Guidance on Promoting Principles of Integrity in the Private Sector Released

The paper stresses that the private sector plays a significant role in countering corruption today. The importance to engage the business community in the fight against corruption is highlighted in such international documents as:

In the opinion of the OECD experts, the business sector organisations can contribute to the fight against corruption by:

Participating, together with the public bodies in the development of anti-corruption legal acts, strategies and policies;
Providing comments with regard to the assessment of effectiveness of the jurisdictional sanctions and incentives aimed at promoting the principles of integrity in the private sector;
Engaging in raising public awareness about the detrimental impact of corruption and the measures to combat it;
Supporting public initiatives to counter corruption;
Promoting the principles of integrity in the sector and supply chain etc.

In order to engage organisations in countering corruption, the authors of the publication recommend that the public bodies:

Create the necessary legal basis, in particular, adopt anti-corruption laws covering the private sector (for example, like in the United Kingdom and France), oblige companies to ensure transparency of beneficial ownership (for instance, Slovakia has a Register of Beneficial Owners), introduce corporate liability for corruption offences in the legislation (like in Australia);
Ensure compliance with the anti-corruption legal provisions applicable to the private sector also by providing the competent public bodies with sufficient independence and necessary resources;
Promote the principles of integrity in the public bodies thereby setting an example for the private sector;
Provide private sector organisations with the recommendations on how to counter corruption designed with due regard of the comments of the business community;
Involve private sector organisations in the development of the national anti-corruption policy and legal acts (for example, like in Uruguay, where representatives of the business community actively participate in the drafting of the anti-corruption law);
Use digital technologies to enhance transparency of activities of the subjects of the public and private sectors, including by creating single online procurement platforms;
Provide protection and reward to the whistleblowers reporting corruption offences both in the public and private sectors;
Coordinate action to promote the principles of integrity in the private sector at the international level to secure a level playing field for the companies from different jurisdictions, inter alia, by exchanging experience and good practices and cooperating in investigations and recovery of assets of illegal origin;
Assess, on a regular basis, the effectiveness of the measures adopted to prevent and combat corruption in the private sector and update them in accordance with the findings and existing needs;
Ensure consistency of the measures taken to enhance integrity in the business environment.

The OECD experts highlight that strong integrity performance in the business environment is impossible without striking a balance between the sanctions for corruption offences and the incentives provided to enhance the anti-corruption potential of companies. The achievement of this balance is subject to the legal structure, economic situation, institutional capacities and resourcefulness of each country. In particular, the sanctions must be proportionate to the organisation, gravity of the offence and amount of the damage caused, prevent the use of illicit proceeds and encourage the organisation to adopt the measures to such similar offences from occurring in the future. These sanctions can include:

Fines;
Reparation of damage to the natural and/or legal persons considered as direct victims of a corruption act by the law, as well as to the communities and other social groups that have suffered from the damage caused by corrupt activities;
Confiscation of the proceeds;
Imprisonment of the persons responsible for corrupt activities;
Restrictions on the access to certain public services such as export credits;
Suspension and/or debarment of unreliable companies from public procurement;
Requirement to conduct corporate reforms, in particular, with regard to changes to management and/or board composition, modification of governance systems, policies and procedures;
Publication of the verdict that potentially leads to reputational losses.

The system of incentives balancing the penalties is necessary to encourage the companies for implementing integrity practices aimed at preventing and/or detecting corruption offences. These incentives can include:

Penalty mitigation up to exemptions from prosecutions, for example, in the event of self-reporting and adoption of prevention measures (in Algeria for example, any person may be exempted from, or have penalties reduced, if they report a corruption offence to the authorities prior to the beginning of any judicial proceedings; in the United Kingdom, an organisation can be exempted from liability for illegal acts of its employees and other persons affiliated to it, if it is proved that the organisation has adopted all possible measures to prevent the offence from being committed);
Criminalization of a failure of an organisation to prevent corruption offences, which will encourage organisations to adopt measures to prevent corruption;
Provision of preferential access to public procurement to the companies in the list of preferred suppliers;
Provision of preferential access to public benefits to the companies that have implemented best practices in countering corruption;
Protections of investments of the companies that comply with the principles of integrity;
Certification of the organisations implementing best practices in countering corruption (this measure, however, may create ample space for superficial and, in often cases, openly unfair assessment of sufficiency of anti-corruption measures);
Public recognition of the contribution of the reliable organisations in countering corruption.

Among other things, as per the Guide, the following measures are equally important in terms of promoting the principles of integrity in the private sector:

Collective initiatives of public bodies, private companies, civil society organisations and other stakeholders, including the establishment of sectoral unions and anti-corruption coalitions, striking of public-private partnerships. For instance, the Maritime Anti-Corruption Network (MACN), uniting over 180 companies, was established to strengthen cooperation of relevant organisations, building their capacities and undertaking collective action in promoting the principles of integrity and anti-corruption based on the anti-corruption standards adopted by MACN;
Educational and awareness-raising initiatives aimed at raising public awareness, in particular, potential “enablers”, children, young people about the negative impact of corruption and the measures to counter it;
Measures to ensure inclusiveness, including gender equality that contributes to reducing the cases of misconduct and strengthening governance structures;
High level of transparency of all processes in supply chains.