INTERNATIONAL CONSORTIUM ON GOVERNMENTAL FINANCIAL MANAGEMENT Presented by TEMISTOCLES ROSAS R. Partner – Director Consulting Plus 74 Street, San Francisco, Golf Plaza Building Nº 8 P.O Box , Panama, Rep. of Panama Program of Good Governance and Business Ethics in Panama

Agenda  Introduction  Program of Good Governance and Business Ethics - Participation of Panama in Ethics Programs - Importance of Ethics for Businesses - What is an Ethic Program? - Basic Principles of Corporate Ethics - Steps to follow in the Panamanian Ethics Pact for Businesses.

Program of Good Governance and Business Ethics It is an initiative sponsored by the U.S. Department of Commerce to promote in private sector, the use of business ethics principles and to provide knowledge (know how), tools and leadership to fight corruption. The program began with developments of ethics programs for the former Russian Federation and countries of Eastern Europe. In Latin America, programs began for Panama, Paraguay and Nicaragua. Most recently, Guatemala, Honduras and El Salvador have joined the program. In Panama, the Ethics Pact for Businesses was signed on October 21st, 2003.

Current Situation in Panama U.N. GLOBAL COMPACT The U.N. Global Compact has not been designed as an instrument of regulation. It is not a code of conduct nor a legal instrument. It should not be seen as a substitute for the regulatory statues that either countries and businesses have the interest to establish. This is only a simple and open exercise with the aim of identifying, spread and promote good practices based on universal principles promoted by the United Nations.

Current Situation in Panama  U.N. Global Compact contains: Human rights principles, labor standards, environment, anticorruption principles. Promotion of Social Responsibility in Businesses. Currently, it is discussing the norm ISO relation to Corporate Social Responsibility. “Business practices rooted in universal values can bring social and economic gains” Ban Ki Moon, U.N. General Secretary

…Current situation in Panama  Ethics Pact for Businesses  Establishes guidelines for Corporate Governance and Accountability  Business Ethics principles  Implements Codes of Conduct  Promotes Corporate Social Responsibility

…Current situation in Panama  Ethics Pact for Businesses  Signed by main business leaders and associations  Signed by government officials  Signed by non government organizations such as the Catholic Church, Universities and Civic Clubs

¿What is Ethics?  It is a philosophical reflection on morality, know as the rules that govern human relationships, or the acts taken under such rules.  It is the code of conduct or the system of principles that guides our existence and we apply it when we act.  It begins where the Law ends.

…¿What is Ethics?  In businesses, it is known as:  To treat others well.  To do things right…even if nobody is watching.  To do things right…because the goal is right.  Respect my profession, my name and my family.

¿How is Ethics in Panama? “Don’t worry fellows, even if things are not going right, we have the necessary resources required to bribe the authorities”

Lowers rotation and improve employee commitment Creates a high rotation of personnel The best prospects seek to join companies with high standards of ethics Creates problems on job recruiting Creates a positive work environment Diminishes moral on employees Improve reputationCreates a negative reputation Builds loyalty on clientsCauses fines and sanctions Establishes competitive advantages Causes loses of clients and the business Benefits of BEHAVING with Ethics in Business Cost of NOT BEHAVING with Ethics in Businesses

¿What is an Ethics Program? It is an effective tool in order to establish standards and procedures that reflect company’s values: what ALL of the employees and company’s owners think, say and do. The ethics program goes beyond the observance of laws and summarizes the behavior of the employees in situations when there is no legal reference.

Benefits obtained by implementing an Ethics Program Reduces risks and costs Improves reputation and profits Improves performance, productivity and competitive position Improves the access to capital, credit and foreign investments. Increases earnings, with long term sustained growth

The Four Main Foundations of an Ethics Program 1. Codes of Conduct 2. Training and Communication 3. Ethics offices and alternating channels of information 4. Monitoring, audits and evaluations

Basic Principles of Corporate Ethics Norms of Corporate Government and Accountability. To have a mechanism of consulting, monitoring and audit on ethics. To maintain and communicate reports on infraction and infringement of laws and established norms. To maintain a reliable system of accounting and with good internal controls To avoid fraudulent behavior To clarify what is a conflict of interest, the offering and acceptance of permitted presents and the improper and inadequate payments. Management and protection of the information

Basic Principles of Corporate Ethics Relationships with employees To promote team work and equitable and just treatment. To avoid discrimination and harassment. To maintain adequate standards of health and safety. Personal and Professional Relationships Relationships with other companies and with the consumer.

…Basic Principles of Corporate Ethics Relationship with the local and global community and to act with social responsibility. Relationship with government authorities Prevention of bribery and extortion Economic contributions and political activities

It is good to show my faith on the goodness of my vocation, enforcing it until a good reputation for the high quality of my services is obtained. Whenever a doubt emerges, in relation to the right or to the ethics of my position or the action towards other people, solve it on your account. Look for success and demand for a just profit or remuneration that you rightfully deserve, but refuse all profits and rewards that could result in a loss or reduction of your dignity, as an effect of benefiting of any unfair advantage or any dubious personal action. Have always in mind your citizenship’s obligations towards your Nation, your Country and your community; always profess your constant loyalty in your thought, speech and action, dedicate generously your time, work and resources.

¡Let’s Change this Dilemma!

What are some of the things left for us to do?  To enforce the basic principles of Corporate Ethics.  To establish a permanent and inclusive dialogue.  To train on Corporate Ethics.  To establish programs of Corporate Ethics.  To form an alliance between the public sector, the civil society (community) and the private sector.  To install an ethical business behavior in a sustainable and lasting way.