Seminar background materials

Promoting integrity in SOEs: contributing to the development of new international guidance

Продвижение корпоративной этики на государственных предприятиях: содействие в разработке нового

международного руководства

Friday, 8 June / Пятница, 8 июня 2018 г.

INTEGRITY AND ANTI-CORRUPTION IN STATE-OWNED ENTERPRISES

Продвижение корпоративной этики на государственных предприятиях

CHALLENGES AND SOLUTIONS

8 June, 2018, MoscowAlison McMeekin

3

Main findings: challenges and opportunities in “SOEs”

4

1.

experiences with

corruption

2.

corruption-risk

perceptions

3.

What SOEs are doing

5.

What States as owners are doing

4. obstacles

to integrity

challenges

opportunities

5

SOE experiences with corruption and perceptions of corruption risk

The scale of the issue

The scale of corruption in SOEs, according to others?

27% of all foreign bribes of public officials between 1999 and 2014 involved SOE officials

71% of IMF mission chiefs attributed real-sector corruption to malpractice of SOEs

The scale of corruption / irregular practices in SOEs, according to SOEs?

42% of respondents witnessed corrupt and other irregular risks materialise in the last 3 years (or at least 1 in 49% of companies)

47% companies sustained financial losses – 3% of annual corporate profit in the last year

40% of complaints made in the last 12 months were related to corruption or other irregular practices in the last year

6

Corporate Insiders: who reports and who is reportedly involved?

Who witnessed corrupt behaviour?

• 43% of Board members

• 45% of heads of corporate audit, compliance or legal functions

• 36% of Executive Management

7

80% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Aerospace and Defence

Banking and related financial services

Information and Communication Technology (ICT)

Agriculture and Fishing

Transportation and Logistics

Energy (i.e. electricity generation and supply)

Postal

Mining

Oil and Gas

Yes

I don't know

No

In which sectors?

1

1.1

1.2

1.3

1.4

1.5

1.6

1.7

1.8

1 1.2 1.4 1.6 1.8 2 2.2 2.4

Ris

k Li

kelih

oo

d (

pe

rce

pti

on

s in

de

x, o

ut

of

3)

Risk impact (perceptions index, out of 3)

A

B

C

D

E

F

G

H

I

JK

Understanding present / future risk: comparing likelihood and impact

9

A - Violations of data protection and privacyB - FraudC - Receiving bribesD - Procurement/contract violations E - Violations of regulationsF - Anti-competitive, anti-trust activities or collusive activitiesG - Falsification and/or misrepresentation of company documentsH - Offering bribesI - Money launderingJ - Non-declaration of conflict of interestK - Favouritism (nepotism, cronyism and patronage)

10

What are SOEs doing about it?

• 81% of companies allocate operational budget to preventing, detecting and addressing corruption and breaches of integrity = 3% on average

• 97% of respondents said their companies have relevant specialised board committees

• 81% have internal audit: with significant responsibility for integrity

• 98% of companies assess anti-corruption and integrity risks

• All companies have complaints and advice channels – predominantly formalised whistleblowing channels

11

Integrity efforts within SOEs

12

Disclosure by SOEs

Top 10 obstacles to integrity in SOEs

13

Behaviour

Relationship vis-a-vis government

Controls and accountability

Company culture

Behavioural issues

• Slightly higher perception that corruption risks will materialise in companies with mixed objectives, as opposed to those with entirely commercial objectives

• Respondents who have at least one state official, or at least one politician, on boards see slightly higher risk and greater obstacles than companies with at least one independent member on boards

• SOEs may be less responsive to corruption risk than private companies:

SOES Action Non-SOEs

12% respondents said their companies have ceased business operations in a particular jurisdiction because of the integrity or

corruption risks involved

39%

46% respondents said their companies have taken internal remedial/disciplinary action following violation of your

organisation’s integrity or anti-corruption policies.

70%

30% respondents said their companies have substantially revised at least one business project because of the corruption and

integrity risk(s) involved.

66%

32% respondents said their companies have severed a relationship with at least one business partner (e.g. supplier, service provider)

because of the risk of exposure to or engaging in corruption

66%

Tools used by the State, as owner, for promoting integrity

• Expectations and rules are clearly laid out, and companies have mechanisms, but: – Need improved effectiveness of controls

– Need improved culture of integrity within the SOE and in the state

• So what tools can (and do) states use? – Set a tone from the top in their own conduct

– Objectives and expectations setting

– Ownership policy

– Nomination procedures of board members to ensure the right people on boards (including criteria and ineligibilities)

– Promoting improved awareness though dialogue with boards

– Encouraging or offering training within the SOE

– Incorporating ACI into disclosure policies

– Innovative approaches to monitoring and benchmarking15

Проблемы комплаенса российских государственных компанийИюнь 2018 г.

© 2018 АО «Делойт и Туш СНГ». Все права защищены.

Комплаенс – что это?

Комплаенс – это соответствие деятельности любой организации комплексу сводов и правил, которые предусмотрены регуляторами соответствующей отрасли экономики.

Сегодня наличие в организации системы комплаенс-контроля является необходимостью при ведении бизнеса для предотвращения рисков и защиты репутации компании. То есть это своеобразный фундамент, на котором возводится система контроля любой организации, и одна из важнейших частей менеджмента.

© 2018 АО «Делойт и Туш СНГ». Все права защищены.

Гражданский кодекс РФ

• подарки• взаимодействие с государственными служащими и прочими лицами

Уголовный кодекс РФ

• получение и дача взятки должностным лицом• коммерческий подкуп• посредничество во взяточничестве / коммерческом подкупе• мелкое взяточничество и мелкий коммерческий подкуп• провокация взятки / коммерческого подкупа

Кодекс РФ «Об административных правонарушениях»

Федеральный закон от 25.12.2008 г. №273 «О противодействии коррупции»

Федеральный закон от 13.03.2016 г. № 38-ФЗ «О рекламе»

Федеральный закон от 26.07.2016 г. № 135-ФЗ «О защите конкуренции»

Федеральный закон от 05.04.2013 г. № 44-ФЗ «О контрактной системе в сфере закупок товаров, работ, услуг для обеспечения государственных и муниципальных нужд»

Федеральный закон от 18.07.2011 г. № 223-ФЗ «О закупках товаров, работ, услуг отдельными видами юридических лиц»

Федеральный закон от 27.07.2016 г. № 152-ФЗ «О персональных данных»

Федеральный закон от 27.07.2004 г. №79-ФЗ «О государственной гражданской службе РФ»

Законодательная база в Российской Федерации

© 2018 АО «Делойт и Туш СНГ». Все права защищены.

Комплаенс в России

Раньше большинство организаций в России не уделяли должного внимания рискам коррупции и неэтичного поведения сотрудников; но сегодня все больше и больше организаций обращаются к нам за помощью в создании и развитии системы антикоррупционного комплаенс.

Как следствие, недопущение коррупции становится частью корпоративной культуры общества.

В ходе своей деятельности каждая государственная организация оценивает собственные финансовые и нефинансовые риски, стремясь сохранить баланс между должным уровнем прибыли и добросовестного поведения, включая не только соблюдение требований законодательства, но и внутренних политик и устава общества.

Комплаенс в России является сравнительно новым направлением, получившим свое развитие по мере понимания бизнес-сообществом необходимости в управлении репутационным рисками и дальнейшей интеграции России в мировую экономику.

© 2018 АО «Делойт и Туш СНГ». Все права защищены.

Основные процессы комплаенс в государственных компаниях в России

Корпоративная этика

Противодействие коррупции

ПОД/ФТ

Конфликтыинтересов

Горячая линия

Закупки

Антимонопольный комплаенс

Контроль инсайдерской информации

© 2018 АО «Делойт и Туш СНГ». Все права защищены.

Что уже сделано и что предстоит?

Методология и процедуры

Ответственные лица

Обучение персонала

Комплаенс-функция

Комплаенс-культура

Нормативная база

© 2018 АО «Делойт и Туш СНГ». Все права защищены.

Проблемы встраивания комплаенс-системы в государственные компании в России

Отсутствие в перечнях и классификаторах должности комплаенс-менеджера

Отсутствие профессионального стандарта для комплаенс-менеджера

Информационная и документарная загруженность процессов управления

Противоречивые процедуры внутреннего контроля для различных направлений деятельности ГК

© 2018 АО «Делойт и Туш СНГ». Все права защищены.

В связи с интеграцией российского бизнеса в мировую экономику очевидна необходимость в надлежащем отражении ведущих мировых комплаенс-практик в политиках и процедурах российских государственных организаций организаций.

Должное соблюдение основных принципов комплаенса и их эффективная реализация ведут к установлению принципа справедливости в отношениях между участниками рынка, минимизации правовых и репутационных рисков, а также напрямую влияют на успех и целостность самой организации и на благополучие ее персонала, что в итоге обеспечивает повышение эффективности бизнеса и его инвестиционную привлекательность.

Что дает комплаенс бизнесу?

ANTI-CORRUPTION AND INTEGRITY: NEW OECD GUIDANCE

FOR THE STATE AS AN OWNER

Presentation made to the Integrity Seminar in Moscow on 8 June

2018.

Hans Christiansen, Senior Economist, DAF/Corporate Affairs

Division, OECD.

The OECD Guidelines on Corporate Governance of State-Owned

Enterprises

• An OECD instrument. All OECD countries must associate themselves with the recommendations laid down in the Guidelines. Newcomers to OECD must demonstrate that they can credibly do so.

• Addressed to the SOE ownership. The Guidelines makes recommendations to policy makers and public officials responsible for exercising the ownership of enterprises.

• Non-binding. No government or SOE is in any given situation legally obliged to follow the Guidelines.

• Not limited to OECD members. Any country can, following a review of its national SOE sector, become an adherent to the Guidelines and participate fully in OECD’s work on SOEs.

The Guidelines are and will remain OECD’s main recommendation

on SOEs

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The OECD Guidelines on Corporate Governance of State-Owned

Enterprises

Independent

regulation

The “OECD model” implies:

• The ownership of SOEs is separated from regulation

• Each ownership decision should be taken at the appropriate level

Government

• Sets ownership policy• Coordinates at cabinet level

Ownership function

• Defines objectives for individual SOEs• Monitors performance

SOE board

• Approves strategy• Monitors management

Management

• Runs the company

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Towards new Anti-Corruption and Integrity Guidelines for SOEs

• Scope: Avoiding corruption and maintaining integrity in SOEs.

– A broader definition than “bribery”.

– A focus on preventing irregular practices.

– A complement and supplement to the existent Guidelines.

• Timeline:

– “Zero draft” shared with OECD members, observers and consultation partners in early July 2018.

– First draft discussed by the OECD Working Party on State Ownership and Privatisation Partners on 14-15 November

2018.

– Final discussion (?) by the Working Party on 11-12 March 2019.

• Stakeholders:

– Other OECD policy forums charged with fighting bribery and upholding public sector corruption.

– OECD’s consultation partners.

– A parallel effort by the G20.

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Proposed content of the ACI Guidelines

1. Integrity of the state

– Apply high standards of integrity to those exercising ownership of state-owned enterprises on behalf of the general

public.

– Establish ownership arrangements that are conducive to integrity.

2. Ownership and governance

– Ensure clarity in the legal and regulatory framework and in the State’s expectations.

– Act as an informed and active owner with regards to integrity in SOEs.

3. Corruption prevention and detection at the SOE level

– Require adequate risk management systems within SOEs.

– Require adoption of high quality integrity mechanisms within SOEs.

– Safeguard the autonomy of SOEs and their decision-making bodies

4. Accountability of SOEs and of the state

– Require objective external review of SOEs and the ownership function.

– Take action and respect due process for investigations and prosecutions.

– Invite the inp.uts of civil society, the public and the press

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Principle 1: Apply high standards of integrity to those exercising

ownership of SOEs on behalf of the general public

The state should set high standards of conduct for public officials responsible for the ownership of SOEs. It should be mindful of the fact that it is exercising its ownership rights on behalf of the general public who are the ultimate owners. It should set an example for integrity and conduct of SOEs. SOEs should not be operated as conduits for political finance, patronage, or personal or related-party enrichment.

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Principle 2: Establish ownership arrangements that are conducive

to integrity

The State should design its ownership practices in a way which is supportive of high standards of integrity, including by separating ownership from other government functions and minimising opportunities for political intervention and other undue influence by the state, serving politicians or politically-connected third parties in SOEs. The ownership structure should be transparent. So too should be the methods of communication between the ownership function and other parts of government or third-party advisers, and between the ownership function and SOEs. At the same time, the state should encourage professional co-ordination between the relevant state authorities responsible for the avoidance of corruption.

32

Principle 3: Ensure clarity in the legal and regulatory framework

and in the State’s expectations

The State should ensure that the legal and regulatory framework facilitates a level playing field in the marketplace, and that SOE objectives are transparent and that state expectations on anti-corruption and integrity are explicit and clearly communicated. The State should thereby communicate a consistent message that promotes high standards of integrity and low tolerance to corruption and related irregular practice. Expectations should be clear particularly in high risk areas such as public procurement, conflict of interest, privatisation, political party financing, bribery, patronage and favouritism. The State can make compliance easier by aggregating expectations into one document, such as the ownership document. The ownership function should seek confirmation from SOEs that such expectations are understood and integrated throughout the corporate hierarchy.

33

Principle 4: Act as an informed and active owner with regards to

integrity in SOEs

The state should ensure that relevant agencies, including but not limited to the ownership function, monitor SOEs’ corruption risks and integrity and anti-corruption efforts. Information-sharing should occur when state ownership is decentralised, or when other government functions are involved in monitoring SOEs, such as Supreme Audit Institutions or State Comptrollers. The state ownership function itself should be duly informed about corruption risk when setting and monitoring objectives and risk tolerance, reporting on SOE performance, developing a disclosure policy and establishing clear remuneration policies for boards. Corruption risk and mitigation efforts should thus be an integral part of the ownership’s dialogue with SOEs’ boards of directors or top management. Moreover, ownership entities may develop capacity in the area of risk and control, in order to understand and assess red flags and vulnerabilities of its SOEs. Failure in this regard would imply State responsibility in the case where corruption in SOEs does occur.

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Principle 5: Require adequate risk management systems within

SOEs

The State should ensure that SOEs understand, manage and, when appropriate, communicate risks, including corruption-related and compliance risks. The State should expect its enterprises to develop risk management systems consistent with private sector best practices. States should encourage risk analysis to be inclusive and conducted on an annual basis, and require that they incorporate corruption-related risks. Risk analysis should allow for consideration of high-risk areas, such as engagement in public procurement or sub-contracting, as well as for integration of new and emerging risks. Risk management should be monitored by SOEs’ decision-making bodies.

35

Principle 6: Require adoption of high quality integrity mechanisms

within SOEs

The State should, without intervening in the management of individual SOEs, take all appropriate steps to strengthen internal SOE governance and promote integrity, including by instructing SOEs to adopt internal control mechanisms that are integrated into the risk management system, internal and external audit and transparency and disclosure mechanisms amongst other ethics and compliance measures in line with internationally accepted best practices. States should promote board professionalisationand capacity development. States should encourage Boards and Executive management to take all necessary measures to instil a company culture in which SOE and professional values are known and upheld, compliance is made easy, opportunities for corruption are minimised and digressions are sanctioned.

36

Principle 7: Safeguard the autonomy of state-owned enterprises

and their decision-making bodies

The State should ensure that SOEs are overseen by effective and competent boards of directors who are empowered to oversee the companies’ management and act autonomously from the State. This includes ensuring that serving politicians do not sit on SOE boards; board members are selected on the basis of merits and subject to transparent procedures; conflicts of interest are declared and managed at the time of appointment and during the tenure; and an appropriate number of independent directors unrelated to the State serve on each board of directors. States should ensure that board appointment criteria are clear, consistent and take into account the integrity of candidates. The state should express an expectation that the board be apply similar standards for hiring of CEOs and other members of the executive management.

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Principle 8: Require objective external review of SOEs and the

ownership function

States should ensure that SOEs are subject to adequate external audit that provides assurance on their financial and non-financial performance. This includes assuring that SOEs’ financial statements are subject to external audit based on high-quality internationally accepted standards. The work of relevant authorities at the state level –such as Supreme Audit Institutions and State Comptrollers in reviewing SOE performance – can be a useful complement to, but cannot replace, regularised external audit. Ownership entities should, as part of the public administration, be audited by the Supreme Audit Institution and the findings should be made public.

38

Principle 9: Take action and respect due process for

investigations and prosecutions

Keeping in mind that cases of corruption in SOEs could be liable to trigger political costs, states should develop transparent procedures to ensure that all potential cases are investigated and prosecuted as needed. States should encourage self-reporting by SOEs that have detected irregular practices. Enforcement of provisions in the legal framework should be rigorous and systematic, to demystify a perception that SOEs may be given unfair advantage or protected by their ownership. The State should stablish mechanisms to ensure that the SOEs as well as all relevant government agencies, without interference from the State, co-operate fully with the authorities. The state should have processes for follow-up with SOEs on mitigating recurrence, for instance the elaboration of an action plan to remedy the lack of, or weaknesses in, internal controls and the communication of lessons learned throughout the SOE hierarchy. The state should also assess need for reforms within SOEs or in the exercise of its duties following a case of corruption or related misconduct.

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Principle 10: Invite the inputs of civil society, the public and the

press

The State should co-operate with stakeholders such as civil society, trade unions, private sector representatives and the public and press in highlighting and addressing problems of corruption in SOEs. This includes providing accessible channels for stakeholders to raise concerns. Special care should be taken to ensure that state or SOE representatives, who may themselves be party to irregular practices, are not empowered to silence criticism or stifle investigations.

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41These and other publications are available at: http://www.oecd.org/daf/ca/soemarket.htm

Selected publications on state-owned enterprises

“Without data you’re just another person with an opinion” (W. Edwards Deming)

Preventing

corruption and

promoting integrity

in state-owned

enterprises (2018)

OECD review of

the corporate

governance of

state-owned

enterprises:

Argentina (2018)

Ownership and

governance of

state-owned

enterprises: A

compendium of

national practices

(2018)

The size and

sectoral

distribution of

state-owned

enterprises (2017)

OECD review of

the corporate

governance of

state-owned

enterprises:

Lithuania (2016)

Risk management

by state-owned

enterprises and

their ownership

(2016)

State-owned

enterprises as

global competitors:

A challenge or an

opportunity?

(2016)

State-owned

enterprises in the

development

process (2015)

State-owned

enterprise

governance: A

stocktaking of

rationales for

enterprise

ownership (2015)