BUSINESS PRINCIPLES FOR COUNTERING BRIBERY A MULTI-STAKEHOLDER INITIATIVE LED BY TRANSPARENCY INTERNATIONAL

Transcription

1 BUSINESS PRINCIPLES FOR COUNTERING BRIBERY A MULTI-STAKEHOLDER INITIATIVE LED BY TRANSPARENCY INTERNATIONAL

2 Transparency International is the global civil society organisation leading the fight against corruption. Through more than 90 chapters worldwide and an international secretariat in Berlin, we raise awareness of the damaging effects of corruption and work with partners in government, business and civil society to develop and implement effective measures to tackle it. The chapters are independent local NGOs, free to choose their own polices and to raise funds for their activities. Transparency International is based on the principle that, as corruption is a country-specific phenomenon, local organizations can be much more efficient than any efforts taken or imposed from the outside. Transparency Azerbaijan was established by representatives of civil society and academia; fully accredited as a national chapter by Transparency International. Author: Translated by: Edited by: Cover photo: xxxxxxxxxxx Every effort has been made to verify the accuracy of the information contained in this report prepared in the framework of National Integrity System project financed by European Union. All information was believed to be correct as of October Nevertheless, Transparency International and Transparency Azerbaijan, its local representation cannot accept responsibility for the consequences of its use for other purposes or in other contexts. ISBN: xxxxxxxxxx 2015 Transparency International. All rights reserved.

3 TABLE OF CONTENTS FOREWORD 2 STAKEHOLDER DEVELOPMENT 3 1. INTRODUCTION 4 2. THE BUSINESS PRINCIPLES 5 3. DEVELOPMENT OF A PROGRAMME FOR COUNTERING BRIBERY 6 4. RISK ASSESSMENT 7 5. SCOPE OF THE PROGRAMME Conflicts of interest Bribes Political contributions Charitable contributions and sponsorships Facilitation payments Gifts, hospitality and expenses 8 6. PROGRAMME IMPLEMENTATION REQUIREMENTS Organisation and responsibilities Business relationships Human resources Training Raising concerns and seeking guidance Communication and reporting Internal controls and record keeping Monitoring and review Cooperation with authorities Independent assurance INITIAL EVALUATION QUESTIONS RELATED TO BUSINESS INTEGRITY PRINCIPLES 8. COMPREHENSIVE EVALUATION QUESTIONS RELATED TO BUSINESS INTEGRITY PRINCIPLES

4 FOREWORD More than ever, the risks from bribery are a major concern for enterprises, whether they are confronted with demands for bribes, faced with competitors acting corruptly or undermined by employees violating their codes of conduct. Since the Business Principles for Countering Bribery were first published in 2003, the environment has changed considerably. The advent of stricter domestic and foreign bribery laws and increasing enforcement, the imposition of record fines and the threat of criminal penalties for company directors and employees have been sending shock waves through the business community. Furthermore, pressures are mounting from socially responsible investment funds and indices, which are applying anti-bribery criteria to their screening procedures. As regulators and stakeholders become less tolerant of lapses, responsible companies increasingly understand that they must undertake continuous efforts to ensure that they identify and mitigate the risks of bribery effectively. To assist companies in the design and implementation of effective anti-bribery policies, Transparency International (TI) and Social Accountability International joined forces to launch the Business Principles for Countering Bribery in The development of the Business Principles was achieved through a multi-stakeholder process with the cooperation of a Steering Committee drawn from business, academia, trade unions and other non-governmental bodies. Although its composition has changed over the years, the Steering Committee has remained closely involved in efforts to disseminate and maintain the Business Principles. The Business Principles have become a major platform for TI s private sector activities. They have also influenced a wide range of anti-bribery standards and initiatives. In the past decade, the Business Principles have been translated into more than 10 languages and used extensively by the Transparency International network in its work with the business community. They have also informed a number of Transparency International s key research tools. This third edition reflects recent developments in anti-bribery practice and incorporates changes to the original text based on the experience gained since an earlier revision in 2009 and feedback from a public consultation in recent months. The Steering Committee has contributed its valuable knowledge and expertise to this process. Consultations, field-testing and workshops have enriched the Business Principles and the supporting suite of tools over the years. There is more understanding today than ever before of what constitutes an effective anti-bribery programme, but bribery and corruption remain a major challenge. Transparency International believes that integrity is good for business and we hope that the Business Principles will continue to be a reference for enterprises as they strive to develop stronger and more effective anti-bribery programmes, resulting in a higher and more uniform standard of practice worldwide. Cobus de Swardt, Managing Director, Transparency International October TRANSPARENCY INTERNATIONAL

5 STAKEHOLDER DEVELOPMENT This third edition of the Business Principles for Countering Bribery was produced by Transparency International with the input and guidance of a multi-stakeholder Steering Committee. The contents of the Business Principles reflect the views of the Steering Committee and not necessarily those of its individual members on particular topics. The first edition of the Business Principles for Countering Bribery, published in 2003, was drafted with the original members of the Steering Committee and subjected to field tests and a public consultation. In 2009, the Business Principles underwent minor updates. This is the third edition of the Business Principles for Countering Bribery. Changes were formulated taking into account input from the Steering Committee and comments received during a public consultation. STEERING COMMITTEE MEMBERSHIP Corporate members BP plc HSBC Norsk Hydro ASA PricewaterhouseCoopers Sanlam SGS Shell International Non-corporate members The Conference Board European Bank for Reconstruction and Development International Federation of Consulting Engineers International Federation of Inspection Agencies Social Accountability International Supplier Ethical Data Exchange (SEDEX) Trade Union Advisory Committee to the OECD Transparency International (Chair) United Nations Global Compact Chair Cobus de Swardt, Managing Director, Transparency International Secretariat Susan Côté-Freeman BUSINESS PRINCIPLES FOR COUNTERING BRIBERY 3

6 1. INTRODUCTION The Business Principles for Countering Bribery were originally developed through an extensive multi-stakeholder process involving companies, non-governmental organisations and trade unions, as a tool to assist enterprises to develop effective approaches to countering bribery in all aspects of their activities. Enterprises should develop and implement an anti-bribery programme as an expression of broader ethical values and corporate responsibility. But an anti-bribery programme must focus on effectively countering the risk of bribery. Risk exposure may vary among different industries and specific companies, but no enterprise can be certain that it will be free of risk. Not only does an effective anti-bribery programme help mitigate this risk, it also strengthens reputation, builds the respect of employees, raises credibility with key stakeholders and supports an enterprise s commitment to honest and responsible behaviour. The Business Principles aim to provide a framework that can assist enterprises in developing, benchmarking or strengthening their anti-bribery programmes. The Business Principles reflect a high, yet achievable standard of anti-bribery practice. They apply to the bribery of public officials as well as private-to-private transactions. The Business Principles were originally published in 2003 and underwent a first revision in The 2013 revision is part of a periodic review process carried out with the input of the Steering Committee to ensure that the Business Principles remain current in light of changing anti-bribery laws and evolving corporate practice. The primary focus on bribery is maintained in this edition, but the Business Principles now include clauses and revised language on topics such as risk assessment, conflicts of interest, cooperation with authorities, facilitation payments, lobbyists and communication and reporting, to reflect the importance of these matters in up-to-date anti-bribery practice and to achieve closer alignment with other leading codes and legal instruments such as the United Nations Convention Against Corruption. BRIBERY The offering, promising, giving, accepting or soliciting of an advantage as an inducement for an action which is illegal or a breach of trust. 4 TRANSPARENCY INTERNATIONAL

7 2. THE BUSINESS PRINCIPLES The enterprise shall prohibit bribery in any form whether direct or indirect. The enterprise shall commit to implementing a Programme to counter bribery. The Programme shall represent the enterprise s anti-bribery efforts including values, code of conduct, detailed policies and procedures, risk management, internal and external communication, training and guidance, internal controls, oversight, monitoring and assurance. These Business Principles are based on a Board commitment to fundamental values of integrity, transparency and accountability. Enterprises should aim to create and maintain a trust-based and inclusive internal culture of individual accountability in which bribery is not tolerated. BUSINESS PRINCIPLES FOR COUNTERING BRIBERY 5

8 3. DEVELOPMENT OF A PROGRAMME FOR COUNTERING BRIBERY 3.1 The enterprise should develop a Programme that clearly and in reasonable detail, articulates values, policies and procedures to be used to prevent bribery from occurring in all activities under its effective control The enterprise should design and improve its Programme based on continuing risk assessment. The Programme should be consistent with all laws relevant to countering bribery in each of the jurisdictions in which the enterprise transacts its business. The enterprise should develop the Programme in consultation with employees, trade unions or other employee representative bodies and other relevant stakeholders. 3.5 The enterprise should ensure that it is informed of all internal and external matters material to the effective development and implementation of the Programme, and in particular emerging best practices including engagement with relevant stakeholders. 6 TRANSPARENCY INTERNATIONAL

9 4. RISK ASSESSMENT 4.1 The Programme should be tailored to reflect the enterprise s particular business risks, circumstances and culture, taking into account inherent risks such as locations of the business, the business sector and organisational risks such as size of the enterprise and use of channels such as intermediaries. 4.2 The enterprise should assign responsibilities for oversight and implementation of risk assessment. 5. SCOPE OF THE PROGRAMME The Programme should address the most prevalent risks of bribery relevant to the enterprise, but at a minimum should cover the following areas. 5.1 Conflicts of interest The enterprise should establish policies and procedures to identify, monitor and manage conflicts of interest which may give rise to a risk of bribery actual, potential or perceived. These policies and procedures should apply to directors, officers, employees and contracted parties such as agents, lobbyists and other intermediaries. 5.2 Bribes The enterprise should prohibit all forms of bribery whether they take place directly or through third parties The enterprise should also prohibit its employees from soliciting, arranging or accepting bribes intended for the employee s benefit or that of the employee s family, friends, associates or acquaintances. 5.3 Political contributions The enterprise, its employees, agents, lobbyists or other intermediaries should not make direct or indirect contributions to political parties, organisations or individuals engaged in politics, as a way of obtaining unfair advantage in business transactions The enterprise should publicly disclose all its political contributions. BUSINESS PRINCIPLES FOR COUNTERING BRIBERY 7

10 5.4 Charitable contributions and sponsorships The enterprise should ensure that charitable contributions and sponsorships are not used as a subterfuge for bribery The enterprise should publicly disclose all its charitable contributions and sponsorships. 5.5 Facilitation payments Recognising that facilitation payments 1 are bribes, the enterprise should prohibit them. 5.6 Gifts, hospitality and expenses The enterprise should develop a policy and procedures to ensure that all gifts, hospitality and expenses are bona fide. The enterprise should prohibit the offer, giving or receipt of gifts, hospitality or expenses whenever they could influence or reasonably be perceived to influence improperly the outcome of business transactions. 6. PROGRAMME IMPLEMENTATION REQUIREMENTS The following section sets out the requirements that enterprises should meet at a minimum when implementing the Programme. 6.1 Organisation and responsibilities The Board of Directors or equivalent body should demonstrate visible and active commitment to the implementation of the enterprise s Programme The Chief Executive Officer is responsible for ensuring that the Programme is carried out consistently with clear lines of authority. 6.2 Business relationships General The content of the following General section applies to all business entities The enterprise should implement its Programme in all business entities over which it has effective control. 1 Facilitation payments: Also called facilitating, speed or grease payments, these are small unofficial payments made to secure or expedite the performance of a routine or necessary action to which the payer of the facilitation payment has legal or other entitlement. 8 TRANSPARENCY INTERNATIONAL

11 Where the enterprise does not have effective control it should use its influence to encourage an equivalent Programme in business entities in which it has a significant investment or with which it has significant business relationships Whether or not it has effective control over a business entity, the enterprise should undertake properly documented, reasonable and proportionate anti-bribery due diligence of business entities when entering into a relationship including mergers, acquisitions and significant investments The enterprise should avoid dealing with business entities known or reasonably suspected to be paying or receiving bribes The enterprise should perform reasonable and proportionate monitoring of its significant business relationships. This may include the right of inspection of books and records The enterprise should document relevant aspects of the implementation of its Programme or equivalent by associated business entities In the event that policies and practices of associated business entities are in conflict with the principles of its own Programme the enterprise should take appropriate action. This can include requiring correction of deficiencies in the implementation of the entity s Programme and the application of sanctions The enterprise should have a right of termination in the event that associated business entities engage in bribery or act in a manner inconsistent with the enterprise s Programme Joint ventures and consortia Where the enterprise is unable to ensure that a joint venture or consortium has a Programme consistent with its own, it should have a plan for taking appropriate action if bribery occurs or is reasonably thought to have occurred. This can include: requiring correction of deficiencies in the implementation of the joint venture s or consortium s Programme, the application of sanctions or exiting from the arrangement Agents, lobbyists and other intermediaries The enterprise should not channel improper payments through agents, lobbyists or other intermediaries The enterprise should undertake properly documented due diligence before appointing agents, lobbyists or other intermediaries All agreements with agents, lobbyists or other intermediaries should require prior approval of management Compensation paid to agents, lobbyists or other intermediaries should be appropriate and justifiable remuneration for legitimate services rendered Agents, lobbyists and other intermediaries should agree contractually to comply with the enterprise s Programme and be provided with appropriate advice and documentation explaining the obligation. BUSINESS PRINCIPLES FOR COUNTERING BRIBERY 9

12 The enterprise should contractually require its agents, lobbyists and other intermediaries to keep proper books and records available for inspection by the enterprise, auditors or investigating authorities Contractors and suppliers The enterprise should conduct its procurement practices in a fair and transparent manner The enterprise should take steps to identify its contractors and suppliers The enterprise should assess the risk of bribery in its contractors and suppliers and conduct regular monitoring The enterprise should communicate its anti-bribery Programme to contractors and suppliers and work in partnership with major contractors and suppliers to help them develop their anti-bribery practices. 6.3 Human resources Human resources practices including recruitment, promotion, training, performance evaluation, remuneration and recognition should reflect the enterprise s commitment to the Programme The human resources policies and practices relevant to the Programme should be developed and undertaken in consultation with employees, trade unions or other employee representative bodies as appropriate The enterprise should make it clear that no employee will suffer demotion, penalty, or other adverse consequences for refusing to pay bribes even if such refusal may result in the enterprise losing business The enterprise should make compliance with the Programme mandatory for employees and directors and apply appropriate sanctions for violations of its Programme. 6.4 Training Directors, managers, employees and agents should receive appropriate training on the Programme Where appropriate, contractors and suppliers should receive training on the Programme. 6.5 Raising concerns and seeking guidance To be effective, the Programme should rely on employees and others to raise concerns and violations as early as possible. To this end, the enterprise should provide secure and accessible channels through which employees and others should feel able to raise concerns and report violations ( whistleblowing ) in confidence and without risk of reprisal These or other channels should be available for employees to seek advice on the application of the Programme. 10 TRANSPARENCY INTERNATIONAL

13 6.6 Communication and reporting The enterprise should establish effective internal and external communication of the Programme The enterprise should publicly disclose information about its Programme, including the management systems employed to ensure its implementation The enterprise should be open to receiving communications from and engaging with stakeholders with respect to the Programme The enterprise should consider additional public disclosure on payments to governments on a country-by-country basis In the spirit of greater organisational transparency and accountability to stakeholders, the enterprise should consider disclosing its material holdings of subsidiaries, affiliates, joint ventures and other related entities. 6.7 Internal controls and record keeping The enterprise should establish and maintain an effective system of internal controls to counter bribery, comprising financial and organisational checks and balances over the enterprise s accounting and record keeping practices and other business processes related to the Programme The enterprise should maintain available for inspection accurate books and records that properly and fairly document all financial transactions. The enterprise should not maintain off-the-books accounts The enterprise should subject the internal control systems, in particular the accounting and record keeping practices, to regular review and audit to provide assurance on their design, implementation and effectiveness. 6.8 Monitoring and review The enterprise should establish feedback mechanisms and other internal processes supporting the continuous improvement of the Programme. Senior management of the enterprise should monitor the Programme and periodically review the Programme s suitability, adequacy and effectiveness and implement improvements as appropriate Senior management should periodically report the results of the Programme reviews to the Audit Committee, Board or equivalent body The Audit Committee, the Board or equivalent body should make an independent assessment of the adequacy of the Programme and disclose its findings in the Annual Report to shareholders. 6.9 Cooperation with authorities The enterprise should cooperate appropriately with relevant authorities in connection with bribery and corruption investigations and prosecutions. BUSINESS PRINCIPLES FOR COUNTERING BRIBERY 11

14 6.10 Independent assurance Where appropriate, the enterprise should undergo voluntary independent assurance on the design, implementation and/or effectiveness of the Programme Where such independent assurance is conducted, the enterprise should consider publicly disclosing that an external review has taken place, together with the related assurance opinion. 12 TRANSPARENCY INTERNATIONAL

15 APPENDIX 1: THE CISM CHECKLIST CISM Anti-Bribery Checklist: How does your company stand on countering bribery? ( Y: Yes, N: No, N/A: Not Applicable) 1.0 COMPLIANCE TO ANTI-CORRUPTION LEGISLATION Y N Partly Planned N/A 1. Have you performed a review to ensure that your company is compliant with anti-corruption legislation in Malaysia and countries where you operate? 2.0 POLICY 2. Is there a formal, up to date, published policy on zero tolerance of bribery? 3. Is there a public commitment to be consistent with all relevant anti-bribery laws in all jurisdictions in which your company operates? 4. Have you made a commitment to implement an anti-bribery programme 1? 3.0 IMPLEMENTATION 5. Do you carry out regular risk assessment to determine the risks of bribery and tailor the programme to mitigate these risks? 6 Does your programme have detailed policies, procedures and controls for: a) Political contributions b) Charitable donations and sponsorships c) Facilitation payments d) Gifts, hospitality and travel expenses 7 Does your leadership assign unambiguous responsibility and authority to managers for carrying out the programme? 8 Is the programme implemented in all business entitles over which your company has effective control? 9 Do you encourage an equivalent programme in business entitles in which your company has a significant investment or with which it has significant business relationships? 10 Is the programme communicated to : a) All employees 5.4 Business partners 5.5 Other stakeholders 11 Do your human resources practices 2 reflect your company s commitment to the programme? 12 Is tailored training provided to: a) All directors, managers, employees and agents? b) Key high-risk third parties including other intermediaries, contractors and suppliers? 13 Does your company provide secure and accessible channels through which employees and others can obtain advice or raise concerns (whistleblowing) without risk of reprisal? 14 Is the whistleblowing policy communicated adequately to external parties and authorities? 15 Are there internal controls to counter bribery, with financial and organisational checks on accounting and record keeping practices and related business procedures? 16 Are there procedures/mechanisms which require employees to declare any personal interest in any significant business decisions? 17 Does your company include an anti-corruption clause in procurement/tender contracts? 18 Does your company require senior management to declare their assets? 4.0 MONITORING AND REVIEW 19 Are the internal control systems, in particular the accounting and record keeping practices, subjected to regular review and audit? 20 Do you have procedures in place to deal with any incidents of bribery? 21 Does your senior management periodically review the programme s suitability and effectiveness and implement improvements? 22 Does the Audit Committee, Board or equivalent body make a regular independent assessment of the adequacy of the programme? 23 Does your company publicly disclose information about its programme and its implementation? 24 Do you carry out external assurance of the programme and is the opinion statement published publicly? For further information please contact: ask@transparency.org.my 5.7 The whole of an enterprise s anti-bribery efforts including values, code of conduct, detailed policies and procedures, risk management, internal and external communication, training and guidance, internal controls, oversight, monitoring and assurance. ² Including those for recruitment, training, performance evaluation, recognition and promotion.

16 APPENDIX 2: THE CISM SELF-EVALUATION TOOLKIT (SET) Self-Evaluation Indicators ( Y: Yes, N: No, N/A: Not Applicable) Y N N/A Unclear 1.0 THE PRINCIPLES 1.1 Prohibition of bribery in any form 1 Does the company have a high level public statement such as Corporate Values statement which includes a commitment to business integrity? 2 Has an Anti-Bribery Programme been formally approved by the Board or equivalent body or if a familyowned company, the owner-manager? 3 Does the company have a Code of Conduct or equivalent policy document which includes an explicit statement of the no-bribes policy? 2.0 DEVELOPMENT OF THE PROGRAMME FOR COUNTERING BRIBERY 2.1 Design 4 Does the programme clearly and in reasonable detail, articulate values, policies and procedures to be used to prevent bribery from occurring in all activities under the company s effective control? (If the programme has yet to be designed, tick N/A.) 2.2 Monitoring emerging best practices and engagement with interested parties 5 Does the company have a procedure to ensure that it is informed of all internal and external matters related to the effective development and implementation of the programme, and in particular, emerging best practices? 2 SPECIFIC FORMS OF BRIBERY 3 Political contributions 6 Is there a policy and procedure covering political contributions whether made directly or indirectly? 7 If the policy is not to make political contributions, does the company have procedures to prevent political contributions being made? 8 If the policy allows for political contributions, does the policy and procedure ensure that contributions are not made directly or indirectly to political parties, organisations or individuals engaged in politics as a way of obtaining an advantage in business transactions? 9 Is there a procedure to record accurately in the books any political contributions made? Charitable contributions 10 Are there procedures and controls to ensure that charitable contributions are not used as a subterfuge for bribery? 11 Is there a review and approval procedure for charitable contributions with designated levels of approval? 12 Is there a procedure to record charitable contributions accurately in the books? 13 If the company has a foundation or trust, are that entity s contributions subject to procedures and controls to ensure they are not used as a subterfuge for bribery to gain an undue advantage for the company? 3.3 Sponsorships 14 Is there a policy and procedure covering sponsorship to ensure that sponsorships are not used as a subterfuge for bribery? 15 Are there procedures for approval and payment of sponsorships which are in line with the normal purchasing procedures? ¹Even if there is a policy not to make political contributions, such contributions may be made either inadvertently or in contravention of the policy in such cases, they must be recorded correctly.

17 ( Y: Yes, N: No, N/A: Not Applicable) Y N N/A Unclear 3.4 Facilitation payments 16 Is there a policy and procedure covering facilitation payments? 17 If the policy does not prohibit facilitation payments, then does it require the company to work to identify and eliminate such payments? 18 Does the company have a procedure to monitor implementation of its policy on facilitation payments? 3.5 Gifts, hospitality and expenses 19 Does the company have policies and procedures covering gifts, hospitality and expenses? 20 Are there procedures and controls including thresholds and reporting procedures, to ensure that the company s policies relating to gifts, hospitality and expenses are followed? 21 Are there clear guidelines to enable employees to know how to handle the giving or receiving of gifts, hospitality and expenses? 22 Is there a procedure to communicate to employees and business partners the guidelines for gifts, hospitality and expenses? 4.0 ORGANISATION AND RESPONSIBILITIES 4.1 Commitment to a Programme and assignment of responsibilities 23 Has the Board of Directors or equivalent body or owner-manager committed to an anti-bribery policy and programme? 24 Does the Board of Directors or equivalent body or owner-manager provide oversight to the programme either directly or through a Board committee? 25 Is the Chief Executive or equivalent responsible for ensuring that the programme is carried out consistently with clear lines of authority? 26 Does a director or senior manager have responsibility for implementing the programme? 4.2 Demonstration of commitment by the Board and management 27 Does the company make compliance with the programme mandatory for directors? 28 Is there a sanctions procedure for breaches of the programme by directors? 5.0 SUPPORT AND OPERATIONAL FUNCTIONS 29 Are there procedures to ensure that support and operational functions have the skills and resources to assist in implementing the programme? 30 Are there procedures to examine sales and marketing procedures regularly where risks of bribery apply and to implement appropriate remedies? 31 Are there procedures to examine contracting and purchasing procedures regularly where risks of bribery apply and to implement appropriate remedies? 6.0 BUSINESS RELATIONSHIPS 6.1 Subsidiaries 32 Is there a policy and procedure to implement the company s programme in all business entities over which it has effective control? 33 Is it the company s policy to hold General Managers of subsidiaries accountable for implementation of the programme?

18 Appendices ( Y: Yes, N: No, N/A: Not Applicable) Y N N/A Unclear 34 Is there a procedure for General Managers of subsidiaries to provide regular written assurance that the parent company s programme is being implemented? 35 Do the records show that General Managers are making written reports regarding implementation of the Programme? 6.2 Significant investments 36 Is there a policy and procedure to encourage the implementation of a programme equivalent to its own in which the company has a significant investment? 6.3 Joint ventures and consortia 37 Is there a procedure to conduct due diligence before entering into a joint venture or consortium? 38 Is there a policy to ensure that the joint ventures and consortia over which the company maintains effective control have a programme consistent with its own? 39 Is there a procedure to ensure that the joint ventures and consortia over which the company maintains effective control have a programme consistent with its own? 40 Where the company has effective control of a joint venture or consortium is there a procedure to make known its programme to the other entities in the venture and encourage them to adopt a programme for the venture consistent with its own? 41 Where the company does not have effective control of a joint venture or consortium is there a procedure to make known its programme to the other entities in the venture and encourage them to adopt a programme for the venture consistent with its own? 42 Does the company have a procedure to monitor the Programmes and performance of its joint ventures and consortia? 43 In the case of policies and practices that are inconsistent with its own Programme, is there a procedure for the company to take appropriate action? 6.4 Exit strategy 44 In the case of policies and practices that are inconsistent with its own programme, is there a procedure for the company to take appropriate action? 45 Does the company have a procedure that where it is unable to ensure a joint venture or consortium has a Programme consistent with its own, it has a plan to exit from the arrangement if bribery occurs or may be reasonably thought to have occurred? 6.5 Agents and other intermediaries 46. Are there procedures to ensure that the company does not channel improper payments through agents or other intermediaries? 47 Is there a policy and procedure to undertake due diligence before appointing agents and other intermediaries? 48. Is there a procedure to provide guidance to employees for conducting due diligence before appointing agents and other intermediaries? 49 Does the company have a procedure to properly document due diligence reviews? 50 Is there a procedure for all agreements with agents and other intermediaries to require prior approval of senior management? 51 Is there a policy to require agents and other intermediaries to contractually agree to comply with the company s programme? 52 Is there a procedure for the company to have the contractual right of termination in the event that agents and other intermediaries pay bribes or act in a manner inconsistent with the programme?

19 ( Y: Yes, N: No, N/A: Not Applicable) Y N N/A Unclear 53 Is there a procedure to make provision in all contracts with agents, advisers and other intermediaries relating to the right of access to records, cooperation in investigations and similar matters pertaining to the contract? 54 Does the company have a procedure to provide its agents and other intermediaries with advice and documentation explaining the obligation to comply with the company s programme, as well as applicable sanctions? 55 Is there a policy that compensation paid to agents and other intermediaries is an appropriate and justifiable remuneration for legitimate services rendered, and are there procedures to ensure this? 56 Are there policies and procedures to ensure that compensation paid to agents and other intermediaries is paid through bona fide channels? 57 Is it the company s policy not to make payments to agents and intermediaries to off-shore accounts, and are there procedures to ensure this? 58 Is there a procedure to contractually require agents and other intermediaries to keep proper books and records available for inspection by the company, auditors or investigating authorities? 59 Does the company have a procedure to properly document material aspects of the relationship with the agent, adviser or other intermediary? 60 Is there a procedure to monitor the conduct of the company s agents and other intermediaries? 61 Does the company apply sanctions to agents and intermediaries that pay bribes or act in a manner inconsistent with the programme? 6.6 Contractors, subcontractors and suppliers 62 Does the company have an explicit public statement to conduct its contracting and procurement practices in a fair and transparent manner, and are there procedures to ensure this practice? 63 Does the company have a procedure to perform due diligence on contractors and procedures to avoid dealing with contractors and suppliers known or reasonably suspected to be paying bribes? 64 Does the company have procedures to make known its anti-bribery programme to contractors, subcontracts and suppliers? 65 Does the company have procedures to monitor significant contractors and suppliers to ensure they have an effective anti-bribery programme? 66 Are there procedures for the company to have the right of termination in the event that contractors and suppliers pay bribes or act in a manner inconsistent with the company s programme? 6.7 Other business relationships 67 Is there a policy to require or encourage the implementation of a programme equivalent to its own in entities with which the company has significant business relationships? 7.0 HUMAN RESOURCES 7.1 Alignment of human resource practices with the programme 68 Do the company s human resource practices including those for recruitment, training, performance evaluation, remuneration, recognition and promotion reflect the company s commitment to the programmes? 7.2 Mandatory compliance with the programme and sanctions 69 Is there a policy and procedure to make compliance with the programme mandatory for employees, and do they include sanctions in the event of a violation? 7.3 Protection of employees for refusing to pay bribes 70 Is it the company s policy that no employee will suffer demotion, penalty or other adverse consequences for refusing to pay bribes even if such refusal may result in the company losing business?

20 Appendices ( Y: Yes, N: No, N/A: Not Applicable) Y N N/A Unclear 8.0 TRAINING 71 Are there procedures for the training of directors, managers and employees so that they clearly understand the company s programme, and know the company s expectations and the sanctions procedure in the event of a violation? 72 Is refresher training done annually or bi-annually for the staff? 9.0 RAISING CONCERNS AND SEEKING GUIDANCE 9.1 Complaints channels for employees 73 Does the company encourage employees and others to raise concerns and report suspicious circumstances to responsible company officials as early as possible? 74 Does the company provide secure and accessible channels through which employees feel able to raise concerns and report violations ( whistle-blowing ) in confidence and without risk of reprisal? 9.2 Complaints channels for business partners and others 75 Are there secure and accessible communication channels that encourage and allow business partners or other external parties to raise concerns and report violations ( whistle-blowing ) in confidence and without risk or reprisal? 10.0 COMMUNICATION 10.1 Internal communication 76 Does the company have procedures for communicating its programme in an accessible way to all its employees? 10.2 Guidelines on the programme 77 Is there a procedure to require all employees to sign that they have read and understand the guidelines? 10.3 External communication 78 Is there a policy and procedure to publicly disclose information about the programme including the management systems employed to ensure its implementation? 79 Is there a procedure to communicate the policies and procedures on bribery risk areas and the whistleblowing channel to external parties such as suppliers, contractors, customers and business partners? 11.0 INTERNAL CONTROLS AND RECORD KEEPING 11.1 Internal controls system 80 Is there an Audit Committee or equivalent that provides oversight of internal controls, financial reporting processes and related functions, including countering bribery? 81 Does the company ensure that there is an appropriate separation duties? 82 Is there a procedure to discuss the results of internal audits of the programme with relevant operational personnel? 83 Is there a procedure to address identified weaknesses with a documented corrective action plan and a timetable for action? 11.2 Books and records 84 Are there procedures to maintain and be available for inspection, accurate books and records that properly and fairly document all financial transactions?

21 ( Y: Yes, N: No, N/A: Not Applicable) Y N N/A Unclear 85 Are there procedures to ensure that there are no off-the-books accounts, inadequately defined transactions or false entries? 86 Is there a procedure to implement accountability throughout the company and its subsidiaries, to enforce internal controls and proper books and records? 11.3 Review and internal audit 87 Is there a procedure to ensure that the internal control systems, in particular the accounting and record keeping practices, are subject to regular internal audits to provide assurance that they are effective in countering bribery? 88 Is there a procedure for ensuring that there is an adequate audit trail to support all recorded transactions? 89 Is there a procedure for Internal Audit to carry out regular review of the programme to assess its effectiveness and identify areas for improvement? 12.0 MONITORING AND REVIEW 90 Are there feedback mechanisms and other internal processes supporting the continuous improvement of the programme? 12.1 Use of risk assessment in improving the programme 91 Is there a procedure for regular risk assessment for bribery that extends to all operations under the company s effective control? 12.2 Use of consultation in the monitoring and improvement of the programme 92 Is there a procedure by which the views and comments of employees are incorporated into the continuing improvement of the programme? 93 Is there a procedure for consulting regularly with key stakeholders about implementation and improvement of the programme? 12.3 Use of experience from incidents to improve the programme 94 Is there a procedure to use the experience from incidents to improve the programme? 12.4 Reviews by Audit Committee and the Board 95 Is there a procedure for senior management to monitor the programme and periodically review its suitability, adequacy and effectiveness, and implement improvements as appropriate? 96 Is there a procedure for senior management to periodically report the results of programme reviews to the Audit Committee, Governance Committee, Board or equivalent body? 97 Is there a procedure for prompt reporting of any issues or concerns to senior management and the Board? 13.0 EXTERNAL VERIFICATION AND ASSURANCE 98 Has an external verification or assurance been conducted? 99 If external verification or assurance has been conducted, have the findings been reported to the Board? 100 If external verification or assurance has been conducted, have the findings been acted upon?

22 APPRECIATION Transparency International wishes to express its appreciation to the current and past members of the Steering Committee, who have provided financial and in-kind support to the Business Principles initiative. We also wish to acknowledge the valuable contributions of past chairs, Laurence Cockcroft and Jermyn Brooks, as well as Peter Wilkinson for his expert input.

23 Transparency International International Secretariat Alt-Moabit Berlin Germany Phone: Fax: ti@transparency.org blog.transparency.org facebook.com/transparencyinternational twitter.com/anticorruption Transparency Azerbaijan Address: AZ1001, Baku, Jafar Jabbarlı str.16, apt. 7 Tel: ( ) Tel: ( ) Tel: ( ) Fax: ( ) info@transparency.az