP is both a document (a legal contract) and a process- An IP is an activity of the CIP- Use in public procurement/contracting- To ensure clean bidding, a level playing field

It contains rights and obligations that all parties will not engage in, pay, offer, demand or accept bribes while carrying out the contract

• A pact between a government office inviting public tenders for any type of contracts related to goods and services and the bidders for the contract

• Undertaking by the principal that its officials will not demand or accept any bribes, gifts etc ., with appropriate disciplinary or criminal sanctions in case of violation

• Statement by each bidder that it has not paid, and will not pay, any bribes in order to obtain or retain the contract

• Each bidder to disclose all payments made in connection with the contract to anybody (including agents and other middlemen as well as family members etc.)

PactPact

Elements of IP

Code of conductCode of conduct

SanctionsSanctions

Independent monitoring

system

Independent monitoring

system

Source: Transparency International

Description

• Bidders are also advised to have a company Code of Conduct (clearly rejecting the use of bribes and other unethical behaviour) and a compliance programme for the implementation of a Code of Conduct throughout the company

• A pre-announced set of sanctions for any violation by a bidder which may include:

– Denial / loss of contract, forfeiture of the bid security and performance bond, liability for damages to the principal and the competing bidders, debarment of the violator by the principal for an appropriate period of time

• The use of arbitration as a conflict resolution mechanism and the instance to impose sanctions

• Use of an independent monitoring body which can be performed by any structure with independence, accountability and credibility

Solutions

IMPLEMENTATION OF INTEGRITY PACT ON MEGA PROJECT

Element of IP Current Status

Legal undertakings etc.

Covered by MoF directive/ directives on Government contracting

Monitoring of bidding process and execution

MACC and Auditor General’s Department are among the body monitoring the implementation.

Arbitration No provision currently; to consider

• The MRT SBK Line project was proposed for full-scale showcasing of Integrity Pact2

NEXT ACTIONS:

1. To include arbitration clause in the next project.

2. To implement IP

on privatisation

project as well.

Role to Play by Employer :

>Reduce Bureaucracy/Red Tape >Simplify Processes >Encourage Reporting on Corrupt Practices or Abuse of Power >Protect Whistle Blower >Know your employee (Be busy body) and take care of their welfare.

Direct interaction between two parties who Direct interaction between two parties who holds a position and involves discretionary holds a position and involves discretionary

power gives opportunity for corruption. power gives opportunity for corruption. Automation is the best solution to reduce Automation is the best solution to reduce

discretion.discretion.246 CCTV installed at 17 entry points involving 12 states

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CHALLENGES

1. PUBLIC APATHY AND EMPATHY - LACK SUPPORT

2. PERCEPTION ISSUES

3. DIFFERENCES IN:- CULTURE & TRADITION – eg. gift giving during festive seasons

- VALUES of the gifts – nominal, modest, non-commercial- LEGAL PRACTICES – anti-corruption

laws, facilitation payments

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'NO GIFT POLICY' BY PETRONAS

BEST PRACTICES

‘WHISTLE BLOWING POLICY’ BY PKNS

WHISTLEBLOWER PROTECTION ACT 2010

IMPACT:

Whistleblowers will be encouraged to report and will receive:

• Protection of confidential information

• Immunity from civil/ criminal suits

• Protection against detrimental action

Dec 15, 2010 – Act came into force

• Smile• Say ‘Thank you’• Respect Others

• Tolerate• UPHOLD INTEGRITY

Putrajaya at night

CONTACT USMalaysian Anti-Corruption CommissionBlock D6, Complex D, Federal Government Administrative CentreP.O Box 600062007 Putrajaya, Malaysia

Tel : 03 8886 7000 Fax : 03 8888 9562 Email : [email protected] SMS : 019-6000696

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The Essential Elements :-

52

- A pact (contract) between the project owner and the main contractor;- An Undertaking by the principal – written declaration that its officials will not demand or accept any bribes;- A statement by each bidder that he has not paid, and will not pay any bribes in order to obtain or retain contract;- An undertaking by each bidder to disclose all payments made in connection with the contract including to third parties (agents/middlemen0 as well as family members;- The explicit acceptance by each bidder that the no-bribery commitment and the disclosure obligation, as well as the corresponding sanction, remain in force for the bidder until the contract has been fully executed;

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- Bidders must have company’s Code of Conduct/Ethics (clearly rejecting the use of bribes and other unethical behavior) and a compliance programe- The use of arbitration as a conflict resolution mechanism and the instance to impose sanctions;- A pre-announced set of sanctions for any violation by a bidder of its commitments or undertakings, including * denial or lost of contract, * forfeiture of the bid security and the performance bond; * liability for damages and performance bond. * debarment of the violator by the principle for an appropriate period of time.- An independent monitoring system, which can be performed with active civil society participation or any other structure with independence, accountability and credibility.

The Essential Elements :-

Documents

BUILDING A CORPORATE ETHICAL CULTURE. TRACKER Unit of measure 1 Footnote SOURCE: Source 2 MALAYSIAN TRANSFORMATION PROGRAMME ANTI-CORRUPTION INITIATIVES