Corruption,integrity, whistleblowers, financing of political parties

Introduction for the delegation of the Republic of South Africa

A.P.Ranner & P.ArlmanAugust 31 2010 The Hague

The government is very effective in the fight against corruption 8% 7%

The government is somewhat effective in the fight against corruption 21% 44%

The government is neither effective nor ineffective in the fight against corruption 13% 5%

The government is somewhat ineffective in the fight against corruption 26% 21%

The government is very ineffective in the fight against corruption 26% 7%

DK/NA 16% 16%

Basis Global Population weighted 1258812588

 Sample Size (Unweighted) 73132 1202

Transparency International The Netherlands

Position Score (out of 10)Bribery index 2008 3 and 4 8.6Corruption perception index 2009 5 and 6 8.9

How would you assess your current government´s actions in the fight against corruption? Total Sample The Netherlands

TRAC report 2009Assesses the extent to which close to 500 leading listed companies have publicly reported the strategies, policies and management systems they have in place for combating bribery and corruption.The Netherlands 23, average score by country 17

No major problem in The Netherlands, Yet sectors with high bribery risks and incidentsPublic sector:

Purchasing and selling of goods and services Granting of subsidies en permits

Granting of passports and staying permits Private sector: Bribery in international trade and production

Real estate and infrastructure transactions

Corruption

Clearer definition of civil servants in penal law Legal treatment of corruption in private sector brought into line with public sector Maximum penalty for corruption increased from 1 to 2 years Separate logs of foreign corruption cases

Fighting Corruption (1)

Recent measures

Capacity increase Rijksrecherche Public Prosecution Service

to enable more investigations and strengthen informational resources Increased cooperation between Rijksrecherche, fiscal authorities and public prosecutions service

Fighting Corruption (2)

Fighting international corruption still no priority

Public has no recourse to criminal investigations records

Facilitation payments not included in definition of corruption

Fighting Corruption (3)Shortcomings

Municipalities, provinces, polder boards insufficiently use Bibob services provided by Public

Prosecution Service (since 2003): Investigation of private companies/ entrepreneurs applying for permits/ subsidies and refusal of applications

impopular: Time- consuming, costly and complex

Fighting Corruption (4)Shortcomings

Transparency international:Recommendations Institute special national entity including fiscal detectives to

investigate bribery Improve the protection of whistleblowers from the public as

well as the private sector Become more pro-active in fighting corruption and pay more

attention to the follow-up of corruption cases Bring penal law into line with UK and US anti bribery law and

recommendations of CRECO and UNCAC Make better use of existing anti-corruption instruments and

improve reciprocal assistance in the field of corruption

Fighting Corruption (4)

• Public sector (1) Theory: good governance

Individual civil servants should Act according to law

With due regard to democratic decision making and legitimacy

and perform efficient , effective and sound

Integrity

• Public sector (2)

New civil servants: oath of office Code for accepting presents Code of good conduct Implementation regulation for whistleblowers Implementation regulation for complaints committee regarding undesired behaviour Appointment of Confidence Manager Training of moral judgements (ethical dilemmas)

Requires implementation, monitoring and sanctioning of integrity policies and client screening

Integrity

Major deficiencies in practice: Insufficient translation of norms into organizational behaviour

Public sector (3)

No priority for operational measures due to priority for core public services and or budgetary restrictions

Examples: Delayed oath of office Opaque codes : small gifts, preference for acquaintances as suppliers Civil servants having little knowledge of existing integrity regulations Little knowledge of existing person of confidence Only incidental training of moral judgement /dilemmas Training limited to highest ranking civil servants, public officials (mayors, alderman etc.) and recently council members

Integrity

Develop material compliance codes of conduct as well as symbolic artefacts

Develop transaction monitoring systems & client screening applications

Make integrity screening more important for new personnel

Appoint a compliance officer Make compliance norms highly visible

Possible improvements

IntegrityPublic sector (4a)

Decision makers demonstrate model integer conduct

Signal gaps between individual and organisational norms

Advise individual civil servants Report periodically (annually) on execution of

integrity policies into organizational norms and processes as well its visibility to civil servants

Possible improvements

IntegrityPublic sector (4b)

Legal obligations Enables more attention for real commercial and fraudulent

risks Reduces costly legal procedures and reputation risks Limits liability in the event of accidents Limits government iniatives to create new legislation Creates a positive shared company culture Protects reputation Improves staff behaviour and social responsibility

Integrity

Importance increases:Private sector (1)

Integrity

Importance increases:Private sector (2a)

In Real Estate significant distrust of integrity project developers, brokers,traders and taxers. Conclusions:

Some recent studies in real estate and social housing

Sufficient: Code of conduct, confidence manager, training, ethics comittee, real estate ombudsman

No integrity audits and no additional legal penal measures apart from increasing penalties

Integrity

Importance increases:Private sector (2b)

Social housing sector: new internal rule: practice what you preach, Increased internal auditing regarding integrity Integrity part of risk management More effective internal sanctions Integrity more important aspect of culture Integrity more important for recruitment and selection of staff

No changes in penal code wanted

• Private sector (3)

Basic elements: Ethical leadership & culture of integrity Business code of conduct Reporting standards

Integrity

100 largest Dutch companies have business code of conduct

Ethical leadership & culture of integrity Strong commitment board of directors and CEO High performance and high level of integrity Spirit and letter of formal rules (legal and financial) Voluntary adaption of global ethical standards Employee commitment to core values of honesty, candour, fairness ,trustworthiness, reliability, elements of deterrents/affirmative Red flag training Commitment and consistent leadership that makes performance with integrity the foundation of the corporation

IntegrityPrivate sector (4a)

Ethical leadership & culture of integrity Building integrity infrastructure: risk assessment, risk abatement to prevent, detect and respond early warning systems stimulating systemic education and training Ombudssystems: professionally, fairly and promptly and prohibit

retaliation Compensation systems : Payment with integrity No direct cash payments to officials Clear guidelines and presumptions & strong centralised processes to ensure that hard cases are decided upon. Real due diligence(vetting third parties) and hard extensive contracts

IntegrityPrivate sector (4b)

Cover: Conflicts of interest, Compliance with laws and regulations, Financial records and other internal information, Confidentiality, Accepting gifts and bribes, Reporting violations, Fair competition, Insider trading, Discrimination.

Business code of conduct

Private sector (4 c)

Effective: Comprehensive, morally justifiable, authentic and feasible

Integrity

Truly embed a code Formal inclusion in major decision making procedures Internal audit reports on compliance per business unit Performance evaluation criteria External reporting about effectiveness Background investigations on prospective employees.

Business code of conduct

Private sector (4 d)

Integrity

Most effective implementation depends on: ownership structures,

financial market development and legal environment of a specific country

Key internal building blocks:Aligning incentives for executives with corporate interests in

accountable manner: sustainable profitability and adequate risk management

Renumeration transparent and accountable (disclosure) …> shareholders advise on executive compensation

Make boards more independent and effective Recognise role of whistleblowers: hotlines, protection

Reporting standards

Private sector (4 e)

Integrity

• January 2010 new whistleblowerscode Only Central government & Police, incl. former civil servants Employers duty to protect whistleblowers against

intimidation/aggression of colleagues Confidential communication of wrong doings to trust officer Easier filing complaints with external body: Commission

integrity government Financial allowance (fixed) for cost of civil procedures and

legal assistance court procedures

Whistleblowers

January 2010 new whistleblowers code New publication and education module trust officer

Next steps:

National advisory and referral institute for whistleblowers from public and private sector

Central communication point for breaches of integrity public sector

Whistleblowers

Transparency International: General law for public sector (as a whole) and private sector Scope of the law: broad subject matter, broad coverage and requirement of honest belief of whistleblower Primarily protecting whistleblowers not companies

Whistleblowers

Transparency International: No penal consequences for whistleblower, only in case of evident wrong doing Whistle blowing is a societal problem not a

problem between an employer and an employee

Whistleblowers

Financing political parties

Annual subsidy for political parties

two thirds dependent upon amount of parliamentarian seats,

one third dependent upon amount of membersIn total some € 13.6 million

No buying of votes allowed: heavy penalties vote rigging

Financing political parties

Draft law : Add political movements: PVV (1 member) Publish sources of gifts and donations (transparency) No obligatory party funding by chosen representatives Subsidies for party, scientific bureau and junior member party

organisationPressure of Parliament and Greco (Council of Europe) Desirable more attention for regulation of grants, more attention for transparency, supervision and sanctions.

Returned to Council of Advisors for new reading / advice

Financing political parties

Transparency International All sources of finance of political parties and or

movements should be transparent and accounted for.

Political parties should not be allowed to be involved in business transactions