Principle 10

Corporate Governance
Principle 10: Businesses should work against corruption in all
its forms, including extortion and bribery.

The Global Compact exists to assist the private sector in the

management of increasingly complex risks and opportunities
in the environmental, social and governance realms. the
Global Compact seeks to embed markets and societies with
universal principles and values for the benefit of all.
 Origin of the 10th principle

• On 24 June 2004, during the UN Global Compact Leaders Summit it was

announced that the UN Global Compact henceforth includes a tenth principle
against corruption. This was adopted after extensive consultations and all
participants yielded overwhelming expressions of support, sending a strong
worldwide signal that the private sector shares responsibility for the challenges of
eliminating corruption. It also demonstrated a new willingness in the business
community to play its part in the fight against corruption.
• Objectives of the 10th principle: The adoption of the tenth principle commits UN
Global Compact participants not only to avoid bribery, extortion and other forms of
corruption, but also to develop policies and concrete programs to address
corruption. Companies are challenged to join governments, UN agencies and civil
society to realize a more transparent global economy.
 What is Corruption?

Corruption can take many forms that vary in degree from the minor use of
influence to institutionalized bribery. Transparency International's definition of
corruption is "the abuse of entrusted power for private gain". This can mean not
only financial gain but also non-financial advantages.
• What is meant by extortion?
The OECD Guidelines for Multinational Enterprises define extortion in the
following way: "The solicitation of bribes is the act of asking or enticing another to
commit bribery. It becomes extortion when this demand is accompanied by threats
that endanger the personal integrity or the life of the private actors involved."
• What is mean by bribery?
Transparency International's Business Principles for Countering Bribery define
"bribery" in the following way: "Bribery: An offer or receipt of any gift, loan, fee,
reward or other advantage to or from any person as an inducement to do something
which is dishonest, illegal or a breach of trust, in the conduct of the enterprise's
business
 Governance & Anti-Corruption
Not the same thing!
The manner in which the State
Governance acquires and exercises its authority to provide public
goods & services

Corruption Use of public office for private gain

• Corruption is an outcome – a consequence of the failure of accountability

relationships in the governance system
• Poor delivery of services and weak investment climate are other outcomes of
bad governance
• Governance is the door to anticorruption, and the broad overarching
framework for donor engagement
Poor Governance and Corruption Pose Three Risks
Development
Development
Effectiveness
EffectivenessRisk
Risk
Poor governance and
corruption will be
impediments to
development in
general and in donor-
supported projects

Reputational
ReputationalRisk
Risk Fiduciary
FiduciaryRisk
Risk
That large That donor
amounts of aid in resources will be
countries with not be used for
corrupt leaders the purposes
will tarnish intended
donors’
reputation
 Countering corruption
• Foreign Corrupt Practices Act (1977)
– Made it illegal for U.S. firms and their managers to attempt to influence
foreign officials through personal payments or political contributions
• OECD Anti-Bribery Convention (1997)
– Commits signatories to passing domestic laws against international corruption
– Establishes a monitoring mechanism
– 37 signatories; laws adopted in 20 countries
• UN Convention Against Corruption (2003)
– Came into force in December 2005
– 140 signatories; 95 ratifications/accessions
• Corruption and culture
– Corruption is linked to poverty
– In countries that suffer from corruption, the problem is weak institutions
– “The vast majority of people in such countries are only victims of corruption”
 Anti-Corruption Bodies

• THE UNITED NATIONS CONVENTION

AGAINST CORRUPTION (UNCAC)
 The Four Pillars of the UNCAC

Criminalization International
Law Enforcement Cooperation
Preventive Asset
Measures Recovery

Purpose: Integrity, Accountability and the Proper Management of Public

Affairs and Property
 Preventive measures

Public procurement &

management Public reporting
Anti-corruption
Anti-corruption policies of public finances
bodies
and practices

Prevention in judiciary &

prosecution services
Measures for the
private sector
Participation of Prevention of Codes of conduct
civil society money laundering
for public officials
Anti-Corruption Policies and Practices

• Develop and implement, or maintain, effective coordinated anti-corruption

policies and practices-

• Periodical evaluation of legal instruments and administrative measures –

Measuring Corruption and the effect of Anti-Corruption measures

• International Collaboration – Regional and International Exchange,

Research, and Training
 Independent Anti-Corruption Bodies
• Establish anti-corruption bodies to
– Implement, oversee and coordinate the implementation the anti-corruption
policies
– Increase and disseminate knowledge on corruption
• Independence to enable the body to carry out its functions effectively and free
from undue influence
– Legal independence
– Political independence – appointment and removal process
– Realistic budgetary resources and allocations
– Immunity against civil litigation
• Necessary resources,e.g. specialized staff and training
LEGAL COMPLIANCE IS NOT ENOUGH
 Preventive Measures in Public
Sector
Personnel Management (Art.7)
Code of Conduct (Art.8)

Transparency
Integrity
Public Procurement and
Accountability Public Finance
Management(Art.9)

Integrity of Judiciary and

Prosecution Service (Art.11)
Public Sector
• Building an efficient, transparent and merit-based civil service
– Strengthening systems for recruitment, promotion and retirement of civil
servants,
– Adequate selection procedures and training for public position
vulnerable to corruption,
– Regular rotation,
– Adequate remuneration and equitable pay scales,
– Education and training to enable public officials to meet requirements
for the correct, honourable and proper performance
• Promote transparency of government actions and prevent the conflict of
Interest
Codes of Conduct for Public Officials
•Application of codes of conduct for the correct, honourable and proper performance of
public functions
– Codes of conduct have to be more than pieces of paper
– Systems and measures facilitating the reporting of acts of corruption by public
officials (Art 33 – protecting those persons)
• Public Awareness of the Codes of Conduct / Citizen Charter
• Complaint Boxes, Hotlines and Internet Sites
• Effective and credible complaints review system
• Reliable feedback those complaining & regular public reporting
– Effective disciplinary and other measures against public officials for the violation
of the codes of conduct
 Participation of Society
• Public Reporting (Art.10)
• Facilitate access of
general public to
information on organization
& decision-making of
public administration
Participation of Society (Art.13)
• Ensure Active Participation of Civil
Society
• Provide Public Access to Anti-Corruption
Bodies
• Encourage Citizens to Report on Offences
(Art.39)
Preventive Measures
in Private Sector
Enhanced Accounting and Dissuasive Civil, Administrative or
Auditing Standards Criminal Penalties

Art. 12
Prevention of conflicts of No Tax Deductibility of
interest between public Expenses Constituting
officials & private sector Bribes

Prohibition of Off-the-
Book Account and similar
Acts
 Mandatory and Other Criminal Offences
5 Mandatory Offences
Bribery of National Public Officials (Art.15)
Active Bribery of Foreign Public Officials (Art.16)
Embezzlement, Misappropriation and Other
Diversion
of Property (Art.17)
Money Laundering (Art.23)
Obstruction of Justice (Art.25)19

6 Other Criminal Offences

Passive Bribery of Foreign Public Official
(Art.16)
Trading in Influence (Art.18)
Abuse of Function (Art.19)
Illicit Enrichment (Art.20)
Bribery in Public Sector (Art.21)
Embezzlement in Public Sector (Art.22)