PRIME Minister Lee Hsien Loong reiterated Singapore’s commitment to the highest degree of integrity at the Public Service Values Conference on Jan 13.

Plans were unveiled for a review of the Prevention of Corruption Act, an increase of the Corrupt Practices Investigation Bureau’s manpower and the establishment of a Corruption Reporting Centre.

Corrupt practices can exist in many industries, including shipping, bunkering, freight inspection, commodities trading, defence contracting, construction and real estate, technology supply, travel and hospitality.

In this article, I highlight some areas of concern, using the acrostic C-O-R-R-U-P-T: Communication; Ownership; Rewards; Risks; Understanding (cultures); Profiling and Training.

 

Communication

The importance of ethics must be communicated to all levels of employees in all organisations and not be restricted to senior executives. Ethics training must go beyond the scope of legal actions and regulatory fines.

All employees should be informed of the dangers they may face in their everyday dealings with suppliers, vendors, salesmen and employees at different levels of the supply chain.

A recent case concerning a purchasing manager in an oil and gas firm illustrates this point. When a contract came up for re-tender, the purchasing manager accepted an offer to have a house built in his home country at a dirt-cheap price by the managing director of a construction business.

In return, the contractor won the tender. It is crystal-clear that bribery risks exist at all levels of decision-making in industry-specific supply-chains and must therefore be clearly communicated to all employees.

 

Ownership

Compliance is not just a head office’s responsibility. It is the responsibility of all employees. At a recent party, a number of shipping and trade executives from North Asian companies were present.

When I casually asked how their firms tackled corruption, I was surprised with the spontaneous response: “Ah, the compliance department in headquarters sends around a form every year for all to sign.”

When the discussion changed to premium scotch whiskey, one forthcoming executive shared that in return for purchasing fuel from a local bunkering firm, he received crates of the finest brands.

Let me be very clear on this front: The law expects equal compliance responsibility from the individual and the organisation.

Rewards

A culture of high bonus payments often creates risks of unethical behaviour. When substantial rewards are at stake, corners may be cut and excessive risks may be taken.

In an age of frequent job change, there is less loyalty to organisations and the traditional values they may represent. When there is excessive focus on material rewards, the risk of unethical behaviour also increases.

Organisations must try to strike a balance between rewarding high performance and at the same time encouraging ethical behaviour and ensuring compliance with acceptable business practice.

 

Risks

A number of organisations have yet to analyse the likely corrupt practices that are specifically relevant to their industry and take the steps needed to reduce risks. Organisational structures also need to be checked to prevent individuals from bring unaccountable or having the power to act alone.

Often, I have observed veteran senior executives becoming so powerful that even people in compliance functions squirm about questioning them. No one should go unquestioned.

It is easier said than done in some cultures and “whistleblowing” comes with its own challenges. The court of law will not excuse organisations that claim they are not aware of the bribery risks in their industries.

 

Understanding cultures

There is an urgent need in Asia to clearly draw the line between what is acceptable as entertainment of a business nature and the kind of expenditure that influences deals.

The culture of accepting and offering favours has remained strongly ingrained in Asia from the ancient days of barter trading. The culture needs to be acknowledged and then tackled.

 

Profiling individual lifestyles

All too often, only the basic minimum controls of monitoring gifts and entertainments are implemented. I heard of a recent case involving a bank’s technology manager who had his property permits back home facilitated by the prospective vendor (whom he used to work for) in return for influencing the vendor’s selection by the bank.

When people live lifestyles not justified by their incomes, questions need to be asked. I cannot over-emphasise the need for profiling and holistic risk awareness regarding executive lifestyles and spending habits.

 

Training

Training can raise awareness in preventing corrupt practices and as such is to be commended. Organisations that have effective training measures in place are likely to be dealt with more leniently by the courts should problems arise.

Training emphasis should be on:

•   Making it relevant. All sales and negotiating functions must review industry-specific case studies;

•   Keeping it simple. Focus on behaviours and supervisory best-practices; and

•   Acknowledging cultures. Promote ethical behaviour at all levels of the firm so this takes prerogative over the “accepted culture”. Singapore’s position in Asia as a much admired centrepiece of commerce comes with the corresponding burden of its responsibility as a watchdog.