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Corruption is a species of unfair competition

Corruption is a species of unfair competition. A VIEW FROM A CORPORATION: A.Westerlaken , ex-CLO Kon.Philips Electronics N.V. Enlightened self-interest.

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Corruption is a species of unfair competition

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  1. Corruption is a species of unfair competition

    A VIEW FROM A CORPORATION: A.Westerlaken, ex-CLOKon.Philips Electronics N.V.
  2. Enlightenedself-interest Leavingasidemoralobjections , fightingcorruption is for multinational corporationsalso a matter of enlightenedself-interest , because: 1.Tolerating corruption corrupts alsoownorganisation 2.International risksforreputation/ criminalprosecution are muchbiggerthanoftenrealized in Europe : e.g. FCPA
  3. Foreign Corrupt Practices Act ( FCPA) Recent examples: Daimler AG agreeswith DOJ USA to pay 185 mio dollar to settle US BriberyInvestigation ( WSJ Europe, 24 maart 2010 ) BAE Systems Plcacknowledgesguilt and is fined 400 mio dollar (March 2010) N.B. considerations DOJ ENI Spa makes a provisionfor 250 mio dollar for FCPA settlement AAB announcesthatit has made a provision of 850 mio dollar “forpotentialcostsrelated to US and Europeanbriberyinvestigations Halliburton must pay 579 mio dollar “to settle FCPA enforcementaction (2009) Siemens settleslargest ever FCPA enforcementaction and willpay a fine of 800 mio dollar to US authorities ; worldwidesettlement of corruption scandal costs Siemens more than 1.6 billion dollar in fines ( NB chairmanSupervisory Board and memberBoMlosetheir job and willbeprosecuted in Germany)
  4. Enlightenedself-interest ( ctd ) Corruptionmakescorporationsvulnerable vis a vis authorities in countrieswherecorruptiontakes place ( e.g. regime change) Corruption is “a race to the bottom”; “whopays most “ Risk thatownstaffbecomes corrupt Effectsonstaffmorale Competitivedisadvantageforcompaniesthatactivelyfightcorruption ( N.B. Siemens nowemploys 600 FTE s in compliance ) Corruption is more expensivefor the customer ,for the country , butultimatelyalsofor the ownorganisation( e.g. involvement of , oftenquestionable, intermediaries; additionalcostsconnectedwithmonitoring , audits etc., risk of blackmail )
  5. The Netherlands Untilveryrecentlycorruption at a national level was severelyunderestimated Internationally : the Netherlandswere the penultimate country thatratified the OECD Guidelines (a.o.againstbribery ) in 2001; Switzerland was the last ( 21 st) country In the Netherlandsuntilappr. 1999 bribeswerefiscallydeductible as “cost of doing business “
  6. The Netherlands ( ctd) Since a few years the perception in the Netherlands of corruption as a “non-issue” has changedconsiderably Somehighlypublicized cases of corruption e.g. : “RealEstateFraud”; Guarantee of 190 mio euro by CEO Rotterdam Harbor to entrepreneur van de Nieuwenhuizen The “Construction scandal “
  7. PHILIPS Since 1998 thoroughlyrevised General Business Principleswithincreased focus onbribery/discrimination and anti-trust Wrtbribery e.g. : Muchstronger M&A due diligence Letters of representationby senior and middle management thatnobriberytook place in their units Supervisionby and reporting to AuditCommitteeSupervisory Board by CLO Wwnetwork of complianceofficers ( 150 people);joint auditsby Legal and InternalAudit FCPA –e training forselectedgroups ( incl at least : country management , sales & service staff , finance , legal and governmentalaffairs offices) Risk-assesmentpolicyforappointment,monitoring and extension of agencies/distributors ( withaid of i.a. TI CorrutionPerception Index) FCPA –e training follow-up with FCPA classroom training In some cases witdrawalfromcountries Discussiononfacilitatingpaymentsstillgoingon
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