ETHIC Intelligence hosts second annual international conference
on corruption prevention Standards and Guidelines


OECD Conference center, Paris, Monday September 11, 2017

ETHIC Intelligence was very pleased to host its second annual international conference on Standards and Guidlines: Recent developments in Anti-Corruption Compliance on September 11, 2017 at the OECD conference centre in Paris. You can now view photos and video from the conference where experts from business, civil society and government exchanged and debated on how best to progress in the fight against corruption.

Click here for photos and videos


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 Charlie-MonteithWhat is Collective Action?

Charlie Monteith

Head of Legal and Case Consultancy

International Centre for Asset Recovery

Basel Institute on Governance

Steinenring 60

4051 Basel

Switzerland

Tel: +41 61 205 55 11

Charlie Monteith is the Head of Legal and Case Consultancy at the International Centre for Asset Recovery of the Basel Institute on Governance. He was formerly Counsel with White and Case in London. Mr Monteith is a member of the ETHIC Intelligence Certification committee.   The Basel Institute is an international, multi-disciplinary body which encourages links between the public and private sectors as well as links between solid business practices and academia. Its expertise lies in the fields of financial investigation, corruption prevention and anti-bribery compliance and business ethics.  
What is Collective Action?

The underlying concept of collective action involves joint initiatives between businesses and between business and the public sector. It assumes that issues cannot be solved unilaterally. The fight against corruption is one example which benefits significantly from coordinated efforts exercised in the collective action context. Companies, governments and institutions can come together to combat the negative and illegal manifestations of corruption whether they be through extortion, bribe solicitation or facilitation payments.   Collective actions can be carried out on a macro or micro-level. On the macro-level these actions include global initiatives and declarations such as the World Economic Forum’s Partnering Against Corruption Initiative (PACI), the Transparency International Business Principles and the International Chamber of Commerce’s Rules of Conduct and Recommendations and, more recently, its anti-corruption clause.   On an industry wide-level examples include the banking industry’s Wolfsberg Group statement on money laundering as well as efforts in the aeronautic and defense industry. One such effort is the International Forum on Business Ethical Conduct (IFBEC) which was launched in 2010 by the defense industry to encourage exchanges between members of the industry, their clients and civil society. Country-wide initiatives include Colombia’s High Level Reporting Mechanism and Mexico’s Social Monitor Procurement oversight.   On a micro-level collective actions can be seen on the project/port/tender level with the Islands of Integrity and various Integrity Pacts including the Port Said facilitation payment initiative. Another manifestation is mutual access to whistleblower hotlines.  

What are the specific difficulties when mounting collective actions?

The difficulties are varied and can only be overcome through a collaborative and sustained process of cooperation between stakeholders. Trust must be fostered amongst competitors who would normally be more concerned with anti-trust issues like price-fixing and corporate mergers designed to reduce the competitiveness of a particular market. The difficulties faced when working with rogue companies, small to medium sized businesses and local enterprises must be addressed appropriately and the action should be moderated by a neutral and respected institution.   A collaborative effort when communicating with the relevant authorities on the defined goals and topics of the action will reduce any inherent problems and/or inconsistencies.   Sometimes gaining the commitment of management to collective actions can be problematic. And, in other cases, even if this commitment is assured, a shortage of time in the schedules of all concerned can pose ongoing complications as the imperatives of business edge out the need for collective action when priorities are set.  

What is the International Centre for Collective Action?

The International Center for Collective Action (ICCA) was established in October 2012 as a global umbrella and knowledge hub for worldwide collective action initiatives and research. The activities of the Centre include collecting and making available information on potential collective actions; analysing and researching existing collective actions and the underlying causes of their success and/or failure; developing typologies, guidelines and good practice examples; offering a platform for exchange through web-based communications where connections can be made and regular expert and practitioner meetings can be organised and, finally, providing expertise for initiating new or facilitating existing collective action initiatives.   The Centre is comprised of institutional partners including the Basel Institute, TRACE, Transparency International, Universidad de San Andrés and the International Anti-corruption Academy in Austria.  

Can you give a specific example of a collective action?

A specific example of a collective action involves the High Level Reporting Mechanism or HLRM. Until recently governmental efforts had been focused largely on the offering of bribes. Solicitation and extortion are serious issues for companies. The business community has long been concerned about inadequate action against solicitation which is particularly widespread in public procurement and government regulation. The most sensitive industry sectors include extractive industries, aerospace, defense and construction. The companies face a dilemma: failure to pay results in a loss of orders or exclusion from future bidder lists while paying bribes feeds demand and opens the company up to possible prosecution. It was apparent that a concerted effort was needed on both the supply and demand side.   The HLRM concept started as a proposal to raise reporting channels to levels above procurement and regulatory agencies. Numerous international bodies including the OECD, the G20, the B20 and others have called regularly for this issue to be addressed. In addition, a group of multinational companies from the transport and energy industry called on the Basel Institute and the OECD to assist in developing a practical mechanism. The World Economic Forum/PACI, the Basel Institute and the OECD developed an initial concept for high-level reporting of bribery solicitation and extortion attempts and this became the HLRM.   The HLRM is a reporting channel sitting above the level of the concerned public agency or ministry which companies can use to report solicitations or extortion. This ensures a speedy response to the report and reduces the risk of collusion thereby also reducing the risk for companies to suffer from retaliation and /loss of business. The objective is for companies to report bribery solicitation in a timely fashion i.e. immediately after the solicitation attempt. This allows the authority in charge of implementing the mechanism to verify the reports and take remedial action without delaying the process. The HLRM should be a voluntary mechanism.   The HLRM should be country specific. As with all transposition of an internationally developed concept into domestic practice, it is recommended that the mechanism is conceptualized in each country so as to reflect the country’s institutional framework and governmental structure, its legal framework and practice, and socio-cultural aspects.   With respect to confidentiality and whistleblower protection the reporting mechanism has to be accompanied by adequate and applicable protection mechanisms.   Speedy intervention at a high-level provides realistic hope that demands for bribes by procurement officials will be dropped. This enables procurement to proceed without delays or suspicions of improprieties. The HLRM is beneficial to both governments and companies.   It is important to differentiate prevention from prosecution: prevention requires speedy, informal action, in a matter of days or a few weeks while prosecution necessarily requires formal action and can take a considerable amount of time. The preventive action keeps the solicitation from being consummated and makes it unlikely that a company will commit an offence.  

Where will the first High Level Reporting Mechanism be implemented?

The first high level reporting mechanism will be implemented in Colombia. The structure and procedures necessary for a good fit were found in Colombia’s Office of the Secretary of Transparency. The HLRM will call on experts from government, academia, international financial institutions, local professional associations and experts in procurement, civil engineering and project management. It was launched on April 2, 2013 by the President of Colombia. The HLRM has set thresholds which will trigger reporting and complaints. These can then be verified. It has been designed to alert senior officials within the procuring agencies of any irregularities in their processes and to enhance supervision of particular procurement processes. The HLRM will also be used to review the selection criteria for bids.  

Apart from the High Level Reporting Mechanism are there any other collective actions currently being implemented?

Some industries, starting with energy, have initiated sector wide approaches to the problems of corruption and enhanced transparency. IFBEC, of the aeronautical and defense industry, has been mentioned. Country specific approaches also exist in countries in the Middle East and Africa as well as in India and Indonesia. These are directed by national steering committees which have country specific approaches. There are also business sector collective actions against facilitation payments in these countries which have already proved successful. Partnerships also exist between certain countries and international organizations including the OECD and the World Economic Forum’s Partnership Against Corruption Initiative.

Charlie Monteith, Head of Legal and Case Consultancy
Basel Institute on Governance
Telephone: +41 (0) 61 205 5514
email: charlie.monteith@baselgovernance.org
June 2013
Tags : collective actions, Charlie Monteith, the Basel Institute on Governance, WEF PACI, TRACE
 




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