1

2016

BASSESSMENT REPORT MOZAMBIQUE

EXECUTIVE SUMMARYFebruary

222

[ MAP - Consult, Ltd.] [ CPI]JosÉ Jaime Macuane Lazaro Mabunda AnastÁcio Bibiane

3[ MAP - Consult, Ltd.] [ CPI]JosÉ Jaime Macuane Lazaro Mabunda AnastÁcio Bibiane

ThisreportwasproducedbytheCentrodeIntegridadePúblicaaspartofaprojectled by theTransparency International Secretariat with funding from the SiemensIntegrityInitiative.FinancialsupportforthereportwasalsoprovidedbytheTonyElumeluFoundation.

Researchers:JoséJaimeMacuane,LázaroMabunda,AnastácioBibiane

Consultant:CarlitosZunguene(AccountingandAudit)

Copyright:CentreforPublicIntegrityMaputo,Mozambique

February2016

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ACKNOWLEDGEMENTSThe Centre for Public Integrity and the research team would like to acknowledge the contribution of the following entities and individuals who made this research report possible:

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• TransparencyInternationalSecretariat,especiallyKatjaBechtel,SanthoshSriva-nasanandSusanCote-Freemanfortheirguidance,supportandinputsfromthebeginningoftheBICAprocessandthroughouttheresearch,uptotheproductionofthisreport.

• Mr.CarlitosZungueneforhisassistanceincollectingdataandprovidinginputsonreviewingaccountingandauditmatters.

• ThevaluablecontributionsbymembersoftheNationalAdvisoryGroup,repre-sentativesofvariousorganizations,namely:MariaRitaFreitas(MinistryofIndustryandCommerce/DirectorateofSupport tothePrivateSector),CarlosHenriques(AssociationofCommerce, IndustryandServices–ACIS),AntónioSouto(GAPI),Confederation of Business Associations (CTA), Adriano Boane (Attorney-GeneralOffice – PGR), Plínio Fonseca (Institute of Directors of Mozambique – IoDmz),OdeteTsamba (StateShareholdersManagement Institute– IGEPE), JoséMacar-ingueandElisaSamuel(TheMozambicanAssociationofJudges),DiasPereira(TheNationalAssociationofLegalExperts),theTaxAuthority,theEmbassyofGermany,ItalianCooperation,theEmbassyofPortugalandtheAssociationofAccountantsandAuditors.

• Ms.CatherineHindsandMrs.PamelaRebelofortheirreviewofdraftreportsandtheirvaluableinputsandsuggestionsforimprovement.

• Alltheintervieweesandinstitutionsvisitedfortheirvaluablecontributionsandpatiencewhen interactingwiththeresearchteam,someofwhompreferredtoremainanonymousbutcontributedequallyimportantinputsandinsights.

• Finally,theCIPmanagement,especiallyDr.AdrianoNuvungaandMr.StélioBila,andtheadministrativeteam(Ms.NéliaNhancumeandAidaMacuácua)fortheirsupportandassistancethroughoutthelongresearchprocess,providingthenec-essaryworkingconditionsthatmadethisstudypossible.

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The Business Integrity Country Agenda (BICA) is a new initiative developed byTransparency International (TI) that seeks to reduce corruption in the businessenvironment.TheBICAinitiativecomprisestwostages:first,anassessmentofthebusinessintegrityenvironmentinthecountry,resultingintheBICAAssessmentReportand,second,thetranslationoftheassessment’skeyfindingsintoanopera-tionalreformagendatobeimplementedthroughcollectiveaction.BICAisbasedontheideathatcollectiveaction,involvinggovernment,thebusinesssectorandcivilsocietyismoreeffectiveinpromotingbusinessintegritythanactionsbyindi-vidualstakeholdersorstakeholdergroupsactingalone.Theinvolvementofthesethreestakeholdergroupsisthuscrucialinbothstages.

TheBICAAssessment,thefocusofthisreport,isorganisedaccordingtothethreemainstakeholderareasthatformacountry’sbusinessintegrityenvironment:thepublicsector,thebusinesssectorandcivilsociety.Thesearedividedinto15the-maticareas,comprisingatotalof51indicators.Theassessmentinvolvesscoringandattributingacolourcodetoeachindicator,basedoncompliancewiththere-quirementsofthequestions.Thescorerangeisasfollows:0orredfornopositiveanswer;25ororangewhenfewrequirementsaremet;50oryellowwhenhalfoftheanswersarepositive;75oryellow-greenwhenmostoftherequirementsarepresent;and100orgreenwhenallrequirementsaremet.

The BICA Assessment Report Mozambiqueisthefirstofitskind.Itwascarriedout by theTI national chapter, the Centre for Public Integrity (CIP).The assess-ment is based on evidence gathered from multiple sources: legislation, officialdocuments,studies,primarydata,stakeholdersandinterviewswithexperts.Theprocess includedtheselectionofaNationalAdvisoryGroup(NAG),comprisingrepresentativesofallthestakeholdergroupsanddonors,whowereresponsibleforvalidatingtheresearchfindingsandpresentingrecommendationsoncollec-

THE BUSINESS INTEGRITY COUNTRY AGENDA (BICA) Initiative

EXECUTIVE SUMMARY

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RESULTS of the BICA

Assessment Report Mozambique

Public Sector

Mozambiquehassignedandratifiedthemaininternationalandregionalanti-cor-ruptionconventions:theUnitedNationsConventionAgainstCorruption(UNCAC),theAfricanUnionConventiononPreventingandCombatingCorruptionandtheSouthern Africa Development Community (SADC) Protocol Against Corruption,andhasmadeaconsiderableefforttoincorporatetheseinstrumentsintoitslegalframework.However,enforcementisstillproblematic,duetoweakimplementa-tioncapacityandweakincentivesforthepromotionofbusinessintegrity.Public sector thematic areas related to business integrity cover issues such asbribingpublicofficials,commercialbribery,money laundering,economiccom-petition, accounting and audit, undue influence, public tendering, and tax ad-ministration.Inmostoftheseareasthecountryhasalegalframeworkinlinewithinternationalstandards.

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Scores are represented graphically below.

1

1.1

1.1.1

1.1.2

1.1.3

1.2

1.2.1

1.2.2

1.2.3

1.3

1.3.1

1.3.2

1.3.3

1.4

1.4.1

1.4.2

1.4.3

1.5

1.5.1

1.5.2

1.6

1.6.1

1.6.2

1.6.3

1.7

1.7.1

1.7.2

1.7.3

1.7.5

1.7.6

1.8

1.8.1

1.8.2

1.8.3

1.8.4

1.9

1.9.1

1.9.2

1.9.3

Public Sector

Prohibiting commercial bribery

Lows prohibiting commercial bribery

Enforcement of Laws prohibiting bribery commercial bribery

Capacities to Laws prohibiting commercial bribery

Prohibiting laundering of proceeds of crime

Laws prohibiting laundering of process of crime

Enforcement of laws prohibiting laundering

Capacities to enforce laws prohibiting laundering

Prohibiting collsion

Laws prohibiting collsion

.Enforcement of laws prohibiting collusion

Enforcement of laws prohibiting collusion

Whistleblowing

Whistleblower laws

Enforcement of whistleblower laws

Accounting,auditing & disclosure

Accounting and auditing standards

Enforcement of accounting and auditing standards

Professional Service Providers

Laws on Political contributions

Enforcement &Public disclosure on politica

Laws on lobbying

Public Procurement

Operating environment

Integrity of contracting authorities

External safeguards

Regulations for the Business Sector

Taxes and Customs

Operating Environment

Integrity Tax Administration Authorities

External safeguards

1007550250

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Publicsector legislation prohibits the bribery of national public offi cialsanduseoftheirposition forundueadvantage (e.g.PublicEthicsLaw–16/2012),but it isnotex-plicitaboutforeignpublicofficialsdealingwiththecountry.Commercial bribery is also prohibited,andgoesbeyondfinancialtransactionstoincludeeconomicparticipationinbusinesses.Inbothcases,thereisnoevidenceofeffectiveness.Theperceptionthatcor-ruptionishighinthecountryhasremainedstableoverthelasttwoyears,andthejusticesystem’sperformancewithregardtocorruptioncaseshasnotimproved,despitethefactthatthecapacityofthecentralandprovincialAnti-CorruptionOfficeshasimproved,withrising human resources and budget allocation over the last four years.Thus, between2010and2014,theratioofcasesperpublicattorneyintheAnti-CorruptionOfficeswas6to10timesfewerthanthoseoftheordinarypublicprosecutors.Nevertheless,thenum-berofcorruptioncasestakentocourtisstilllow:only11%ofthecasesdisclosedin2014.Thesedatacouldsuggest three things: i) that resources in theAnti-CorruptionOfficesarenotbeingusedefficiently;ii)thatthebacklogofcasesinthejudicialsystemmightbeaffectingthenumberofcorruptioncasestakentocourt;iii)thatdespitetheincreasedre-sourcesallocatedtoanti-corruptionagencies,politicalwillcouldhindertheenforcementofcorruptionlegislation.Anadditionalelementisthat,althoughtheinformationoncor-ruptioncaseshasimproved,thedatapresentedintheAttorneyGeneral’sReportsdonotdifferentiatebetweenthetypesofcorruptiondefinedinthelegislation,makingitdifficulttoidentifythekindofcasesbeingheard.

Mozambiquehasenactedstronglegislationprohibiting laundering of the proceeds of crime (Laws 14/2007; 14/2013), and international conventions have also informedenactmentof theanti-corruption legislativepackage,which includes theVictims and Whistle-blowers Protection Law(Law15/2012).

LegislationoncapitallaunderingincludesthecreationoftheOfficeforFinancialInforma-tion(GIFIM),whichisaninvestigativebody,andamulti-sectoralcommission,comprisingtheCentralBankandtheMinistriesofFinance,JusticeandInterior,amongothers.WhilstGIFIMhasgoodinvestigativecapacity,follow-upofitsworkishamperedbytheweaknessofotherbodies,namelytheCriminalInvestigationPolice.

The whistle-blower protection legislation only focuses on protecting victims and wit-nessesinabroadsense,anddoesnotaddresssituationsthatcanoccurinthebusinessenvironment.Forexample, itdoesnotprovideguidanceor instructionsonorganizinganeffectivesystemofwhistle-blowerprotectionwithintheorganizationalenvironment.ThelawincludesthecreationofaCentralOfficeforVictimProtection,notyetestablished,which is responsible forenforcingandcontrolling the implementationofmeasures toprotectvictimsandwhistle-blowers,andprepareimplementationreports.

Thus,theabsenceofregulationsfortheabove-mentionedlawsandtheweakcapacityofenforcingagencies,suchasthejudicialsystem,limittheireffectiveness.

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Thecountryadheres to international accounting and auditing standards, and therelatedlegislation(Decree70/2009)is inlinewiththeInternationalFinancialReportingStandards (IFRS). However, their application is still limited to a few companies, amongthemthoselistedinthestockmarket,financialsectorcompaniesandpublicenterprises.The MozambiqueTax Authority (ATM) is responsible for licensing and the professionaloversightofcompaniesandindividualprofessionals.TheregulatoryenvironmentinthisareahasbenefittedfromtherecentcreationoftheAccountantsandAuditorsAssociation(OCAM),whichcertifiesandexertssomeoversightoverprofessionalconductinthisfield.Thisishelpingtoimprovetheprofessionalismofauditorsandaccountants.Nevertheless,theTaxAuthoritydoesnothavethenecessarycapacitytoauditandinspectcompaniesandtocarryoutitsprofessionaloversightrole.Withitslimitedcapacity,theTaxAuthor-ity’sinspectionandauditactivitieshavetodatefocussedmoreonfindingviolationsoftaxlegislationtoimprovetaxcollection,thancheckingcompliancewithaccountingandauditregulations.Consequently,despitetheirmandateinthisarea,publicentitiesarenotcontributingtocreatingincentivesforcompaniestocomplywithinternationalaccount-ingandauditstandards.

Procurement(Decree15/2010)andcompetition legislation(Law10/2013)prohibits and creates restrictions on collusion,withtheobjectiveofpromotingfaircompetitioninpublictenderingandtheefficientuseofpublicresources,aswellasthedevelopmentofasoundmarketeconomy.Legislationonprocurementspecificallyprohibitscollusionandthecompetitionlawprohibitstheconcentrationofcompaniesthroughmergersandacquisitionstoinfluencepricesandoutputsartificiallyinspecificeconomicareas.Italsomakesmandatorytheinclusionofananti-corruptionclauseinpubliccontracts,includesheavy sanctions, suchasbanningcontractswithpubliccompanies, and incentives forcompaniestodisclosecasesofviolationofprocurementrules,suchasreducedpenalties.

TheFunctionalUnitfortheSupervisionofAcquisitions(UFSA),theoversightbodyforthisarea,publishesonitswebsiteablacklistofcompaniesinvolvedinwrongdoing.However,itsweakcapacityingeneral,andsupervisorycapacityinparticular,allowforabusivere-coursetodirectcontractingintheoverallpublicsectorandnon-transparentpractices.

Contractingunitsinpublicagenciesinvolveofficialswhoarealsoengagedinplanningandevendecision-makingonpublicexpenditure,andtherearedeficienciesinthedraft-ingofsoundbiddingdocuments,suchastechnicalspecificationsfortheprocurementofgoodsandservices.Thissettingunderminestransparencyandtheefficientfunctioningofpublicprocurement.Businessassociations,amongthemtheBuildingContractorsAs-sociation(whichdidsopublicly inameetingwiththegovernment),acknowledgethatcorruption in public procure ment is high. Combined with the delay in setting up theCompetitionAuthoritytosuperviseeconomiccompetition,thismeansthatenforcementofthislegislationisweak.

Regardingundue infl uence through political funding, sponsorships, lobbying and confl ict of interest, political contributions are regulated through the political parties(Law7/91)andtheelectorallaws.Thislegislationincludestheobligationofpublicdisclo-sureandreportingonpoliticalcontributionsbythepublicandprivatesectors.Neverthe-less,themonitoringofpoliticalfundinghasbeenlimitedtoreportingonthepublicfundsallocatedtoelectoralcampaigns. ThePublicEthicsLawdefinesandplacesrestrictionsonconflictsofinterestforpublicservantsintheirrelationwiththebusinesssector,suchasquarantineor“cooling-off”periods.Nevertheless,enforcementhasbeenweak,andex-amplesofpublicofficialsinvolvedinbusinessesthatimplyconflictofinteresthavenotbeenpunished.PublicEthicsCommissions,entitiesresponsibleforoverseeingconflictofinterestinthepublicsectorhavebeencreated,butarenotyetoperational.AsaboutonethirdofpublicofficialswhoshouldpresenttheirDeclarationofAssetshavenotyetdoneso,thisreducesthepossibilityofverifying,preventingorimposingsanctionsonpotentialcasesofconflictofinterest.LobbyingactivitiesarenotregulatedinMozambicanlegisla-tion.

Finally, taxes and customsweremerged intotheMozambiqueTaxAuthority (ATM) in2006aspartofreformsinthisarea(Law2/2006), inlinewiththeinternationaltrendofcentralizing tax administration for efficiency purposes. ATM is an autonomous agencyandhasasetofinternalcontrolmechanismsandchannels

for thepublic todenouncecorruptioncases,and itsexternalchecksandbalancesarethose of the public administration, such as the Administrative Court, whose oversightcapacity is relativelyweak.ATMannualreportsshowthat internalcontrolentitieshavebeen active in investigating internal corruption and tax evasion cases, some of which

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have been referred to the judiciary for follow-up. However, this does not prevent cus-tomsfrombeingconsideredanareapronetocorruption.Thus,despiteinternalcontrolmechanisms,giventhatpublicadministrationexternalcontrolmechanismsliketheAd-ministrativeCourtare relativelyweak, thisentitystilloperateswithouteffectivechecksandbalancesandsafeguards.

Mozambique’slegalframeworkisinlinewithinternationalgoodpractices.However,itsineffectivenessderivesfromacombinationofmultiplefactors,amongthem:noregula-toryframeworktomakethelawsoperational,weakcapacitytoenforceregulations,duetoinadequatemandates,poorchecksandbalances/safeguardsforautonomousinstitu-tions,weakorabsentadministrativestructuresforimplementationandlackofresources(financialandhuman),andinsomecaseslackofpoliticalwilltodealwithsensitiveissues,likecombatingcorruption.

Moreover,giventhecountry’srelativelyrecentsocialistpast,theMozambicanbusinesssectorhasverystrongandhistoricallinkageswiththepublicsector.Politicalconnectionsplayanimportantrole,andstate-ownedenterprisesarestillimportantintheeconomy,inacontextofaverynarrowproductionbase.Thismeans that there is limited incen-tiveforcompaniestopromotepublicintegritythroughrestrictionsonconflictofinter-est,transparentpublicprocurementandtheadoptionofsounddisclosureandreportingstandards.However,thereisgrowingawarenessthatcorruptionharmsbusiness.Inthisregard,businessassociationsareadoptingbusinessintegritycodesofconduct,althoughstillwithlowadherencebycompanies.Thedialoguebetweenthegovernmentandcivilsocietyisalsoresonatingthisincreasingawarenessoftheneedtofightcorruption,andinAugust2015bothsidesagreed to include in theprivatesectoractionplana setofactivities related to this area, among them the commitment of the business sector todenouncecorruptioncasesandcompaniesthatabandonpublicworks.Thiscontextpro-videsentrypointsfortherecommendationsbelow.

In the short term:

• PublicAttorneyOfficesshouldimprovetheinformationoncorruptionintheiran-nualreporting,identifyingthetypeofcorruptioncasespresentedandtakentocourt,accordingtothetypologypresentedinlegislation.Thiswillallowforabetterunder-standingofthetypeofcorruptionsubjecttosanctionsandthechallengeslyingahead,forfurtheraction;

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• Inthecontextoftheongoingpublicandprivatesectordialogue,identifycriticalareasandincludeinannualplansmeasurestoimprovepublicintegrity,particularlyinareasofinterfacewithbusiness.Examplesoftheseareasare:publicprocurement(es-peciallydirectcontracting)andconflictofinterest(monitoringofcooling-offperiodsforpublicservants);

• PublicEthicsCommissionsincludeintheirmonitoringandreportingprioritiescas-esofconflictofinterestinvolvingtheinterfacebetweenpublicsectorandbusiness,initiallytoraiseawarenessaboutthisproblem,andsubsequentlyforsanctions.

In the medium term:

• Regulate the Public Ethics and theWhistle-blower Protection laws, to allow formoreclarityintheenforcementofconflictofinterestandwhistle-blowerprotectioninthepublicandbusinesssectors;

• Revise procurement legislation to improve the existing framework for internalchecksandbalancesandincludeexternalchecksandbalances(e.g.civilsocietypar-ticipationinoversightandmonitoringpublicprocurement);

• Improvetheorganizationalcapacityofbusinessandpublicintegrityenforcementagencies in the areas of procurement (UFSA), contracting units in public agencies,conflictof interest (PublicEthicsCommissions),protectionofwhistle-blowers (Cen-tralOfficeforWhistle-blowerProtection),applicationoftheIFRSs(TaxAuthority),andpunishing illicitbusinesspractices (thePublicAttorneyOfficesandthe judicial sys-tem);

• ImprovethecapacityoftheCriminalInvestigationPolice,thePublicAttorneyOf-ficesandtheJudicialSystemtofollowupGIFIMinvestigations;

• Government,civilsocietyanddonorsupportforspecialisttrainingforjudgesandthecreation(implyinglegalrevision)ofspecificsub-sectionsincriminalcourtstodealwithcorruptioncases.

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The scores are represented graphically below.

Business Sector

Unlikethepublicsector,localenterprisesdonothavethesameexposure,stimulusandability toadoptpoliciesandpractices in linewith international standards.Some fac-torsthathaveplayedaroleinfosteringpoorstandardsofbusinessintegrity,include:i)theconcentrationofexportsandthefewopportunitiesforlinkageswithmultination-alsandmegaprojectsinafewenterprises;ii)aweakmarketwithlimitedbusiness-to-businessrelations;andiii)weakenforcementofintegritystandardsinthepublicsectorinMozambique. Inthiscontext, relatively fewcompaniesoperate inanenvironmentthatcreatespositiveincentivesforgoodmanagementstandardsandthepromotionofbusinessintegrity.

Thisstakeholderareaassessesbusinessintegritybasedonthefollowing:integrityman-agement, auditing and assurance, transparency and disclosure, stakeholder engage-ment,andtheroleoftheBoardofDirectors.

2.

2.1.

2.1.1.

2.1.2

2.1.3

2.1.4.

2.2.

2.2.1

2.2.2

2.2.3

2.3

2.3.1

2.3.2

2.3.3

2.3.4

2.4

2.4.1

2.4.2

2.4.3

2.5

2.5.1

2.5.2

2.5.3

Business Sector

Integrity management

Provision of policies

Implementation of practices

Whistleblowing

Business partner management

Auditing and Assurance

Internal control & monitoring structures

External Audit

Independent assurance

Transparency & Disclosure

Diclosaure on organizational structures

Disclosure on organizational structures

Contributions, sponsorships & lobbying activities

Stakeholder Engagement

.Stakeholder relations

Business-driven anti-corruption initiatives

Business associations

Board of directors

Executive remuneration

1007550250

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Business integrity management mechanismsaremorefrequentinsubsidiariesofmultinationalcompanies,whichareexposedtoamoredemandingandrig-orousenvironmentthatincludesoperatingindiversemarkets,accountabilitytoshareholdersandtheavailabilityofreliableandattractiveinformationforpotentialinvestors.Somecompaniesinthisgrouphavethemostvisibleandsoundsetofanti-corruptionpoliciesandprogrammesthatareapplicablealsototheirsuppli-ersandbusinesspartners. IGEPE, theStateShareholdersManagement Institute,initsdocumentsstimulatesstate-ownedcompaniestoadoptbusinesscodesofconductandsoundcorporategovernancepractices.

However,inpracticeIGEPE’srecommendationsarenotadoptedbythepublicly-ownedcompanies.Somebusinessassociationsandorganizationshaveadoptedandpromotebusinessintegritytools,butstillwithlowadherencebytheirmem-bership.Whistle-blowingmechanismsarenotexplicitinmostofthecompanieswith integrity programmes, for example, how to handle information on illicitpractices and protect whistle-blowers. Broadly, business integrity managementisweak.Whereitexists,asinmultinationalsubsidiaries,attemptstoextenditsap-plicationtobusinesspartnersandsuppliersisnotcontributingtodisseminatingthesepractices,asitsadoptionislimitedtodirecttransactionsbetweenbothpar-ties.Moreover,inthesamecases,follow-uponimplementationisalsoveryweakandthereisnopubliclyavailablereportingonintegritymanagement.

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Audit and certification practicesinMozambicancompaniesfollowinternationalstandards(IFRS),notnecessarilybecausefirmschoosetodoso,butbecauseregu-lationsarealignedwithinternationalpractices.PublicLimitedcompanies(thosewhosesharesaretradedinthestockmarket),shouldhavetheirfinancialreport-ingcheckedbyexternalauditors.UnderLaw6/2012publicly-ownedcompanies,musthavetheirfinancialstatementscheckedbytheirAuditBoards,aswellasbyinternalandexternalauditors.Onthewhole,allthepublishedannualandfinancialstatementsofpublicandbigprivatecompaniesarecheckedbyexternalaudits.Theavailablefinancialreportsofmultinationalsusuallycovertheirglobalopera-tions,andinformationontheirnationalsubsidiaries isvery limited.Thebankingsector isprobablytheareawiththemostconsolidatedfinancialreportingprac-tices, and with easily accessible documents.Weak enforcement capacity in thepublicsectorconstrainsthewidespreadapplicationofthesepracticesinthebusi-nesssectorandacontributiontobusinessintegrity.

Transparency and disclosure on anti-corruption programmes contribute tomaking companies more accountable. Reports on the implementation of anti-corruptionprogrammesarenotavailableoreasilyaccessibletothepublic.Noneofthesamplecompanieshadareportonthe implementationoftheir integrityprogrammesontheirwebsites.Charitablecontributionsandsponsorshipsarenotincludedinmostfinancialreports.Somemultinationalspresentthistypeofcon-tributionintheir“sustainabilityreports”,butwithoutdetails. InMozambiqueit ismandatoryforcompaniestopresentallrelevantinformationtotheirshareholders(CommercialCode,Law2/2009).Theyarealsosupposedtoprovidefinancialinfor-mationtotheemployeerepresentatives,tobeusedintheannualtripartite(gov-ernment-tradeunion-businesssector)annualsalarynegotiations.Insomecases,theannualgeneralmeetingsofcompaniescanincludeemployeerepresentatives.Nevertheless, this does not guarantee that the company information is madeavailabletotheemployees,asemployeerepresentativesareco-optedandhideinformationfromtheirpeers.UndertheRighttoInformationLaw(34/2014),publicentities,includingpublicly-ownedenterprisesorcompanieswherethestateisashareholderandprivateentitiescontractedbythestateorbenefittingfrompublicresources,mustpublishinformationconsideredofpublicinterestormakeitavail-ablewhenrequested.However,theregulationsofthislawwereonlyapprovedinDecember2015.Thislegislationbroadenstherangeofcompaniesthatcancomeunderpublicscrutiny,suchasthoseinvolvedinpublic-privatepartnerships,publicconcessions and contracts.Taking into account the historical close relation be-tweenthepublicsectorandnationalcompanies,thisisabigopportunitystilltobe(andworthbeing)explored.

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Thereissomestakeholder engagement in anti-corruption initiatives,drivenbymembersofbusinessassociations.Nostakeholdersoutsidethebusinesssec-torareinvolved.Thetwomainbusinessassociationsinthecountryhavedifferentsituations.TheCommercial,IndustrialandServicesAssociation(ACIS)hasaCodeofBusinessConduct,withsomememberssignedup,whereastheConfederationofBusiness/TradeAssociations(CTA),isstillintheprocessofapprovingthisinstru-ment.The Institute of Directors of Mozambique (IoDmz) a business entity con-cernedwithcorporategovernanceandbusinessintegrityissues,hasdevelopedaBusinessCodeofConduct,andaBusinessPactAgainstCorruption(BIPAC)forPublicProcurementandPoliticalFinancing,butstillwithverylowadherencebyitsmembers.

AccordingtotheCommercialCode,theBoard of DirectorsofpubliccompaniesandofprivateandpubliclimitedcompaniesareaccountabletotheAnnualGen-eralMeetingor,inthecaseoftheformer,totheAuditBoardandtotherelevantstateentities.Salariesofmanagersareestablishedonanindividualbasis,result-ing from negotiations with the company. This means that in most companiesneither thesalariesnorthecriteria forestablishingthemarepublic.CompanieswithaCodeofConductusuallyhaveconflicts of interest definedandregulat-ed.Publicly-ownedenterprisesaretheoreticallygovernedbytheGuideonGoodPracticesof theCorporateGovernanceCode,adoptedby IGEPEand thePublicEthicsLaw(16/2012),whichincludeprovisionsonconflictofinterest.Thisguiderecommendsthedefinitionofclearcriteriafortheremunerationofexecutiveandnon-executivemembersoftheBoardofDirectors.Italsorecommendsthepubli-cation,atleastinaggregateterms,oftheboardmembers’remuneration.However,inthepublicsectortheenforcementoftheseinstrumentsisweak.Disclosureofsalariesofmanagersintheprivatesectorisalsonotcommon.

Generally,companieshavemanygapsinbusinessintegrityindicators.Thesitua-tionismorecriticalamongnationalcompanies.Publicly-ownedcompanieshave

18

bettertransparencyanddisclosurepracticesthanprivateones,althoughthisdoesnotmeanthattheyarebetterintermsofbusinessintegrity.Actually,itisimportanttobearinmindthatdisclosureofthesecompanies’financialreportsismandatory.Thepointspresentedhereleadtotwoinsights.Thefirst isthatthetendencyofmultinational enterprises and their subsidiaries to perform better is due to themoreheavilyscrutinizedcontextinwhichtheyoperate.Thesecondinsightisthattherelativelybetterperformanceofpublic-ownedcompaniesstemsfromthele-galobligations,andthecountry’shistory,whentheseenterprisesweredominant,andthenationalbusinessclass isstillnew,undercapitalized,andstill succumbstothewoesofthemarket,includingcompetingtoparticipateinthestate’ssup-plychain,withaweakrecordofintegritymanagement.Despitetherelativebetterperformanceofpublic-ownedenterprisesinsomeaspects,theystillperformpoorlywithregardtoaccountabilitytocitizens,theirmainshareholders.Politicalinfluenceandacultureoflackoftransparencyinthepublicsectorplayaroleinthisperfor-mance, but weak enforcement of existing legislation also has considerable influ-ence.Forexample,publicly-ownedcompaniesaresupposedtoreporttoParliamentthroughtheinclusionoftheiraccountsintheannualGeneralStateAccountsthatareformallyapprovedbythelegislature.TheiraccountsaresubjecttoexternalauditbytheAdministrativeCourtand,bylaw,auditreportsmustbepublished.

Thus,theseinsightsleadtothefollowingrecommendationsforthisstakeholderarea:

In the short term:

• Businessassociationsshouldworkwithcompanieswithbusinessintegritymanagement mechanisms to encourage them to report and share publiclytheirexperiencesofimplementinganti-corruptionpoliciesandprogrammes;

• Asthereisawidespreadunderstandingamongbusinessassociationsthatlocalcompaniesdonothavestrongincentivestohaveintegritymanagementprogrammes,donors,governmentandcivilsocietyshouldsupportthebusi-nesssectoringeneral,andassociationsinparticular,inidentifyingopportuni-tiesandrisksforcompaniesandpromotingbusinessintegrityprinciples.Thisexercisewillinformthedefinitionoffurtherandmoresector-specificinterven-tionsinthisarea.

In the medium term:

• Supportandstrengthentheroleofbusinessassociationsinpromotingin-tegrity, transparency, reporting and disclosure standards among their mem-bers,byreallyimplementingexistinganti-corruptioninstrumentsandadopt-ingIFRSs;

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• Improvetheresponsivenessandaccountabilityofpublic-ownedenterpris-estocitizensthroughstrongerinterventionbytheAdministrativeCourtandParliamenttoguaranteecompliancewiththeexistinglegalframework;

• Supportthedevelopmentofnationalcompanies’capacityforgeneralandintegritymanagement.Thisimpliessupportingtheadoptionofmanagementandreportingstandards(accountingandauditing)byabroadersetofcompa-nies,inlinewithexistinglegislation;

• Civilsocietyandgovernmentshould identifyandlistcompaniesanden-tities(publicandprivate)subjecttothedisclosureof informationobligationundertheRighttoInformationAct.

Civil Society

CivilSocietycancontributetopreventing, reducingandrespondingtocorrup-tion in the business sector providing broad societal checks and balances, suchastheexistenceandeffectivenessof independentmediaandtheengagementofcivilsociety inpromotingandmonitoringbusiness integrity-related issues incompanies.

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Historically,civilsocietyinMozambiquehasplayedtheroleofoversightandwatch-doginrelationtothepublicsector,andnotsomuchthebusinesssector.

Mozambiquecombinessmallvibrantprivately-owned independent mediaandapublicmediasectorwithawidecoverage(mostlyradioandtelevision)through-outthecountry,butsubjecttostrongpoliticalcontrol,whichreducesitsautono-my.Inthecaseoftheprivatemedia,inaneconomyheavilydependentonthestateandcontrolledbypoliticalelites, independentmediafaceseriouschallengesof

The scores of this stakeholder’s area are presented below.

3.

3.1.

3.1.1.

3.1.2

3.1.3

Civil Society

Civil Society broad checks and balances

Independent media

Civil society engagement on business integrity

Civil Society monitoring of business integrity

1007550250

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financialsustainabilityandprofessionalization.Thereisnoconsistentandsys-tematicreportingoncorruptionintheprivatesectorbythemediathat,alliedwiththeirweakprofessionalism, limits theircapacity to reporthighly techni-callydemandingissuesthattheysometimesdonotfullyunderstand.

Civilsociety involvement inbusiness integrity ismorevisible intheprocure-mentareaandtheextractiveindustries.Intheprocurementbusiness,profes-sionalassociations(AssociationofProcurementProfessionals)andNGOshavetakensomeinitiatives.Forexample,businessassociationsincludetherevisionofprocurementregulationsintheirdialoguewiththegovernment.CIPhasaresearchlineonprocurementandhasresearchedandwrittenonpublic-privatepartnerships.CivilsocietyparticipatesintheExtractiveIndustriesTransparencyInitiative (EITI)anddoes research.Organizationssuchas the InstituteofEco-nomicandSocialStudies(IESE),CIP,CentroTerraViva(CTV)workonextractiveindustryfiscalissuesandresettlementprocesses,andhavebeenabletoinflu-encegovernmentandcompanydecisions.Themediahaverecentlyreportedonsporadiccasesofcorruptioninpublicenterprises,althoughnotnecessarilycombinedwithasystematicfollow-up.

Ifcivilsocietyistoplayabroaderroleinchecksandbalancesinthebusinessfield,twosubstantialchangesshouldoccur:

• Train journalists to report on business integrity issues, to increase thefrequencyandtechnicalqualityofmediacoverage;

• Promote a more systematic and informed monitoring of the businesssectorbycivilsocietyorganizations.Thiscanbedoneby improvingtheircapacitytodealwithbusinessissuesandbyfosteringstrategicalliancesorcoalition-building among relevant actors, civil society organizations withexperienceingovernancemonitoringandtradeunions,whichhavemoreexperienceindealingwiththebusinesssector.

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[ MAP - Consult, Ltd.] [ CPI]JosÉ Jaime Macuane Lazaro Mabunda AnastÁcio Bibiane

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