Enhancing Business Integrity within the Private Sector Chiawen Kiew - PowerPoint PPT Presentation

Enhancing Business Integrity within the Private Sector Chiawen Kiew Office of the Chief Compliance Officer 24 May 2017

Looking Beyond Debarment  Deterrence vs. Prevention  Overall business climate  Relative size and risk profile of business  Willingness to reform, but lack of capacity  Bank mandate 2

Procurement Case Study - Background  Corruption in connection with procurement at Latvian Power Plant by the largest engineering firm in Turkey.  Sanctions imposed  Debarment of subsidiary  Compliance enhancements at holding company  Engagement of monitor for a period of 3 years. 3

Procurement Case Study - Status  Compliance enhancements to date  Creation of compliance organization  Implementation of third-party due diligence procedure  Adoption of Code of Business Conduct  Business integrity training of all employees (ongoing)  Launch of anonymous reporting hotline  Enhanced payment controls around gifts, hospitality, donations, and sponsorships  Benefits of the approach  Reduced risk of recidivism 400 projects in 25 countries, many “high risk”  Almost 10,000 employees   Catalyst for regional business integrity improvement 4

Focus Country – Ukraine  Four corruption-related enforcement actions 2015-2016 # Payments Benefit Result Subject ACTI Ukraine US$22 US$100 million in 3-year 1 (Subsidiary of multinational million VAT refunds debarment agribusiness corporation) VAT refunds, 3-year Medium-sized, family- €7.2 million 2 customs clearance, conditional owned plastic manufacturer court case facilitation nondebarment 3-year €18.3 million in VAT Medium-sized, family- €4.3 million 3 conditional owned steel manufacturer refunds nondebarment 3-year Medium-sized, regional 4 US$380,000 Land registration conditional grain trading company nondebarment 5

Focus Country – Ukraine (cont’d)  Improved “Specific” and “General” Prevention  Establishment of anti-corruption function  Establishment of audit function  Training of board and senior management  Increased awareness of business integrity 6

What Can Government Do?  Enhance legislation  Tighten requirements on corporate governance and business integrity  Establish proper corporate liability  Establish defence based on adequate internal controls (i.e., UK Bribery Act)  Raise awareness of business integrity issues  Co-operation with Chambers of Commerce  Awareness-raising events  Increase enforcement related to business integrity issues 7

Questions? EBRD Website: www.ebrd.com List of Ineligible Entities: www.ebrd.com/ineligible-entities.html Report Fraud and Corruption: http://www.ebrd.com/eform/contact/1390580844264 Ombudsman Business Council: https://boi.org.ua/en/ 8