”The tool-kit of TI in fighting corruption in the business sector”

1. ”The tool-kit of TI in fighting corruption in the business sector” BALTIC-NORDIC CONFERENCE ON BUSINESS ETHICS Tallin, April 8 2008 Arvid Halvorsen Member of the Board, TI Norway

2. TI tools for the business sector The Business Principles for Countering Bribery (BPCB) BPCB Guidance Document The Six Step Process BPCB – SME Edition (Small & Medium size enterprises) The Integrity PactAll of the above are available on TI’s web-site Under development: Self-evaluation module External independent verification tool

3. The Business Principles for Countering Bribery Aim: Provide a framework for good business practices and risk management strategies for countering bribery Assist businesses to: eliminate bribery demontrate theircommitment make a positivecontribution

4. The Business Principles for Countering Bribery The enterprise shall prohibit bribery in any form whether direct or indirect The enterprise shall commit to implementation of a Programme to counter bribery

5. The BPCB document content (1) Introduction The Business Principles Aims Development of a programme for countering bribery Scope of the programme Bribes Political contributions Charitable contributions and sponsorships Facilitation payments Gifts, hospitality and expenses

6. The BPCB document content (2) Programme implementation requirements Organisation and responsibilities Business relationships Subsidiaries and joint ventures Agents Contractors and suppliers Human resources Training Raising concerns and seeking guidance Communication Internal control and audits Monitoring and review

7. The Six Step Process Detail advise on how to: 1) decide to adopt a no bribes policy 2) plan the implementation 3) develop detailed anti-bribery programme 4) implement programme 5) monitor 6) evaluate and improve

8. The BPCB – SME Edition Launched on 30 January 2008 Simplified version of the original Business Principles geared towards smaller and medium sized organisations The main principles and values of the BPCB are unchanged

9. The Integrity Pact A contract between the customer and and all bidders for a project: Customer commits not to accept bribes, gifts, etc. Bidders commit not to offer bribes, gifts, etc. Bidders to have Code of Conduct and implementation programme Bidders to disclose all payments Appointment of an independent monitor Arbitration as conflict resolution mechanism Pre-defined sanctions The Integrity Pact remain in force from bidding phase though contract execution

10. ”A glimpse into the Hydro experience” BALTIC-NORDIC CONFERENCE ON BUSINESS ETHICS Tallin, April 8 2008 Arvid Halvorsen Member of the Board, TI Norway

11. The Hydro Integrity Program –based on the Code of Conduct The Hydro Integrity Program Program review Survey of practices and risks Handbook with requirements and guidelines Auditing Roll-out meetings Reporting Business planning and decision processes Seminars and workshops

12. Survey of practices and risks

13. Introduction Eliminating corruption and improper payments Legislation and voluntary commitments on corruption Corruption Facilitation payments Political contributions Charitable donations and sponsorships Community investments Gifts, hospitality and expenses Conflict of interest 3) Respecting human rights Key issues Use of security forces 4) Business relations and value chain General guidelines Due diligence Joint venture partners Agents and other intermediaries Suppliers and contractors Customers 5) Internal actions 6) Sources of information Handbook content

14. Example: Facilitation payments Status Payments for something to which the payer is entitled Legal by some laws (US), illegal by others (UK) Norwegian legislation: Depends on “improper advantage” Hydro is committed to work towards elimination Actions Facilitation payments not to be volunteered Life and health comes first Due regard to legislation Consult with superior or others available Payment only if no alternative Identify practice and risks Establish plans to reduce / eliminate Correct records

15. Example: Agents/intermediaries Intermediaries often channel for bribes and facilitation payments A risk that they are independent entities and may not respect a company’s values Important elements for selecting and managing agents: Carry out due diligence – ”red flags” Inform about Hydro’s requirements Written contract – right of termination Avoid success fees, if possible Monitor

16. Example: Business partners Existing joint ventures: Hydro has controlling interest or operating responsibility: Directives and guidelines shall apply without limitations Hydro has minority interest: Plans to identify and minimize, preferably eliminate, discrepancies New partners: Unfamiliar new business associates – due diligence before binding commitments

17. Additional initiatives Implementation in procurement and contracting: Supplier Certificate Dilemma training package for meetings Dilemma training on intranet Integrity due diligence guidelines Conflict of interest guidelines HR systems: Annual appraisal dialogues Employment contracts Annual self-assessment External review of the programme

18. Key learnings Written rules and guidelines are not enough Commitment from the top is essential What is not asked for by management does not get done What is not be measured/reported does not get done Case studies and dilemma training is very effective Continous focus and new initiatives required

19. Thank you!