”The tool-kit of TI in fighting corruption in the business sector” BALTIC-NORDIC CONFERENCE ON BUSINESS ETHICS Tallin, April Arvid Halvorsen Member of the Board, TI Norway

TI tools for the business sector The Business Principles for Countering Bribery (BPCB) BPCB Guidance Document The Six Step Process BPCB – SME Edition (Small & Medium size enterprises) The Integrity Pact All of the above are available on TI’s web-site Under development:  Self-evaluation module  External independent verification tool

The Business Principles for Countering Bribery Aim: Provide a framework for good business practices and risk management strategies for countering bribery Assist businesses to: eliminate bribery demontrate their commitment make a positive contribution

The Business Principles for Countering Bribery The enterprise shall prohibit bribery in any form whether direct or indirect The enterprise shall commit to implementation of a Programme to counter bribery

The BPCB document content (1) 1 Introduction 2 The Business Principles 3 Aims 4 Development of a programme for countering bribery 5 Scope of the programme 1 Bribes 2 Political contributions 3 Charitable contributions and sponsorships 4 Facilitation payments 5 Gifts, hospitality and expenses

The BPCB document content (2) 6 Programme implementation requirements 1 Organisation and responsibilities 2 Business relationships 1 Subsidiaries and joint ventures 2 Agents 3 Contractors and suppliers 3 Human resources 4 Training 5 Raising concerns and seeking guidance 6 Communication 7 Internal control and audits 8 Monitoring and review

The Six Step Process Detail advise on how to: 1) decide to adopt a no bribes policy 2) plan the implementation 3) develop detailed anti-bribery programme 4) implement programme 5) monitor 6) evaluate and improve

The BPCB – SME Edition  Launched on 30 January 2008  Simplified version of the original Business Principles geared towards smaller and medium sized organisations  The main principles and values of the BPCB are unchanged

The Integrity Pact A contract between the customer and and all bidders for a project: Customer commits not to accept bribes, gifts, etc. Bidders commit not to offer bribes, gifts, etc. Bidders to have Code of Conduct and implementation programme Bidders to disclose all payments Appointment of an independent monitor Arbitration as conflict resolution mechanism Pre-defined sanctions The Integrity Pact remain in force from bidding phase though contract execution

”A glimpse into the Hydro experience” BALTIC-NORDIC CONFERENCE ON BUSINESS ETHICS Tallin, April Arvid Halvorsen Member of the Board, TI Norway

The Hydro Integrity Program – based on the Code of Conduct The Hydro Integrity Program Survey of practices and risks Handbook with requirements and guidelines Business planning and decision processes Roll-out meetings Seminars and workshops Program review Auditing Reporting

Survey of practices and risks

Handbook content 1) Introduction 2) Eliminating corruption and improper payments 1) Legislation and voluntary commitments on corruption 2) Corruption 3) Facilitation payments 4) Political contributions 5) Charitable donations and sponsorships 6) Community investments 7) Gifts, hospitality and expenses 8) Conflict of interest 3) Respecting human rights Key issues Use of security forces 4) Business relations and value chain General guidelines Due diligence Joint venture partners Agents and other intermediaries Suppliers and contractors Customers 5) Internal actions 6) Sources of information

Example: Facilitation payments Status  Payments for something to which the payer is entitled  Legal by some laws (US), illegal by others (UK)  Norwegian legislation: Depends on “improper advantage”  Hydro is committed to work towards elimination Actions  Facilitation payments not to be volunteered  Life and health comes first  Due regard to legislation  Consult with superior or others available  Payment only if no alternative  Identify practice and risks  Establish plans to reduce / eliminate  Correct records

Example: Agents/intermediaries Intermediaries often channel for bribes and facilitation payments A risk that they are independent entities and may not respect a company’s values Important elements for selecting and managing agents:  Carry out due diligence – ”red flags”  Inform about Hydro’s requirements  Written contract – right of termination  Avoid success fees, if possible  Monitor

Example: Business partners Existing joint ventures:  Hydro has controlling interest or operating responsibility: Directives and guidelines shall apply without limitations  Hydro has minority interest: Plans to identify and minimize, preferably eliminate, discrepancies New partners:  Unfamiliar new business associates – due diligence before binding commitments

Additional initiatives Implementation in procurement and contracting: Supplier Certificate Dilemma training package for meetings Dilemma training on intranet Integrity due diligence guidelines Conflict of interest guidelines HR systems:  Annual appraisal dialogues  Employment contracts Annual self-assessment External review of the programme

Key learnings Written rules and guidelines are not enough Commitment from the top is essential What is not asked for by management does not get done What is not be measured/reported does not get done Case studies and dilemma training is very effective Continous focus and new initiatives required

Thank you!