GLOBAL FORUM V

Steve Godfrey

Commonwealth Business Council (CBC)

Business Action Against Corruption (BAAC)with slide input from Sean de Cleene, AICC

Integrity Systems for Civil Society

Tri-Sector Strengthening the Integrity Framework

• Government (Constitution, Elections, Oversight Mechanisms, Separation of Powers, Disclosure of Interests, Rule of Law)

• Business (Corporate Governance, Corporate Social Responsibility, Bottom Line)

• Civil Society (Identity, Accountability, Legitimacy)

Presentation

• TriSector Accountability

• Business Integrity Framework

• Underdeveloped Framework for Civil Society

• Role on Integrity Frameworks for Action Against Corruption

“An effective system of corporate governance must strive to channel the self-interest of managers, directors and the advisors upon whom they rely into alignment with the

corporate, shareholder and public interest.”Ira MillsteinChairman, Private Sector Advisory Group

Global Corporate Governance Forum

What is Corporate Governance?

• Common Law System

– Fiduciary duty of good faith and loyalty

– Duty of care and skill

• Legislative and Regulatory Framework

• Examines Relationship between:

– Law = principles of prescriptive conduct

– Governance = practice of preferred behaviour

• Sets Value System for THE COMPANY

ListedListed UnlistedUnlisted Govt. EnterprisesGovt. Enterprises

Defining Governance System

InternalInternal ExternalExternal

ShareholdersShareholders

Board of Directors

Management

Core Functions

PrivatePrivate

StakeholdersStakeholders

Reputational Agents• Accountants• Lawyers• Credit Rating Agencies• Investment Bankers• Financial Media• Investment Advisors• Research• Governance Analysts

RegulatoryRegulatoryStandards• Accounting• Auditing• Other

Laws and Regulations

Financial Sector• Debt• Equity

Markets• Competitive factors • Products and resources• Foreign direct investment• Corporate control

Corporate Governance Framework

BUT in South Africa and through into NEPAD….

DisciplineIndependenceSocial Responsibility

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Four Primary Pillars

BAAC - An African Initiative to Combat Corruption

• Bottlenecks– The creation/use or attempt to create/use

bottlenecks in any system for private profit or personal gain

• Perversions– The perversion or attempt to pervert the legal or

right process within an entity for private profit or personal gain

DEFINITIONS OF CORRUPTION

•Establishment of a multisector business action against corruption taskforce

•Development a code of conduct for Malawi private sector and state enterprise

•Set up an independent ratings system that will assess systemic action of companies,

•Move towards a national framework on corruption that integrates government, business and civil society

Promotion Advocacy

Par

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ActionIm

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The Board of Directors or CEO shall oversee that all management and if appropriate all staff members should sign an individual contract of agreement to abide by the policy as set out by the company.

That each director (both executive and non-executive) submit signed attestations, in a public disclosure statement to the effect they are fully satisfied that all the organisation’s anti-corrupt practices are being followed, monitored and managed appropriately in accordance with the code.

Our enterprise shall ensure that subsidiaries and joint ventures over which we maintain effective control adopt their anti-corruption programme and use our best efforts to monitor that the conduct of such subsidiaries and joint ventures is consistent with the code.

We shall make it mandatory that all known instances of corruption are reported to the relevant authorities.

Civil Society Sector

• Vast, heterogeneous, diverse

• Includes service delivery, advocacy, faith/mission, lobbyist……

• Growth is a challenge to traditional understanding about the role of NGOs

• Some issues of legitimacy in eyes of other two stakeholders (govt/business)

Non-Profit Sector

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Legal framework and public information

• Responsibility - NGOs have an interest in strengthening the accountability framework within which they operate and ensuring transparency.

• Accountability - efforts to streamline arrangements for company registration and reporting need to be matched for civil society bodies.

• Reciprocity – availability of information on activities, effectiveness and financial accountability.

• Protection - rights of free association in a democratic society should not be undermined by authoritarian measures.

FRAMEWORK

Civil society itself should ensure:

• Principles of corporate governance are applied, with necessary adjustments, to NGOs;

• Making available through the web information on the projects and activities they are funding and the evaluations undertaken on their activities;

• Developing guidelines committing organisations to high standards of fairness in public debate (including the right of reply)

• Disclosure on financing and sponsorship, either from the public, government, or other bodies, as well as the contribution from membership.

Integrity Frameworks and Corruption – Why?

• Progress requires multi-stakeholder approach to create National Frameworks Against Corruption

• Coalitions between Government and civil service, business, civil society

• National campaigns requires Codes of Conduct for each sector at their core

• BAAC believes that these must become part of African benchmarking system on corruption