Conference Report | Business Case for Anti-Corruption: Call For Collective Action

AGENDA OF CONFERENCETIME PROGRAM

09:00 – 09:50 Tea & Registration09:50 – 10.00 Welcome Address Dr. Uddesh Kohli, Senior Advisor UNGC10:00 – 10:20 Keynote Address Dr. A. K. Balyan, Member GCNI Governing Council and MD & CEO PLL10:20 – 10:40 UNGC Collective Action Projects Ms. Olajobi Makinwa, Head, Transparency and Anticorruption Initiatives, UNGC10:40 – 10:50 Collective Action Project - India Ms. Shabnam Siddiqui, Project Director, GCNI

10:50 – 11:20 TEA BREAK

11:20 – 13:00 CEO ROUNDTABLE: Moderator: Ms. Olajobi Makinwa, Head, BUSINESS CASE FOR Transparency & Anticorruption Initiatives, UNGC ANTICORRUPTION IN INDIA Discussants: • Dr. A. K. Balyan, MD & CEO, PLL • Mr. Arun Kumar Jain, MD, FLUOR Daniel India Pvt. Ltd. • Dr. Raman Ramchandran, CMD, BASF India

13:00 – 14:00 LUNCH

14:00 – 15:00 Panel Discussion: Strengthening Moderator: Ms. Cristina Albertin, Anticorruption Efforts in Indian Representative, UNODC, Policy Regime in light of UNCAC Regional Office for South Asia

Discussants: • Mr. S. N. Sahu, Joint Secretary, Rajya Sabha • Mr. Kaushik Dutta, Director, TARI • Mr. Mukesh Arya, MD & CEO, Red Flag Oversight Consultancy Services Pvt Limited

15:00 – 16:00 Panel Discussion: Business Case Moderator: Ms. Navita Srikant, for Transparency in Value Chain & Governance and Anticorruption Specialist Supplier Code of Conduct Discussants: • Mr. P. Mani, Chief Compliance and Head Assurance, Dr. Reddy’s Laboratories Ltd. • Mr. Amit Vidyarthi, Lead Ombudsman and Chief Investigator, GE India Industrial Pvt. Ltd • Mr. Arvind Kadyan, CVO, BHEL

16:00 – 16:15 TEA BREAK

16:15 – 17:15 Panel Discussion: Business Case Moderator: Ms. Bulbul Sen, for Transparency in Procurement Chief Commissioner of Income tax and Consultant, CUTS International

Discussants: • Ms. Usha Chandrashekhar, CVO NMDC • Mr. Sandeep Kumar, Director Industry Interface, Fluor Daniel India Pvt. Ltd. • Mr. Amar Prasad, CVO, KRIBHCO

17:15 – 17:30 Summing Up • Ms. Shabnam Siddiqui, Project Director, GCNI

17.30 onwards HIGH TEA

Conference Report, November 28, 2014 Business Case for Anti-Corruption: Call For Collective Action 3

GLOBAL COMPACT NETWORK INDIA organized an Interna-tional Conference on ‘Business Case for Anticorruption: Call For Collective Action’ on Friday November 28, 2014 at The Lalit, New Delhi. The Conference was organized to mark

the successful completion of UNGC – Siemens Integrity Initiative Anti-corruption Collective Action Project in India. The Conference brought together a significant number of champions from the public and private sector, civil society, government, media and academia who discussed the business case for anti-corruption and the value transparency measures hold for companies.

UNGC’s 10th Principle states that “Businesses should work against all forms of corruption, including extortion and bribery”. In furtherance of this principle, UNGC launched the Anti-Corruption Collective Action Projects in five countries – Brazil, Egypt, India, Nigeria and South Africa for a period of four years (2011 -2014) – with financial support from Siemens Integrity Initiative. The aim of the projects was to foster a high-impact collective action platform on anti-corruption by facilitating dialogue between private and public sector and incentivize ethical behavior of businesses.

In the past four years, the India project has taken up pressing transparency issues in the Indian context viz. public procurement, bribery and fraud in the private sector and its trend in the country, ethical business conduct, supply chain sustainability and sports related hospitality.

COLLECTIVE ACTION

November 28, 2014, The Lalit, New Delhi

CONFERENCE REPORT

BUSINESS CASE FOR

ANTI-CORRUPTION

CALL FOR

4 Business Case for Anti-Corruption: Call For Collective Action Conference Report, November 28, 2014

The theme of the Conference BUSINESS CASE FOR ANTI-COR-RUPTION was designed to show-case the impact made by Collec-tive Action Project (CAP) India on some of the pressing issues of corruption in the country. In the Introductory Panel Dr. Uddesh Kohli, Advisor UNGC, welcomed the guests and Dr. A K Balyan, Managing Director and CEO, Petr-onet LNG Limited while giving the Inaugural Address said that at the time when talking about corrup-tion in the corporate world was seen as a taboo, CAP India was successful in getting all the stake-holders on one platform to discuss organizational issues related to graft. Ms. Olajobi Makinwa, Head Transparency & Anti-Corrup-tion at UN Global Compact spoke about the achievements of all the five Collective Action Projects implemented across the globe; Brazil, Egypt, Nigeria, South Africa and India and Ms. Shabnam Siddiqui, Project Director, Global Compact Network India spoke of the specific achievements of CAP India so far and outlined the agenda of the Conference.

INAUGURAL PANELWELCOME ADDRESSDr. Kohli welcomed the Confer-ence participants and spoke at length about the events that led United Nations Global Compact to select India as one of the first countries to implement CAP.

Dr. Kohli further said that when the CAP India started, anti-cor-ruption in business was a new concept in India, and the organi-zation required guidance towards the implementation of the project. An extensive stakeholder mapping was conducted at the beginning of the Project, to gauge the readi-ness of stakeholders to discuss graft. Thereafter a series of semi-nars and workshops were held across the country to share the goals of CAP India and a roadmap developed in an inclusive manner. With the seminars, discussion and interactions, the buy-in of Project goals was ensured. Since 2011, the project has produced litera-ture on anti-corruption, capturing anti-graft practices in the Indian industry and mapping the chang-ing landscape of fraud and bribery in the country.

Dr. Kohli shared that in the begin-ning the project started inter-acting mostly with public sector undertakings, and in due course the project got involved with the government functionary. In the last two years though, the project has received extensive support from the private sector in India, both home-grown and multina-tional businesses.

During the tenure of the imple-mentation of the project, India

Dr. Uddesh Kohli, Advisor, UN Global Compact

(Left-Right) Ms. Shabnam Siddiqui, Dr. A.K. Balyan, Ms. Olajobi Makinwa and Dr. Uddesh Kohli


witnessed a very strong anti-cor-ruption wave which led to the passing of the Lok Pal Bill in the lower house of the parliament. This movement helped the project as anti-corruption became a topic of discussion not just among the classes but also amongst the masses.

INAUGURAL ADDRESS Dr. Balyan stressed that everyone recognizes anti-corruption as a social problem. However corrup-tion and business are very closely related. Business is so intricately connected with corruption that there is a larger responsibility for all the stakeholders to come up with new ways to fight graft and eliminate it. In a global survey by Ernst &Young, it was highlighted that Indians have a soft approach towards corruption. This is the issue which needs urgent atten-tion. In the same study one of the other findings was that on an aver-age 38-40% of Indians have been asked to pay bribe as compared to the global average of 7-8%. This is overwhelming.

Dr. Balyan further shared that in the recent past, Indian ranking in the ‘Ease of Doing Business’ and ‘Corruption Perception Index’, has been dipping to embarrass-ingly low levels. Federation of Indian Chamber of Commerce and Industry (FICCI) did a study on India Risk Survey 2014, which found that one of the biggest threats to Indian economy is from corruption, bribery and fraud. In the first three months of 2014, a number of scams were reported namely; The Indian Railways-Railtel Corporation of India mobile scam, Hindustan Aeronautics Limited and Rolls-Royce defense scam to the tune of INR10,000 crores, Air India Family Fare Scheme scam, Bokaro steel plant recruitment am, to name a few.

Dr. Balyan reiterated that all of these developments indicate that time is ripe to inculcate clean, transparent business systems, to benefit citizens. GCNI’s anti-cor-ruption project has tried to do that by involving a diverse group of stakeholders in its interven-tions. CAP India’s first publication collated best practices followed by Indian businesses to address graft in their organizations. It was an attempt to share best practices, which could be used as models for other businesses to design their own codes of conduct for business operations. The second publication captured trends of

measure of success of any initi-ative can be gauged from the change in attitude and mindset that has been brought amongst its stakeholders. It is important to transform efforts into effec-tive end result. Corruption is an ever involving phenomenon, to address it one should adopt inno-vate ways. The journey of effec-tively implementing the 10th Prin-ciple at GCNI has just begun.

UNGC COLLECTIVE ACTION PROJECTSMs. Makinwa called on busi-nesses to develop policies and plans to align business practices with needs of their communi-ties. Global Compact believes that there is a glaring case for business to fight corruption and companies must work collectively to do so. The Global Compact as a collective action initiative creates enabling environments for companies to better embrace the Global Compact’s 10th Princi-ple on Anti-Corruption.

Ms. Makinwa stated that Collec-tive Action Project and its success

Dr. A.K Balyan, MD and CEO, Petronet LNG Limited

COLLECTIVE ACTION PROJECT AND ITS SUCCESS IN DIFFERENT COUNTRIES, INCLUDING INDIA, HAVE INSPIRED UNGC TO TAKE CONCRETE ACTION”

fraud and bribery in India in the last fifteen years. A topic specific consultation on Procurement was conducted in partnership with United Nations Office of Drug and Crime in New Delhi while another National consultation on Supply Chain was conducted in Mumbai. With the aim to involve younger generation in the fight against corruption, CAP India along with University of Mumbai conducted a national level paper competition; papers were submitted on various anti-corruption topics.

Dr. Balyan concluded that while efforts have been made to fight corruption through CAP, the real


in different countries, including India, have inspired UNGC to take concrete action. UNGC has facil-itated dialogue between govern-ment and companies, as well as learning between companies and sharing of best practices. Work-ing with small and medium enter-prises has empowered vulnera-ble stakeholders to join the fight against corruption and collaborate with UNGC. The Global Compact has also produced e-learning program on the UN Convention Against Corruption, which is avail-able on its website and translated into different languages. This has enabled its use within companies for training their staff and also to use the learnings to develop their own tools and resources. The message is clear – Corruption will not be tolerated in any form. The projects serve as a platform to convene businesses to work together and engage in dialogue, exchange information, share good practices and reinforce commitment to the fight against corruption.

Ms. Makinwa said that collective action provides a framework for a coalition of like-minded stake-holders (industry peers, commit-ted government officials & policy makers, civil society, academics, and business associations) to act together for a common cause.

Collective action has been the hallmark of the Global Compact’s efforts to further anti-corrup-tion and transparency. Collective action can create a more stable business climate by enhancing access to markets and allowing companies to save revenue and profits that would otherwise be lost to bribery. Collective action-led solutions, arrived at by multi-ple stakeholders, have more credibility, ownership, acceptance and their implementation is more sustainable. But collective action is indeed not easy. It requires many things, the most important being trust among companies, which is difficult to secure. This is the dilemma. Global Compact’s

COLLECTIVE ACTION CAN CREATE A MORE STABLE BUSINESS CLIMATE BY ENHANCING ACCESS TO MARKETS AND ALLOWING COMPANIES TO SAVE REVENUE AND PROFITS THAT WOULD OTHERWISE BE LOST TO BRIBERY”

Collective action projects in five countries are bold initiatives that have taken the bull by its horn by laying the foundation for solid collective efforts to address corruption challenges in the countries of implementation.

The five country collective action projects were launched in Janu-ary 2011 in Brazil, Egypt, India, Nigeria and South Africa with the support of the Siemens Integ-rity Initiative, to engage critical stakeholders in concrete efforts to eliminate corporate corrup-tion. All the projects have been working with local businesses, governments, civil society and academia in these countries to create an enabling environ-ment for dialogue, discussion and action against corruption. By facilitating ongoing dialogue between the private and public sector, the projects set the stage and offered an opportunity for a wide range of stakeholders to explore how collective action can create incentives for ethical busi-ness performance, and to discuss areas for further improvement. The Global Compact has proved to be the best incubator for these collective action initiatives.

Ms. Makinwa concluded by saying that these five collec-tive action projects conclude in January 2015. However, the spark of action that has been ignited has the potential to shine brightly and incessantly with the commitment from business – whether local or global – and all key players in the international arena. Ms. Makinwa congratu-lated the GCNI for completing its first collective action project and urged Indian companies to use UNGC tools and resources, increase engagement with the local network and set the tone from the top for zero tolerance of corruption in any form.

Ms. Olajobi Makinwa, Head Transparency & Anti-Corrup- tion at UN Global Compact


PSUs SIGN AN INTEGRITY PACT AND ALL CONTRACT TERMS AND CONDITIONS ARE LAID CLEARLY. IN CASE OF ANY IRREGULARITY, INDEPENDENT EXTERNAL MONITORS CAN BE APPROACHED FOR REDRESSAL”

At a special CEO Roundtable held as a part of the Business Case for Anti-Corruption Confer-ence, convened by the Collective Action Project of Global Compact Network India in New Delhi, top leaders from diverse company backgrounds candidly discussed the importance of ethics and transparency in business opera-tions, as well as the key attributes of a healthy and holistic business establishment. Drawing from their current and previous work experience, the leaders talked about a wide array of issues that have helped grow their organiza-tions sustainably – ranging from respecting and ensuring diver-sity in the business establish-ment to non-negotiables related to gift policies, to responsive management. And prosper these organisations have – BASF will complete 150 years of operations

TONE FROM THE TOP –IN CONVERSATION WITH LEADERS

in January 2015, Fluor Corpora-tion completed 100 years in 2012 while ONGC is a natural leader and always ahead in defining and implementing rules of the game, whether it is to invite UN Global Compact to India or sign the Integrity Pact promoted by Trans-parency International worldwide.

Inefficiency is one of the biggest contributor to corruption both within and outside organizations. The roundtable panelists agreed that employees want to work for a company whom they can trust. As an example, when BASF conducted a brand perception study in which a group of relevant stakeholders were observed in a closed room, within ten minutes the first thing that the stakehold-ers recalled of BASF was that it is an ethical company. Fluor reiterated its belief and experi-

(Left-Right) Dr. A.K Balyan, Ms. Olajobi Makinwa, Dr. Raman Ramchandran and Mr. Arun Jain


ence that suppliers and business stakeholders want to be associ-ated with a company in which they have implicit trust. Also, investors want to put funds in a company in which they have faith, a company which executes business in an ethical manner and enjoys a good reputation. Fluor’s 100 years of operations have strengthened this image of Fluor being an ethi-cal organization.

Compliance StructureDr. A. K. Balyan, member GCNI Governing Council and Manag-ing Director and Chief Executive Officer of Petronet Liquid & Natu-ral Gas (LNG) Limited said that he firmly believes business can be conducted in a better way and that

way is being clean and transpar-ent. He said that it is because of the society that business survives, and as business is a sub-set of the society it should indulge in trans-parent activities that bring bene-fit to the society. The importance of business cannot be under-mined but how the business is conducted is of prime impor-tance. Businesses should not only disclose their financial results but also the impact (positive/negative) that it is having on the environ-ment, disclosure of compensa-tions, their relations with differ-ent stakeholders, among others. There are some industry role models which companies should replicate. These role models have made profit and have created value for the society and led to overall wealth creation. He said, there is merit is conducting the business in a transparent manner. Transparent business creates value not just for the company but also for the employees and soci-ety at large. Dr. Balyan added that systems are great but the actual issue is their implementation.

Agreeing to this view, Dr. Raman Ramchandran, Chairman BASF Companies in India and Head South Asia, said that BASF believes that each employee is their brand ambassador. Multina-tional companies like BASF, need to be very careful as non-compli-ant behavior of an employee puts

the entire organization at risk. The risks are severe which included damage to their brand image, huge compensations and financial losses. To safeguard the company from reputational and financial risks, BASF has a code of conduct which is uniform for all the subsid-iaries operating across the globe. The code of conduct ranges from environment to human rights and to anti-trust which is an important component of anti-corruption.

In terms of the compliance struc-ture of the BASF organization, there is a compliance officer in each country who reports to the country head and also to the global CEO. There is dual report-ing on all compliance issues. This is done to ensure no discretion-ary powers rest with the Country head. Further, the compliance officers are required to go through regular trainings, normally once in three years. For other oper-ations which are considered as risk such as sales and marketing, employees are trained annually. These training comes in form of an e-clip training program which automatically comes to employ-ees every year. After the comple-tion of the training program, the employees’ profile gets locked with the HR department.

Dr. A. K. Balyan, Managing Director and CEO, Petronet LNG Limited

Dr. Raman Ramchandran, Chairman BASF Companies in India and Head South Asia

IF YOU HAVE AN ETHICAL COMPANY THERE ARE LOT OF PEOPLE WHO ARE WILLING TO WORK IN THAT COMPANY BECAUSE THEY CAN HAVE A GOOD NIGHT’S SLEEP AND A CLEAR CONSCIENCE”


Mr. Arun Kumar Jain, Manag-ing Director, Fluor Daniel India Private Ltd., said that Fluor strives to move beyond mere compli-ance with laws and regulations, approaching ethics issues proac-tively to continually improve and enhance its ethics and compli-ance programme by monitoring evolving risks and benchmarking best practices in our company, our industry and the global busi-ness community.

Fluor values open and trans-parent communication. Fluor expects employees, suppliers and other business partners to report known or suspected misconduct involving Fluor, even if they are in no way involved with the miscon-duct. Recognizing the importance of creating an environment that promotes enquiry in fostering ethical conduct, Flour India, for the past eight years, conducts all-hands town hall meetings in which employees, irrespective of their ranks, ask questions of their top management (this cuts across traditional Indian hierarchical organization structures). This has developed into an excellent tool of open communication within the organization.

Supplier Code of Conduct and Vendor PaymentsIn Dr. Balyan’s former associa-tion with ONGC as Director HR, he observed that a supplier code of conduct which covers environ-ment, society and governance is most important. This code of conduct mandates suppliers to make disclosures. These supplier disclosures are audited in cases where suppliers are given responsibility of supplying items which fall under dangerous cate-gory. Also, the suppliers in some cases were required to give right of accessing their database to ensure that they were following

good practices. ONGC was the first PSU to have an open house with the vendors in which the company was informed about suppliers’ material services. In cases of construction work, the company invited vendors for a vendors meet and made detailed presentation of the project. The vendors were given the opportunity to raise issues, and this ensured open-ness. ONGC was also the first company to introduce the TI Integ-rity Pact in India. Initially, there

ism in payment of vendor bills as bill payment in most compa-nies is software driven. One single person is not responsible for giving clearance and making payment. There are several offi-cials who are involved in clearing a bill, who are not connected to each other. If there is an issue, it should be raised by vendors. There is no official who would like to put anyone in discomfort by non-payment of cleared bills. As mentioned, once the bill is submitted every detail is online, bills can be tracked and in case of any issue or delay, a query can be sent to the concerned authori-ties. Further, PSUs sign an Integ-rity Pact and all contract terms and conditions are laid clearly. In case of any irregularity, Inde-pendent External Monitors can be approached for redressal.

A Zero tolerance policy towards violation of code of conduct is practiced by BASF. There have been instances where the code of conduct has been violated to benefit the company, but that has not deterred the company from dismissing the

Mr. Arun Kumar Jain, Managing Director, Fluor Daniel India Pvt. Ltd.

FOR THE PURCHASE DEPARTMENT IN BASF, EMPLOYEES ARE NOT AUTHORIZED TO RECEIVE ANY GIFT (NON-NEGOTIABLE)”

were few contractors that used to bid for projects, but gradually the number of bidders has increased. Thus, new initiatives that were introduced by ONGC couple of years ago have started paying good dividends now.

As far as vendor payment was concerned there is no favourit-

employee. Dr. Ramchandran said that “if you have an ethical company there are lot of people who are willing to work in that company because they can have a good night's sleep and a clear conscience”.

There is a hotline established by BASF where complaints are


received by an external legal firm. Employees as well as direc-tors of the company can access and register complaints This has helped in improving the level of transparency in the company. There is a hotline also for suppli-ers wherein they can complain about any demand by employees,

which goes against the code of conduct of the company.

Additionally, BASF undertakes an awareness programme on its code of conduct for employees and global gift policy. The Gift Policy puts an upper cap to the amount of gift which is acceptable by an

employee. In case this amount is required to be exceeded, then the CEO needs to approve. For the purchase department in BASF, employees are not authorized to receive any gift (non-negotiable).

Mr. Arun Kumar Jain also reiter-ated that Fluor suppliers, contrac-tors, and other business partners can report any business conduct and ethics concern via the Fluor Compliance and Ethics Hotline, managed by a third party company that is available 24 hours a day, seven days a week, with trans-lation / interpretation support in over 180 languages. Fluor inves-tigates all Hotline reports and is committed to maintaining confi-dentiality to the maximum extent possible. Fluor strictly prohibits retaliation against anyone who makes a good faith report. To propagate the message of ethi-cal business, Hotline posters are prominently posted at Fluor loca-tions in India, and one may contact the Hotline website or the Hotline from India via a toll-free number (for ease, a simple 4 digit internal

FLUOR SUPPLIERS, CONTRACTORS, AND OTHER BUSINESS PARTNERS CAN REPORT ANY BUSINESS CONDUCT AND ETHICS CONCERN VIA THE FLUOR COMPLIANCE AND ETHICS HOTLINE, MANAGED BY A THIRD PARTY COMPANY THAT IS AVAILABLE 24 HOURS A DAY, SEVEN DAYS A WEEK, WITH TRANSLATION / INTERPRETATION SUPPORT IN OVER 180 LANGUAGES

(Left-Right) Dr. A.K Balyan, Ms. Olajobi Makinwa, Dr. Raman Ramchandran and Mr. Arun Jain


IF YOU WANT TO FIGHT CORRUPTION IN YOUR COMPANY, YOUR CEO HAS TO TAKE THE LEAD. AN EMPHATIC TONE FROM THE TOP IS THE HARBINGER OF ANY ANTI-CORRUPTION INITIATIVE ANYWHERE IN THE WORLD”

extension number is linked to the 10 digit toll free hotline number). All reports are managed within a case management system, and all investigations are overseen by Fluor’s Compliance Investi-gations Lead, in accordance with Investigations Protocols.

Diversity ManagementMr. Jain expressed that one of the biggest challenges for lead-ership is managing diversity in a transparent manner. Flour has widened the concept of diversity to include diversity of thought, gender and geography. In India, the company based out of Gurgaon employs from 26 of the 29 states of the Indian Union. Further, Flour promotes more visible participa-tion of women in business deci-sion making that has a salutary effect on open, transparent and consultative business conduct.

Dr. Balyan shared that with the introduction of RTI, top PSU management has become more responsive, as grievances are required to be settled within spec-ified time frame otherwise action is taken at the highest level for no or delayed response. This has led to the evolution of culture of PSUs who have largely changed to a different style of working and openness in their operations.

In ConclusionMs. Olajobi Makinwa, Head Trans-parency and Anti-Corruption Initi-atives, UNGC, mentioned that the CEO Roundtable was extremely important as it is the CEOs that set the agenda for their respective companies. They are the ones that give direction, that staff in their companies look up to in terms of what they do or don not do. They are the ones that set the policy direction for the organization and therefore it was crucial to hear from them directly the non-ne-

gotiables vis-à-vis transparency within their business. A number of people are convinced about fight-ing corruption but if you want to fight corruption in your company, your CEO has to take the lead. An emphatic tone from the top is the harbinger of any anti-corruption initiative anywhere in the world.


PANEL DISCUSSIONSTRENGTHENING ANTICORRUPTION EFFORTS IN INDIAN POLICY REGIME IN LIGHT OF UNITED NATIONS CONVENTION AGAINST CORRUPTION (UNCAC)

Ms. Cristina Albertin, Represent-ative, UNODC, Regional Office for South Asia, in her opening remarks mentioned that the United Nations Office on Drugs and Crime is considered to be the guardian of the United Nations Convention Against Corruption (UNCAC). UNCAC entered into force in 2005, and is one of the latest UN convention that the international community has dis-cussed, approved and has been ratified by many countries. India ratified this Convention in 2011 so the topic of discussion on how we strengthen anticorruption efforts in the Indian policy regime, in light of the Convention, is pertinent as stakeholders cannot escape the obligation to work against corrup-tion.

While responding to the ques-tion on what are the three most important aspects that need urgent implementation by Indian government and institutions and their practical feasibility Mr. S.N. Sahu, Joint Secretary, Rajya Sabha said that the key work of the parliament is done within the parliamentary committees. For policy mechanism these com-mittees need to be leveraged. For instance these committees meet throughout the year, rele-vant bureaucrats are summoned and policies are examined. One of the recommendations put forth by parliamentary committee was to make all the Public Sector Undertakings sign the Integrity

Pact. This recommendation was followed. Central Vigilance Com-mission (CVC) and Ministry of Finance came up with guidelines pertaining to signing the Integrity Pact (IP) by public sector under-takings. Similarly, adoption of information technology in several government setups was recom-mended by these committees and was duly followed.

Mr. Sahu further said that a new area has emerged as a potential ground for corruption – Election Funding. UNCAC tries to cover all the aspects of corruption – public, private and transnational, however, election funding, which is infested with corruption is not covered in this convention. Includ-ing election funding corruption, as one of the dimensions in UNCAC, was recommended. Mr. Sahu

Ms. Cristina Albertin, Representative, UNODC, Regional Office for South Asia

Mr. Satya Narayana Sahu, Joint Secretary, Rajya Sabha

THE GOVERNMENT OF INDIA IS TRYING VERY HARD TO PROGRESS ON THE ISSUE OF ANTI-CORRUPTION, AND ADOPTION OF UNCAC WAS FIRST STEP IN THIS DIRECTION”


added that public officials should be oriented towards mannerisms in which corruption takes place at various levels. Mandated financial disclosures by public officials and their monitoring were some other recommendations that Mr. Sahu proposed during the panel dis-cussion.

While responding to the ques-tion of what is the main issue that India could use from the

UNCAC to quickly and efficiently combat corruption, Mr. Kaushik Dutta, Director, Thought Arbi-trage Research Institute said that society cannot run unless there is strong deterrence, and deter-rence comes down to a point that for a white collar crime, the prob-ability of one getting convicted In India is just 0.06%. The stats reit-erate the fact that it is probably more profitable to break rather than follow the law. Post ratifica-tion of UNCAC, India has passed stronger Acts like the Compa-nies Act 2013, which is a water-shield legislation ascertaining punitive liability for individuals who indulge in any kind of cor-rupt practices including directors, officers, employees, and auditors, internal as well as external. This law gives significant enforcement powers to different regulators such as Serious Fraud Investiga-tion Office (SFIO), Securities and Exchange Board of India (SEBI) and others. ‘Disgorgement of assets’ is another aspect that has been introduced in India which is in tune with UNCAC. Now, fines

Mr. Kaushik Dutta, Director, Thought Arbitrage Research Institute

(Left to Right) Mr. Mukesh Arya, Mr. Kaushik Dutta, Ms. Cristina Albertin and Mr. S.N. Sahu

SOCIETY CANNOT RUN UNLESS THERE IS STRONG DETERRENCE, AND DETERRENCE COMES DOWN TO A POINT THAT FOR A WHITE COLLAR CRIME, THE PROBABILITY OF ONE GETTING CONVICTED IN INDIA IS JUST 0.06%”


Mr. Mukesh Arya, MD & CEO, Red Flag Oversight Consultancy Services Pvt. Ltd

will be paid in percentage of the amount of fraud committed.

Finally one of the most significant change visible is that fraud and corruption are now boardroom risks. Indian businesses have realized that the cost of doing business, if you are caught on the wrong side, is extremely high directly affecting their share price.

Mr. Mukesh Arya, MD & CEO, Red Flag Oversight Consultancy

ONE OF THE LIMITATIONS OF THE COMPANIES ACT PERTAINING TO WHISTLE BLOWING IS THE DEFINITION OF “DISCLOSURE”, AS THE DEFINITION IS CONSIDERED TO BE TOO BROAD”

Services Pvt Limited spoke about audit committees in safeguard-ing the whistle blowers, empha-sizing that the audit committee should recommend that all the information should be put on the company’s website. Mr. Arya in his presentation emphasized on the merits of anonymous report-ing, explaining that the Whis-tleBlower Protection Act 2011 has not considered anonymous reporting. He explained how in case of anonymous reporting, the matter that is reported becomes of prime importance rather than the individual who is reporting the issue, and hence internationally anonymous reporting is a widely accepted concept. Additionally anonymous reporting also takes care of the issue of witness pro-tection as in the Indian context protection of whistle blowers is a herculean task with the police services always having man-power issues.

Mr. Arya further shared that the Stock Exchange Board of India (SEBI) in its listing agreement has incorporated clause 49B that is of significant importance as it mandates provisions for whistle blower mechanism in listed com-panies. This sentiment is echoed in the new Companies Act 2013, which has made provisions for “vigil structure” in the companies. One of the limitations of the Com-panies Act pertaining to whistle blowing is the definition of “dis-closure”, as the definition is con-sidered to be too broad.

Ms. Cristina Albertin, concluded that UNCAC as an instrument needs to be evolve and include issues such as transparency in election funding. She said that in her tenure in India she has wit-nessed a paradigm shift on the topic of corruption. The Govern-ment of India is trying very hard to progress on the issue of anti-cor-

ruption, and adoption of UNCAC was first step in this direction. She shared that UNODC has pro-duced literature on best practices adopted by businesses to tackle the issue of corruption along with other fact oriented publications. Ms. Albertin emphasized that it is important for companies to have a truly independent monitoring and evaluation of the adopted policy, which could help in gaug-ing its effectiveness. Further, the government has framed policies for good governance and trans-parent operations. These policies should also be monitored and evaluated by the government and the results should be made pub-lic. The findings of such studies could be an excellent basis that civil society can champion gov-ernments to show the good prac-tices in international forum.


Ms. Navita Srikant, Governance and Anticorruption Specialist, said the top priorities in any discussion on value chain and supplier code of conduct is how to increase the bottom line and reduce the supply chain cost, how much can a company invest in supply chain and how to optimize results, and finally where does the responsi-bility lie.

Mr. P. Mani, Chief Compliance and Head Assurance, Dr. Reddy’s spoke about fostering a close relationship between suppli-ers and the company. In case of small and medium scale enter-prises, which are the suppliers to companies, handholding is an essential task that needs to be

PANEL DISCUSSIONBUSINESS CASE FOR TRANSPARENCY IN VALUE CHAIN & SUPPLIER CODE OF CONDUCT

practiced. He gave the example of Ericsson and Nokia, two giants in their own respect, who have been following the mantra of creating good relations with their suppli-ers and the result of such policy is evident. Both companies had humble beginnings but today they are the market leaders in their own segments.

Mr. Mani said that “We don’t sign a code of conduct. We don’t do anything but we know inher-ently what’s right, what’s wrong. And that’s what I think is evolv-ing compliance into a discussion about the right thing”.

Mr. Vidyarthi, Lead Ombuds-man and Chief Investigator, GE

(Left to Right) Mr. Arvind Kadyan, Mr. Amit Vidyarti, Ms. Navita Srikant and Mr. P. Mani

Mr. P. Mani, Chief Compliance and Head Assurance, Dr. Reddy’s Laboratories Ltd.


India said that anticorruption and compliance are topics restricted to certain forums and training rooms. They need to be talked about more. He gave a real time example when he was asked by a supplier to talk about compliance to the suppliers’ team, the topic was difficult to tackle and the speech sounded like jargon which could not engage people.

Mr. Vidyarthi gave the example of Indian Premier League (IPL), a premier cricket tournament that gives points to each team on fair play, an aspect which has missed most of the viewers’ attention. One of the reasons could be that the supporters are so engrossed in their team winning or losing that other aspects are over-looked. Same could be said about businesses, the profits become

so important that the means by which they are attain does not hold relevance. There needs to be a shift in the mind set of the top management and the companies should see beyond profits.

Mr. Arvind Kadyan, CVO, BHEL said that one third of the suppliers in the list of prospective vendors for a Public Sector Undertakings (PSUs) are bogus. It becomes a tough task for the PSUs then to do due diligence of the suppliers. BHEL does not have a notified supplier code of conduct. But the organization is sensitive to the labor and human rights issues,

Mr. Vidyarthi, Lead Ombudsman & Chief Investigator, GE India Industrial Pvt. Ltd.

Mr. Arvind Kadyan, Chief Vigilance Officer, BHEL

all the payment. In the capacity of a CVO, it becomes very difficult to take a call or suggest any solution, as the purview of the company was to make full payments to its vendors, beyond that the company has no indulgence. In other cases, the sub-contractors do not complain about any irregu-larly committed by the contractor as they are afraid of being ousted from the next tendering process. These issues arise due to absence of an over arching auditing policy. Mr. Kadyan illustrated through examples some of the real time compliance challenges in BHEL.

Ms. Navita Srikant, Chair of the Session, in her closing remarks emphasized on the importance of information sharing and peer learning. There are regular meets of companies of specific industries, mostly having an association, which act as a forum for discussing industry specific issues. These forums could be used for exchanging industry related compliance issues such as sharing list of blacklisted companies and companies penal-ized (monetarily) for indulging in acts of corruption.

ANTICORRUPTION AND COMPLIANCE ARE TOPICS RESTRICTED TO CERTAIN FORUMS AND TRAINING ROOMS. THEY NEED TO BE TALKED ABOUT MORE

in work contracts and in suppli-ers’ contract. There have been instances when employees of the contractors have come to lodge complaints about the nonpayment of dues, whereas BHEL had done


Ms. Bulbul Sen, Consultant, CUTS International, began the session by saying that procurement is THE most passionately debated issue in India, as public procure-ment makes up 25 to 30 percent of India’s GDP and if you count this with private procurement, it is one of the biggest markets requiring transparency and ethics promot-ing institutions and procedures. Ms. Sen emphasized that the temptation for non-transparent practices to flourish in the sector is high as it is very loosely gov-erned, there being no central law governing public procurement. In the case of the private sector on the other hand there is no law as yet governing corruption by the private sector. As a result there is a field day for uncompetitive, non transparent, and unethical prac-tices to flourish in this field.

PANEL DISCUSSIONBUSINESS CASE FOR TRANSPARENCY IN PROCUREMENT

Ms. Usha Chandrasekhar, CVO, NMDC said that the company fol-lows 100% e-payment of suppli-ers and contractors for all sup-plies that are made in its major

projects. E-auction is another practice followed to sell the iron ore with NMDC carrying 100% sale through e-auction mode. NMDC has made a long term decision of involving in electronic mode of tendering and bidding. The company invites all the pro-spective bidders to attend the pre-bid meeting to have clarity about the requirement and to finalize the technical and commercial aspects in order to have a trans-parent and fair procurement.

NMDC has also signed the Integ-rity Pact wherein Civil works up to INR 20 crores, contracts up to INR 20 crores and procurements worth INR 10 crores and above are covered under the gambit of IP. As a policy decision, NMDC invites vendors for the submission of their credentials for the area of

(Left to Right) Mr. Amar Prasad, Mr. Sandeep Kumar, Ms. Bulbul Sen and Ms. Usha Chandrasekhar

Ms. Usha Chandrasekhar, Chief Vigilance Officer, National Mineral Development Corporation


works. After assessing the ven-dor credentials involving techni-cal presentations, assessment of literature, vendor visits are con-ducted to facilitate empanelment for the various categories of items for future reference and inquires are floated to them. This is a con-tinuous process and enables new vendors to enter system for bet-ter competition. Further, NMDC gives preferential treatment to MSMEs. The company allows the purchase from MSMEs up to 20% of the total procurement under a tender where the price quoted by MSME is in the range of L1+15 %.

Mr. Sandeep Kumar, Director Industry Interface, Fluor India said that one of the factors that requires weightage in the pro-curement process is the nature

(features) of the product to be pro-cured. Flour as a practice draws a matrix in which points are given to cost, specification and other aspects of the material – wherein cost designated for procurement of materials and technical spec-ifications are evaluated on the expected life cycle of the project.

Further, the business matrix also takes into account quality norms like health, risk hazard, workers rights so that there is a win-win situation since both the company and the clients are at risk vis-a-vis compliance and sustainability issues.

Mr. Amar Prasad, CVO, KRIBHCO said that continuous sessions of sensitization of vendors, employ-ees and officers on compliance issues is practiced by KRIBHCO.

Mr. Sandeep Kumar, Director Industry Interface, Fluor Daniel India Pvt. Ltd.

The company has adopted all the available technological tools in their procurement process, be it e-tendering, e-auctioning and reverse auctioning. Each of the processes was illustrated by Mr. Prasad through examples and emphasis placed on cost saving through employment of these technologies.

Mr. Prasad also recommended that a common portal needs to be created where industry specific, as well as overall information about the non-compliant companies are posted, so that other organiza-tions are aware of the same. Due diligence is conducted and rules followed at KRIBHCO, but some-times issues either do not surface or are conveniently bypassed, for such situations published data on non-compliant organizations would be very helpful.

In her closing remarks Ms. Sen said that there is merit in usage of technology and conducting pre-bid meetings with vendors to share new technology, especially in hi-tech procurement sectors such as mining. This helps in cut-ting cost and eases towards being compliant. The present govern-ment has pledged to revive the Indian economy and create a fair level playing field ensuring trans-parency in public procurement. This is most important to bring about a more healthy market as procurement makes up a huge share of the Indian market place.

ANTICORRUPTION AND COMPLIANCE ARE TOPICS RESTRICTED TO CERTAIN FORUMS AND TRAINING ROOMS. THEY NEED TO BE TALKED ABOUT MORE

Mr. Amar Prasad, Chief Vigilance Officer, KRIBHCO

Global Compact Network India OfficeSCOPE Complex, Core 5, 6th Floor (ONGC Office)7 Institutional Area, Lodhi Road, New Delhi 110003Tel: 011- 64690653, Fax: 011- 24368269Email: [email protected]

United Nations Global Compact (UNGC) is the largest voluntary corporate citizenship initiative in the world offering a unique platform to engage companies in responsible business behavior through the Ten Principles focusing on human rights, labour standards, the environment and anti-corruption. The Global Compact Network (GCN), India, was formed in November 2003 and registered as non-profit society to function as the Indian Local Network of the UNGC.

LOOKING BACKUNGC's Principle 10 states that "Businesses should work against all forms of corruption, including extortion and bribery". In furtherance of this principle, in December 2010, United Nations Global Compact (UNGC) launched the Anti-Corruption Collective Action Projects (CAP) in five countries – India, Brazil, Egypt, Nigeria and South Africa for a period of four years (2011-2014) – with support from Siemens Integrity Initiative. The aim of the projects were to foster a high-impact collective action platform on anti-corruption by facilitating dialogue between private and public sector and incentivize ethical behavior of businesses.

Collective Action Project India was successfully implemented from January 2011 –December 2014.

LOOKING AHEADBased on the Learnings from the Collective Action Project India, the UN Global Compact India Network instituted the GCNI Centre of Excellence for Business and Transparency – to scale up the Collective Action Agenda in India. Indian business practices a multitude of anticorruption initiatives in silos. COE would encourage shared focus and provide a platform for greater coordination, thereby increasing the reach and impact of business initiatives.

Essentially the COE aims to:• Develop pragmatic approaches around UNGC Principle10 to challenging business decisions• Provide enabling platform to businesses, policy makers, civil society, industry associations, UN

agencies and academia• Improve organizational decision making through a stakeholder management framework that

integrates transparency and integrity

GCNI Centre of Excellence for Business and Transparency will be developed on a collaborative model and develop new approaches and techniques, by engaging diverse range of stakeholders, focusing on both supply and demand side of corruption.

Government & Nonprofit

Conference Report | Business Case for Anti-Corruption: Call For Collective Action