Transparency International, the global anti-corruption organisation, today published 10 Anti-Corruption Principles for State-Owned Enterprises, a guide to encourage and help enterprises controlled or partially owned by the state to implement best-practice anti-corruption programmes based on the highest standards of integrity and transparency.
State-owned enterprises (SOEs) represent a significant proportion of many countries’ GDPs, especially in emerging markets, and are often a country’s largest employer. About one quarter of the Fortune 500 Global Companies are SOEs. Governments use SOEs to provide crucial services such as energy, water, transportation and healthcare to communities.
Compared to other companies, SOEs have specific corruption risks because of their closeness to governments and public officials and the scale of the assets and services they control. Some of the biggest recent corruption scandals have involved state-owned enterprises, which clearly shows the risks that these companies face.
In Brazil, the state oil company Petrobras was the focus of a major corruption scandal involving illegal payments to politicians and bribes that led to immense economic, political and social damage that affected the whole country. The Nordic telecoms giant Telia was recently caught bribing for business in Uzbekistan, which resulted in fines of US$965 million.
“The most effective way for SOEs to combat corruption is through transparency. This is at the heart of the SOE principles,” said Delia Ferreira Rubio, chair of Transparency International. “Because SOEs are owned by the public, they should be beacons of integrity and transparency. Unfortunately, this does not always seem to be the case.”
In 2016 Transparency International published research on corporate transparency in emerging markets that showed that among the 18 mainly Chinese SOEs covered, less than one third published information about their anti-corruption programmes. This was below the overall weak performance of the 100 companies covered, which showed that 48 per cent published information on their anti-corruption programmes. This trend was consistent with the results of previous studies of this kind.
The SOE principles provide a code for ethical behaviour and a practical framework to counter corruption risks. In particular, they emphasise the role of corporate governance in providing accountability to stakeholders through transparency and public reporting.
“These 10 anti-corruption principles aim to help SOEs implement successful anti-corruption programmes and be transparent and accountable to their ultimate owners – citizens,” said Jermyn Brooks, chair of Transparency International’s Business Principles Steering Committee and SOE Working Group.
The SOE principles were developed through a multi-stakeholder process where Transparency International sought advice and recommendations from SOEs themselves, its chapters, academics and governance experts from around the world. They are aligned to the Business Principles for Countering Bribery, which were launched by Transparency International in 2003 and last updated in 2013. They have contributed significantly to shaping corporate anti-bribery practice.
The SOE principles are also designed to complement the work of the Organisation for Economic Co-operation and Development (OECD) on providing corporate governance and anti-corruption guidance to governments.
“We look to all SOEs, from large to small, to adopt and use the guidance set out in the principles and we also call on state owners to require and encourage their use,” added Brooks.
The 10 Anti-Corruption Principles for SOEs
The SOE board and management, supported by all its employees, shall:
1: Operate to the highest standard of ethics and integrity
2: Ensure best practice governance and oversight of the anti-corruption programme
3: Be accountable to stakeholders through transparency and public reporting
4: Ensure human resources policies and procedures support the anti-corruption programme
5: Design the anti-corruption programme based on thorough risk assessment
6: Implement detailed policies and procedures to counter key corruption risks
7: Manage relationships with third parties to ensure they perform to an anti-corruption standard equivalent to that of the SOE
8: Use communication and training to embed the anti-corruption programme in the SOE
9: Provide secure and accessible advice and whistleblowing channels
10: Monitor, assess and continuously improve implementation of the anti-corruption programme
Note to editors: Download a copy of 10 Anti-Corruption Principles for State-Owned Enterprises.
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