Collective Action initiatives

1. 1 Promote, extend, and implement sector based initiatives Main barriers for implementation Support required from stakeholders Timeline • On-going • Possible lack of recognition from public sector at the highest level • Possible lack of adequate training options to support members in respective implementation efforts • Government should encourage state-owned companies to replicate the same efforts described for private companies Collective Action initiatives PRELIMINARY Description of action Relevance • Invite all private-sector participants to join existing Collective Action initiatives in their respective sectors/industries or initiate multi-sector initiatives in their respective countries of origin and all countries in which they operate • Sectoral initiatives are among the most promising approaches to address corruption. They associate companies with the same customers and same characteristics to accept the same rules of behaviors and to establish relevant and harmonized integrity standards Criteria for success Expected impact • Detailed plan to invite participants to Collective Action initiatives in place and communicated to participants • Recognition and support from public sector at the top level • Support from a strong champion with recognized experience in the private sector • Reach Critical mass with at least 2 key local player by industry • Collective Action initiatives facilitate discussions with stakeholders, either governmental or non-governmental organizations and have a stronger impact in the adoption of anti-corruption initiatives Main beneficiaries and decision makers • Individual companies • Associations in each sector • Public sector Activities • Companies to invite participants in their value chain • Associations to include compliance clauses in their statutes and demand adherence • Public sector to provide recognition to associations and companies Focus Group No. 2 / SOURCE: Team analysis and expert interviews – submitted to B20 Task Force on March 29, 2012 1

2. Documentation of private-sector lead Collective Action initiatives 2 Promote, extend, and implement sector based initiatives Main barriers for implementation • Potential lack of addressing of local issues due to a top down approach • Lack of enough funding to make it sustainable • Difficulty in selecting the right selection of head of the hub initiative PRELIMINARY Description of action Relevance • Document, measure and share the existing private-sector led Collective Action initiatives through a central hub for reference to all countries / sectors • Easier, faster and more effective sharing of Collective Action initiatives and results • Standardization of actions Criteria for success Expected impact • Hub in place with a friendly interface accessible to every interested party that leverages key tools from the internet (e.g. videos, social networks) and stays up to date • Head of the initiative appointed with an adequate caliber and relevant experience • Sufficient funding to execute plan • Stronger share of knowledge and participation from private companies and interested associations Main beneficiaries and decision makers • Private sector • Associations with a relevant role in the Collective Actions initiatives Support required from stakeholders Activities Timeline • 1 year • 2 years • Features that characterize effective initiatives should include senior management commitment, appointment of dedicated managers, and implementation of procedures • B20 companies to select a head of the hub initiative • Must have a breadth of experience in anticorruption, possess a large network • Head of Hub to design and develop the hub to provide information on existing Collective Action initiatives on a website Focus Group No. 2 / SOURCE: Team analysis and expert interviews – submitted to B20 Task Force on March 29, 2012 2

3. Adoption of codes of conduct and other tools 3 Promote, extend, and implement sector based initiatives Support required from stakeholders Timeline • 1 year • On-going • Governments should require adherence to code of conducts as a prerequisite to participating in public procurement tenders or receiving other benefits such as export credits, when appropriate • Must address also passive corruption not just active corruption PRELIMINARY Description of action Relevance • Communicate and foster the adoption of codes of conduct and other tools available to private sector participants in order to ingrain anti-corruption in each organization’s corporate culture • To leverage existing tools and to ensure the adoption of current codes of conduct can have a stronger impact than developing new initiatives Criteria for success Expected impact • Ensure all existing tools are well communicated and existing codes of conduct are well known and adopted by key private sector participants • Codes of conduct adapted to each country nuances • Adoption of business codes of conduct in the private sector based on internationally recognized and accepted principles for companies in all countries, especially in developing economies Main beneficiaries and decision makers • G20 and OECD governments • Owner of the code of conduct itself (e.g. PACI, ICC) Main barriers for implementation Activities • Appointment of Local Program Managers for each country with the task of promoting codes and driving their implementation locally • G20 to establish a global program manager to administer the communication activities and execute the roll-out of tools and codes • The function may be played by the government, private sector or associations • Lack of a large network for Program managers to facilitate a broad communication • Promotion of codes should not be confrontational Focus Group No. 2 / SOURCE: Team analysis and expert interviews – submitted to B20 Task Force on March 29, 2012 3

4. High Level Reporting Mechanisms 4 Promote, extend, and implement sector based initiatives PRELIMINARY Description of action Relevance • Continue establishing appropriate forms of “High Level Reporting Mechanisms” to address allegations of solicitation of bribes by government officials • The establishment of a national high-level reporting mechanism to deal with allegations of solicitation of bribes is proposed in response to longstanding business concerns about the lack of effective methods to address the demand side of bribery Criteria for success • Resolution of concerns about bribe solicitation in a timely manner, so that government procurement proceeds without prolonged delays and suspicions of impropriety • Appointment of 2 key positions: i) Conveyor, neutral person in charge of building trust amongst appropriate parties and ii) Ombudsman that must be reasonably high level and not personally involved in decisions • Must be perceived as preventive not punitive Expected impact • Such a mechanism would be intended to provide a means for cleansing procurement processes when there are substantive allegations of corrupt behavior Main beneficiaries and decision makers • Private sector companies to establish and monitor committee • Senior leadership from Public sector support required • Support from NGOs in the setup of committee Activities Timeline Main barriers for implementation Support from stakeholders • Government to ensure involvement from top authorities • Government to establish committee and ensure appropriate seniority of chairman • Chairman to foster the propensity of companies to use these mechanisms • Set up a pilot in a country that is willing to test these mechanisms • Set up of a credible mechanism for reporting with no possibility for retaliation • 1 year • 2 years • 2 years • Reporting might be seen to linked to law enforcement preventing its use from companies • Reporting might, as well, be seen too anonymous so that it can be acted upon • Perception might be seen as punitive instead of preventive • Reporting of solicitation must be above of the procurement agencies • Senior leadership involvement is necessary, ideally from the head of state, but also works at the minister level • Work with the govern-ment to ensure proper interpretation of laws Focus Group No. 2 / SOURCE: Team analysis and expert interviews – submitted to B20 Task Force on March 29, 2012 4

5. Public and private sector partnerships 5 Promote, extend, and implement sector based initiatives Main barriers for implementation Support required from stakeholders Timeline • 1 year • 2 years • 2 years • Probable lack of resources to monitor these partnerships • Recognition from top government authorities • Support from CEOs • Must have a natural mechanism to monitor closely, specially in multiparty initiatives and actions PRELIMINARY Description of action Relevance • Generate public sector and private sector partnerships to address the need to collaborate in the anticorruption initiatives • Partnerships between public and private sectors are key to untangle the real root causes of corruption Criteria for success Expected impact • Strong collaboration between government and private sector with tangible mechanisms like specific partnerships and monitoring systems • Common understanding of root causes of corruption shared amongst involved private and public parties Main beneficiaries and decision makers • Government senior leadership • Individual companies • CEOs from key companies Activities • Private sector and government to establish a neutral secretariat function • Private sector to gain government and senior level recognition and involvement • Secretariat to establish monitoring system • Communicate partnerships • Scale-up partnerships Focus Group No. 2 / SOURCE: Team analysis and expert interviews – submitted to B20 Task Force on March 29, 2012 5

6. Support Cases Based on Interviews conducted in March 2012 6

7. Support cases Details in following pages Recommendation Support cases Interviews Key takeaways 1 • Vicky BowmanGlobal Practice Leader, External Affairs (Policy)Rio Tinto • Dominique LamoureuxEthics and Corporate Responsibility DepartmentThales • Mark PetrilleVP and Chief Compliance Officer - Siemens Healthcare • Macarena NavalonGrupo Marhnos • Prof. Dr. Mark PiethProfessor for Criminal Law, University of BaselChairman, OECD Working Group on Bribery, Basel Institute on Governance • Susan Côté-FreemanProgramme Manager, Private Sector ProgrammesTransparency International • Alex WongSenior Director – Head, Center for Business EngagementWorld Economic Forum • Fritz HeimannTransparency International – Advisory CouncilGeneral Electric – Associate General Counsel • Ensure proper interpretation of laws with government • Detailed plan to invite participants to Collective Action initiatives in place and communicated to participants • Need for neutral secretariat function with ability to broker communication • Recognition and support from public sector at the top level • Ensure resources to operate from the entities that will win the most • Combine carrot and stick approach: legislation must push results • Use a bottom up approach (address local issues first) • Develop a pilot in a volunteer country • Codes of conduct must be supported by solid programs and policies • Implement white lists as a positive measure • Ensure all existing tools are well communicated and existing codes of conduct are well known and adopted by key private sector participants • Reporting of solicitation must be above of the procurement agencies • Solicitations must be dealt with promptly to ideally avoid prosecution as no actual bribery has taken place • Set up of a credible mechanism for reporting of solicitation with no possibility for retaliation • Guarantee support from international associations • Strong collaboration between government and private sector with tangible mechanisms like specific partnerships and monitoring systems • Must address also passive corruption • Promotion of codes should not be confrontational • Reach Critical mass with at least 2 key local player by industry • Support from a strong champion with recognized experience in the private sector • Setup a hub to exchange anti-corruption information and best practices • Codes of conduct must be perceived as preventive not punitive Collective Action initiatives • Medical Imaging Sector - COCIR • Oil & Mining Industry – EITI • Defense Industry Initiative – Thales Group • NEMA Code of Conduct • Mexican Chamber of the Construction Industry • UAE – Emirates Solar Industry Association 2 Documentation of private sector lead Collective Action initiatives • International Anti-Corruption Academy in Vienna • International Chamber of Commerce • Basel Institute on Governance • Transparency International • WEF Partnering Against Corruption Initiative • UN Global Compact - 10th Principle • World Bank Institute (fightingcorruption.org) 3 Adoption of codes of conduct and other tools • Business Principles for Countering Bribery (TI) • OECD Guidelines for Multinational Enterprises • ICC Rules on Combating Corruption (ICC) • International Corporate Integrity Handbook ICC • 10th Principle Against Corruption (UNGC) • WEF Partnering Against Corruption Initiative 4 High Level Reporting Mechanisms • Existing work in the area of HLRM: Basel Institute on Governance • Recommendations from Fritz Heimann, Transparency International – Advisory Council 5 Public and private sector partnerships • Brazil – Instituto Ethos / Project: "Clean games and clean business“ • Vietnam – Customs modernization project • Italy – Use of integrity pacts in municipalities • WEF Partnering Against Corruption Initiative 7

8. Name of the case NEMA's New Code of Ethics for Medical Imaging Equipment Manufacturers Interviewee: Mark Petrille VP and Chief Compliance Officer - Siemens Healthcare • Description of the case • The National Electrical Manufacturers Association (NEMA) new Code of Ethics for member companies that manufacture medical imaging equipment and radiation therapy systems became effective on January 1, 2005 • The code represents industry’s desire to ensure adherence to the government’s anti-kickback and false claims laws, and gives guidance to NEMA member companies on how to interact with customers • It also provides assistance on handling entertainment, charitable contributions, grants, travel expenses for training, and other factors relating to or having influence on the procurement of the vendor’s product • Key success factors • The code counted with strong advocacy with the government • Although this code was just for members, other groups also adopted it on their own • The approach was to standardize conducts in the industry which helped to further adoption • Health care is highly important so it was easy to gain involvement from key stakeholders • Main barriers • Enforcement of the code is a difficult task, in this case, the code is not enforced and mainly serves as guideline for the company’s own compliance efforts • The controls for monitoring come from the companies themselves • Critical mass is key • The trade organization promoting the codes needs to understand the importance • Recommendation to B20 • Need to work with the government to ensure proper interpretation of laws • Promote mainly within members base but also reach to non-members to spill benefits • Detailed plan to invite participants to Collective Action initiatives in place and communicated to participants 8

9. Name of the case PACI - Partnering Against Corruption Initiative World Economic Forum Interviewee: Alex Wong Senior Director – Head, Center for Business Engagement World Economic Forum • Description of the case • PACI is a global anti-corruption initiative, developed by companies for companies offering a risk mitigation platform to: design and implement policies and systems to prevent and address corruption and benchmark vs. global best practices • Key success factors • Support from top leadership from the government, ideally from the Head of the State like in Mongolia • Guarantee funds to operate • Close monitoring is key, specially in multiparty initiatives and actions • Secretariat function played by neutral organizations (e.g. EITI, PACI), as private entities might be perceived as biased • Main barriers • Must have the resources to fund program management and brokerage functions • Must provide natural scaling opportunities for the model to be replicated in other sectors / chambers • Recommendation to B20 • Need for a neutral secretariat function with a strong ability to broker communication • Recognition and support from public sector at the top level • Ensure the resources to operate, ideally coming from the entities that will win the most from reducing anticorruption • Combine carrot and stick approach: legislation must push results as the carrot approach will only take you so far 9

10. Name of the case OECD Working Group on Bribery Basel Institute on Governance Interviewee: Prof. Dr. Mark Pieth Professor for Criminal Law, University of Basel Chairman, OECD Working Group on Bribery, Basel Institute on Governance • Description of the case • The OECD Working Group on Bribery is responsible for monitoring the implementation and enforcement of the OECD Anti-Bribery Convention • This peer-review monitoring system is considered by Transparency International to be the ‘gold standard’ of monitoring • Made up of representatives from the 38 States Parties to the Convention, the Working Group meets four times per year in Paris and publishes all of its country monitoring reports online • Key success factors • Important for high level participants to involve people with a strong expertise in high level reporting • It is important to set up meetings for key companies to talk to each other • An high-level ombudsman must work to mediate issues without breaking bidding process for companies • Main barriers • Procurement might break down if law enforcement is employed • High level reporting is highly political • It is important to give access to the Ombudsman to all companies • Selection of the Ombudsman is crucial as it most be someone experienced and well connected • Recommendation to B20 • High level reporting mechanisms are crucial • Solicitation is the biggest problem and must be given special attention • Needs a bottom up approach, i.e. addressing local issues first • Develop a pilot in a volunteer country (discussions with Colombia are undergoing) 10

11. Name of the case Transparency International Interviewee: Susan Côté-Freeman Programme Manager, Private Sector Programmes Transparency International • Description of the case • Transparency International, founded in 1993, is the global civil society organization leading the fight against corruption • Transparency International is a global network including more than 90 locally established national chapters and chapters-in-formation; these bodies fight corruption in the national arena bringing together relevant players from government, civil society, business and the media to promote transparency in elections, in public administration, in procurement and in business • Key success factors • A communication channel for companies to talk to each other and with government and associations is key • Sectorial associations must support with exchange of data from suppliers that abide by anti-corruption programs • Main barriers • Involved parties must be sensibilized towards the benefits of anti-corruption • Lack of proper incentives might demotivate companies to comply with anti-corruption programs • Lack of critical mass may impede the adoption of policies • Recommendation to B20 • Codes of conduct must always be supported by solid programs and policies • Implement white lists as a positive measure for anti-corrupt companies • Ensure all existing tools are well communicated and existing codes of conduct are well known and adopted by key private sector participants 11

12. Name of the case Recommendations from Mr. Fritz Heimman Interviewee: Fritz Heimann Transparency International – Advisory Council General Electric – Associate General Counsel • Description of the case • Recommendations from Fritz Heimann who served as Associate General Counsel from 1975 until 1995 and is now Counselor to the General Counsel; he is one of the founders of Transparency International and also chairs TI-USA. • Mr. Heimann chairs the Working Group on Bribery and Corruption of the U.S. Council for International Business and is a member of the International Chamber of Commerce Committee on Extortion and Bribery • Key success factors • Reporting mechanisms must be preventive • Prompt attention of solicitation to avoid bribery acts to take place • Need transparency and trust from government • Main barriers • Companies are reluctant to take reports of solicitations to associations to avoid retaliation or being disqualified in bidding processes • Although reporting must be preventive, it should not undermine prosecution • Companies are reluctant to give out their name when reporting solicitation, but if not given, it is hard to assess anonymous concerns • Recommendation to B20 • Reporting of solicitation must be above of the procurement agencies • Implement a government sponsored pilot project in a volunteer country (Colombia in discussion) • Solicitations must be dealt with promptly to ideally avoid prosecution as no actual bribery has taken place • Set up of a credible mechanism for reporting of solicitation with no possibility for retaliation 12

13. Name of the case AeroSpace and Defence Industries Association of Europe (ASD) initiatives Interviewee: Dominique Lamoureux Ethics and Corporate Responsibility Department Thales • Description of the case • ASD’s initiatives in the field of business ethics have followed two main directions: the EU Common Industry Standards and the worldwide Global Principles of Business Ethics • The ‘EU Common Industry Standard´s’ are a series of concrete minimum procedures that European companies need to implement in order to prevent corruption –over 400 companies signed these standards in 2007 and it is expected that national associations will now promote this exemplary initiative to their national authorities (ministerial cabinets, administrations, and members of parliament) and civil society (journalists and NGOs) • The ‘Global Principles of Business Ethics’ represent the commitment from aerospace and defence companies to be responsible and ethical in their business behaviour, in particular in preventing corruption • Key success factors • Support from Transparency International to promote benefits of signing the standards • Commitment from companies is key • Main barriers • Difficulty for American and European companies to recognize each other’s recommendations as there is a view that locally developed initiatives are better • Recommendation to B20 • Guarantee support from international associations to promote membership sign-up • Governments must promote initiatives, and make a pre-requisite to sign existing policies before participating in public biddings • Must address also passive corruption not just active corruption 13

14. Name of the case Code of Ethics of the Mexican Chamber of the Construction Industry Interviewee: Macarena Navalon Grupo Marhnos • Description of the case • The code of ethics for the Mexican Chamber of the Construction Industry started as an initiative from companies in the private sector that was initially promoted amongst their suppliers and eventually made the chamber to request all of its members to sign the code • Key success factors • Sectorial initiatives are more effective and easier to implement • The most challenging part is not the creation of the codes of conduct, but the devise of the activities for implementing them • Main barriers • A line for denouncing solicitations might not work due to fear of retaliation, especially when the line works in a very local environment and anonymity is compromised • Recommendation to B20 • The promotion of codes should not be in a confrontational approach • The root of anticorruption is in a lack of values, thus most efforts must be put into building a strong value foundation in society • Reach Critical mass with at least 2 key local player by industry • Support from a strong champion with recognized experience in the private sector • Must be perceived as preventive not punitive 14

15. Name of the case Extractive Industries Transparency Initiative EITI Interviewee: Vicky Bowman Global Practice Leader, External Affairs (Policy) Rio Tinto • Description of the case • The EITI is a global standard that promotes revenue transparency in the extractives sector (exploitation of oil, gas and minerals), through a methodology for monitoring and reconciling company payments and government revenues at the country level • Each implementing country creates its own EITI process which is overseen by participants from the government, companies and national civil society • Key success factors • Triggered by legislation and the government provided detailed guidance • Locally driven: each country thinks differently • More positively accepted by companies than NGOs initiatives • The methodology allowed for an easier dialogue with businesses about transparency and for a more replicable process • Main barriers • Some sector in the UK did not participate voluntarily until triggered by legislation, e.g. Banking, Pharmacy • Recommendation to B20 • Government should bring together industry sectors to work out corruption issues • Setup a hub to exchange anti-corruption information and best practices 15