STRENGTHENING INTEGRITY WITH THEINTEGRITYAPP

A digital tool for the self-assessment of compliance programmes.

Authors: Rittger, Elena and Wunderlich, Malin

Corruption is a problem that affects the private and public sectors alike. Many companies are aware of the added value of high integrity standards for their business, but do not know how to implement an effective compliance management system. This is where TheIntegrityApp comes in, a digital tool developed by the Alliance for Integrity and its partners for the self-assessment of compliance programmes.

Major corruption scandals in the private sector over the last years have shown that corruption is far from a problem that only involves the public sector. It is instead a problem that involves all sectors of society and the economy, including small and large companies alike. Consequently, this means that the private sector has a crucial role to play in the fight against corruption.

However, compliance and transparency are not just about saving the world from corruption. Compliance is a key element for business development.

High integrity standards as important competitive advantage

Companies with high integrity standards tend to have better financial performance than others, demonstrating the link between good ethical practices and market needs.

Compliance has several advantages for companies with positive effects on

  • customer acquisition and retention;
  • transparency and brand reputation;
  • employee attraction, retention, and engagement;
  • improved productivity and overall financial performance;
  • risk management and mitigation.

Compliance is not just for multinational companies

Many people tend to think that compliance is only for big companies, with many employees, high capital and a complex supply chain. However, this is a fallacious misconception. Especially for small and medium-sized enterprises (SMEs), business integrity is not a choice, but a matter of business survival and a prerequisite for growth: a strong compliance programme can be the convincing argument for various business opportunities, such as doing business with governments or multinational companies.

Strengthening compliance measures with TheIntegrityApp

Many companies face the dilemma that while they understand the value of integrity for their business, they do not know how to develop or improve their compliance management system.

This is the point where TheIntegrityApp comes into play. TheIntegrityApp is a digital tool for the self-assessment of compliance programmes which was developed by the Alliance for Integrity together with its partners to give companies and governments a helping hand in overcoming corruption and uncertainty. By answering a practical and short questionnaire, users will receive a score between 0 and 100, reflecting the strengths of the company’s compliance efforts in relation to international standards and best practices.

Even if every question still has to be answered no at the beginning, this is no reason to bury one’s head in the sand: After the self-assessment, each company receives tailored access to resources such as podcasts, online seminars, publications and more, all designed to improve the company’s integrity standards. The self-assessment should be repeated after a few months to enable comparisons and visualise improvements.

Why companies should make use of TheIntegrityApp

TheIntegrityApp is aimed at companies of all sizes and offers various benefits:

For multinationals, the digital tool helps to train companies in the supply chain by providing a free assessment for business partners and informational material on how to improve or implement an effective compliance programme. In this way, it is possible to ensure high integrity standards along the entire supply chain and actively prevent reputational losses. Due to its availability in several languages (English, German, Portuguese, Spanish and Bahasa Indonesia) TheIntegrityApp can also be used by business partners in different regions across the globe.

For SMEs, TheIntegrityApp offers a free tool that provides access to easy-to-use and practical materials on compliance and integrity. By doing so, companies with a small budget can set up a comprehensive compliance management system and track their progress.

Further development of TheIntegrityApp

In order to continuously improve and develop TheIntegrityApp, the Alliance for Integrity has joined forces with its partners. Together with the Business Scouts for Development, the initiative has been working on a French language version which will be launched during the Global Conference of the Alliance for Integrity end of April 2021. The French version is aimed specifically at companies in Francophone Africa and is intended to make an important contribution to creating a sustainable business environment in the region.

In addition, the Sounding Board of TheIntegrityApp, consisting of the Alliance for Integrity and partners from the private and public sectors as well as civil society, is currently supporting with its expertise the development of a new risk assessment feature. The new function is based on different situations in which a company may face corruption. The risk assessment tool will be able to measure whether the company is exposed to these risk factors and what internal measures need to be implemented to mitigate them. At the end of the assessment, users will receive a heat map and further information on how to efficiently address the identified risks.

TheIntegrityApp for the public sector

The added value for the private sector is clearly expressed by over 1,500 users from 15 different countries. However, to achieve systemic change, the public sector must be involved in anti-corruption efforts as well. Thus, the Alliance for Integrity and its partners have adapted TheIntegrityApp for use in the public sector with almost 4,000 users.

In Colombia, the digital tool is part of the Government’s strategic approach to strengthen business integrity. It allows Colombian companies that signed an integrity pact to self-assess their compliance capacities and to further improve by making use of tailored content delivered through the app. The Alliance for Integrity sends a biweekly report on the status quo to the government.

In Brazil, the Alliance for Integrity and the General Comptroller of the Union Brazil (CGU) jointly developed a version of TheIntegrityApp for the public sector. Changes include a self-assessment tailored to the specific needs of the public sector and a set of targeted tools and resources. Public servants in Brazil can anonymously use the app to self-assess their knowledge of compliance and evaluate the compliance capacities of superiors and their organisations. The Government receives an overview of the level of compliance capacities of participating government institutions.

In Brazil and Colombia, the data provides a structured overview that enables the governments to use limited resources where they have the greatest impact. All data is aggregated and anonymised.

BUSINESS INTEGRITY IN THE DIGITAL AGE

Mr. Suhayl Abidi, Research Advisor, GOG-AMA Centre of International Trade & Consultant, Amity University

In February of this year, the partners of McKinsey & Co., world’s largest and one of the most respected consultancy organisations, voted to replace Kevin Sneader as global managing partner in a historic rebuke over his handling of a string of crises. The most important was the firm’s ethically and morally questionable advice to its clients, a number of pharmaceutical firms selling opioid drugs in how to increase opioid sales, and how to counter the emotional messages from mothers with teenagers that overdosed on the drug. McKinsey & Co. agreed to pay $574m in an out-of-court settlement of lawsuits brought by 49 US states over its advice to opioid manufacturers accused of fuelling an epidemic of prescription drug addiction. Over 40,000 Americans have died due to opioid overdose in the past two decades. This advice led to the bankruptcy of a McKinsey client, the largest firm selling opioid drugs.

In their zeal to increase business, many business leaders cross the blurred lines between what is proper and what is not. In the present time of powerful social media and 24/7 scrutiny, any action seen as unethical can rebound on the company. Though integrity and values have always been important in business, today it has assumed paramount importance for the CEO and Board of Directors. Recently, we have seen in the cases ranging from Yes Bank, ICICI Bank where the business leaders crossed the line of ethical business practices.

Businesses have a bond with its stakeholders such as customers, employees, shareholders and the society in which the company functions and the foundation of this bond is trust. It is the responsibility of the Board of Directors to oversee this function, especially keep a sharp eye on the CEOs and other senior leaders that they don’t cross the line of ethical behavior. This is very common in marketing where customers are given misleading information to increase sales. Very recently, Honey marketed by prominent brands failed a key test of purity, the Centre for Science and Environment (CSE) has claimed, citing an investigation it conducted on various brands of Indian honey. Out of 13 samples of the top brands of honey in the market, only three brands passed a key test. The others, which the biggest names in Indian honey. CSE said that “It shows how the business of adulteration has evolved so that it can pass the stipulated tests in India. We found that sugar syrups are so designed that they can go undetected.”

If ethics is disappearing from our society, and business is part of it, we have only to blame our educational system. Ethics is the most essential and functioning branch of philosophy in today’s world. Ethics are an important part of the decision- making but students are not taught to think ethically. I am surprised to find that Harshad Mehta who conducted bank and stock frauds in the 90s to gain wealth is not seen as a crook by many in the younger generation but someone who was smart enough to break the system. Education is fundamentally about learning values, but we have a great deal of difficulty talking about values and it shows in our political, economic and business systems.

Howard Gardner, the famous Harvard educationist talks about the “Five Minds”, competencies which are required in the 21st century. The fifth mind is “The Ethical Mind”. A U.S. poll revealed that 72 % of respondents believed wrongdoing was widespread in industry. Only 2 % felt that leaders of large firms were “very trustworthy”. According to Professor Gardner, an ethical mind broadens respect for others into something more abstract. A person with an ethical mind asks herself, “What kind of a person, worker, and citizen do I want to be? I fall workers in my profession adopted the mind-set I have, or if everyone did what I do, what would the world be like?”

The downfall of Ranbaxy Laboratories Limited, at one time the largest drug company in India, was due to the unethical behavior of the top leadership in condoning widespread fraud in submitting data and samples to the US drug authorities to obtain approval for their drugs. This was unearthed by a whistleblower who first tried to caution the company leadership and lost his job as a result. He later took his evidence to the US Federal Drug Agency which fined the company $500 million, the largest awarded till date.

Whistleblowers display ethical minds. Many people might see a top manager doing something unethical, but they won’t do anything about it because they want to keep their jobs. It was a whistleblower who brought the corrupt practices of ICICI Bank Managing Director Chanda Kochar to the attention of the bank’s board of directors which dismissed it at first. Later, he revealed it in public leading to her arrest and prosecution is presently continuing.

In the present digital environment, with widespread use of social media, such behavior can even bring a company down and the management of companies must always keep in mind when conducting business that their paramount duty is upholding the trust of its stakeholders.

BUSINESS MUST IMPROVE INTEGRITY IN ANTIGRAFT DRIVE

By: Heru Prasetyo, Cofounder of Indonesia Business Links and former country managing director of Accenture Indonesia

This article has been published in The Jakarta Post, 09 December 2019

Corruption is always the nemesis of good governance, which all governments require to be able to govern effectively. “Power tends to corrupt absolutely,” as Lord Acton said, and governance is a matter of the use of power.

On 09 December the world marks the annual International Anticorruption Day. In Indonesia, the historical upheaval that reset the nation’s governance in 1998 was brought about a strong desire toward upholding ethical conduct in the management of the country and businesses.

While throughout the Reform movement democratisation and decentralisation were the highlight of the political scene, similar watershed changes occurred in the anticorruption and integrity landscape. Impotent law enforcement, as a result of the compromised integrity of law enforcement agencies – the police and the prosecutors – was expected to end through the creation of the Corruption Eradication Commission (KPK). Extraordinary power was entrusted to the KPK to remove the boulder blocking the way to achieving high integrity in governance.

The boulder to be shifted was a heavy as could be. Further, imposed democratisation posed a new challenge. “Power corrupts absolutely” suddenly became “distributed power corrupts widely”, and the task given to the KPK multiplied in both in variety of targets and severity of graft.

Faster decision-making to boost investment and economic growth at the national and local levels, particularly because of decentralizstion, heightened the risks of corruption. This was compounded by poorly prepared measures to inject integrity into local democratisation through local elections that instead became known for “money politics” and vote buying. Regional autonomy simply opened up the Pandora’s Box of corruption, as evident in the KPK investigation into about 120 regional heads for alleged graft so far.

Along with those challenges the KPK’s performance was exemplary, with an increasing number of cases. As The Jakarta Post reported in December 2018 that cases handled by the KPK increased from 44 in 2011 to 99 (216), 121 (2017) and 178 (2018). Actually thousands more cases were reported, reflecting the limited capacity and or willingness of the government to expand the strength of KPK vis-à-vis the enormity of the challenge at hand. It is just like having one “lightsaber” to fight endless corrupt clones.

Now see continued political developments trying to bring the KPK to heel, and to at least partially shift the handling of corruption back to the police and prosecutors. Following President Joko “Jokowi” Widodo’s speech on focusing his second term on boosting much-needed investment, while reminding of the need for firm action against officials involved in extortion, the new National Police Chief, Gen. Idham Azis, invited regional leaders to report attempts at extortion by members of the police force. Likewise, the new Attorney General, Sanitiar Burhanuddin, said he would “wipe out” underlings involved in extortion if he had to.

In 2016 a Supreme Court regulation provided the courts with the needed technical regulations to deal with corporate crime in earnest, further encouraging the business community to get involved in the anticorruption movement.

The 2018 KPK report showed that out of 178 cases, 50 involved businesses. Thus, the business community will be more and more exposed to the risk of facing criminal charges if their members are suspected of being involved in compromising integrity.

This would be highly unfortunate but highly likely given the grey are of “common practices” in the past such as bribing officials, contributing to the lack of knowledge and lack of sensitivity in the business community to the expectations of ethical conduct.

Therefore, regardless of the stops and starts in the government’s anticorruption drive, the business sector needs to gear up its knowledge, sensitivity and capacity regarding ethical conduct in every step of business practices, to enable sustainable, consistent integrity.

The substance of the warnings of the police chief and attorney general against extortion by their members can be a starting point to follow up with proactive steps, including in the business community, who either individually or collectively, as the KPK data show, are often part of the web of corruption and targets of extortion.

Only when all economic actors work together to combat corruption will this nemesis of development be significantly reduced.