Collective action working together for a clean business environment in cambodia

Bribery and corruption are not only illegal and immoral but also add to the cost of doing business, distort competition and create reputational risks.

T h e W o r l d B a n k I n s ti t ut e d e f i n e s a nd j u s t i fi e s c o ll e c ti v e a c t i on a s :

Businesses thus have a profound self-interest in minimising corruption. Benefits include enhanced procurement processes and financial control, financial gains, reduced brand risk, increased profile in line with global standards and genuine improved competitiveness.

“a c o ll a b o r a ti v e an d s us t a i ne d p r o c e ss o f c oo p e r at i o n a m on g s t s t a k e ho l d e rs . I t i n c r e as e s t h e i m p ac t a n d c r e d ib i l it y o f i n di v i d ua l a c ti o n, b r i n g s v u ln e r a b le i nd iv i d u al p l a y e rs i n t o a n a l li a n ce of l ik e - m i n d ed o r g a n i sa t i o ns a nd l e ve l s t he p l ay i ng f i e l d be t w e e n co m p et i t or s ” .

An increasing number of companies worldwide have started to implement strong anti-bribery and anti-corruption programmes, as higher levels of transparency and governance are now needed to compete in the global market.

However, in a country like Cambodia where corruption and bribery are quite deeply entrenched in the business culture, coping with it can seem an overwhelming challenge, and no one business, especially a small one, can combat it alone.

This is precisely where “Collective Action" methods come into play.

Transparency International Cambodia strongly encourages stakeholders in Cambodia to draw from experiences across Southeast Asia and initiate Collective Action among ethical foreign and local businesses to create fair market conditions for all participants.

Transparency International Cambodia (+855) 23 214 430 / (+855) 23 214 211 www.ticambodia.org Facebook: www.facebook.com/ticambodia Twitter: www.twitter.com/ticambodia Photo: ©Conor Wall (top) ©Freepik (bottom)

The business case for Collective Action Across the globe, companies are increasingly engaging in sector specific, multi-industry initiatives, locally, regionally and/or globally, to share their experiences, learn from peers and together help reduce corruption risk, thereby protecting themselves against prosecution under local and international anti-corruption laws, enhancing their reputation and avoiding financial losses caused by corruption.

A far greater aggregate impact. It is highly unlikely that individual activities alone will be sufficient to bring about significant change and improve the transparency of business processes. When joining forces, businesses, civil society and the public sector can tackle corruption from multiple angles and be more effective.

Collective Action initiatives can include: common industry standards; an anti-corruption pledge; multi-stakeholder initiatives; or public-private partnerships.

What’s in for businesses?

Benefits include:

Learning from best practice. Businesses willing to manage and minimise corruption and strengthen their internal management systems and procedures can greatly benefit from Collective Action as it enables them to learn from their peers’ experiences and apply best practice in preventing fraud and corruption and setting up anticorruption compliance programmes.

A louder voice to tackle corruption at its institutional roots.

Corruption is a symptom of underlying problems of governance.

Opaque regulations, weak enforcement mechanisms, barriers to business, inefficient government agencies, excessive discretionary powers in the hands of public officials, absence of public dialogue on corruption, and a lack of checks and balance all help corruption to thrive. It is these incentives for corruption that need to be reduced.

 The creation of a level playing field and clean market space/ competition  Improved public trust in business  Strengthened voice to influence laws and regulations  Boosted information and best practice sharing  Building of a “clean business network”

Efforts to combat corruption must therefore involve more than simply naming and shaming individual companies and weeding out crooked government officials and company executives. If only some companies are punished, others will continue to face the same set of opportunities and risks that incentivised corrupt behaviour in the past. By working together, stakeholders can push for change at the institutional level and curb these incentives for corruption for lasting change.

By engaging in Collective Action, companies not only serve their self-interests but also society at large. .

Transparency International Cambodia (+855) 23 214 430 / (+855) 23 214 211 www.ticambodia.org Facebook: www.facebook.com/ticambodia Twitter: www.twitter.com/ticambodia

Integrity Alliance Collective Action in practice An Integrity Alliance is a form of Collective Action that has proven effective in changing business practices, reducing opportunities for corruption and levelling the playing field for companies. It complements individual companies’ compliance programmes, which are mere tools to manage corruption risk.

In an Integrity Alliance, companies commit to adhering to certain standards. It can be seen as an “island of integrity”, serving as safe and clean haven in an otherwise corrupt environment.

For the alliance to be credible and effective, there needs to be a clear certification and verification system, transparent information sharing, and possible sanctions against companies that break their commitments.

An Integrity Alliance can include: Anti-Corruption Business Principles through which companies commit to prohibiting bribery in any form and establishing effective programmes to counter it.

A Declaration of Intent signed by every new to exemplify their commitment to enter a collective action with the Government, civil society, the media and international organisations to foster cleaner business practices.

A Code of Conduct where businesses commit to specific transparency, integrity and compliance principles.

A self-evaluation tool for countering bribery, adapted from Transparency International’s Business Principles for Countering Bribery, which seeks to enable companies to assess the adequateness and effectiveness of their anti-bribery policies and procedures.

Training programmes for corporate executives on sources of corruption risk and policies to address it, and training of employees focusing on compliance and internal audit.

How? W e l l - r e sp e c t ed i nd i vid u a l s f r o m t h e b u s i n es s c om m u ni t y n e e d t o be e n g a g e d a n d t h e p ri v at e s ec t o r ne e ds t o t a k e a l e ad i n g r ol e .

A s t e e r i n g c o m mi tt e e with key s t a k e ho l d e rs f r o m the p r i v a te a n d p u b l ic s ec t o r s m u s t be e s t a b l i s h ed . T he c o m mi t t e e w i ll d e ve l o p a c o n c ep t n o te t o b e p r e se n t e d a t t h e N a ti o n al Conference on Business Integrity in 2015.

D u r i n g t h e d e si g n p h as e , t h e n e e d s o f t h e p r i v a t e s e c t o r mu s t b e p r o p e rl y a d d r e ss e d . G a rn e r i n g s u p p o r t f r om b u s i n es s a s so c i at io n s , i nd u s t ry u m b r e ll a g r o u ps a nd c h a mb e r s of c o m me r c e w i ll d e t e rm i ne t h e i m pa c t a nd s u c ce s s o f t h e I nte g r i t y A l l i a nc e .

P r e v i o us i n i t ia t i ve s a im i n g a t e n ga g i ng t h e p r i v a t e s ec t o r i n C a m b o d i a h a v e a r g u a b ly m is s ed t h is k ey a s p ec t .

O n l y a f e w k ey s t ake h o l d e rs w i l l b e p a r t i c ip a t i ng in t h e i nit i a l s t a g e o f t h e I n t e g r i ty A l li a n ce . I n t h e l on g - t e r m , l o c a l c om p a ni e s wi l l ing t o l e a r n f ro m b e s t p ra c t ic e s d ev el o p e d b y th e I n t e g r i ty A l l ia n c e wi l l be e n g a g ed .

P a r t i c i pa t i o n w i ll b e o n a v o l u n t a r y b a s i s a n d t hi s w i ll a p pl y t o a l l a s pe c ts o f t h e I n te g r i t y A l l i a n c e .

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Transparency International Cambodia (+855) 23 214 430 / (+855) 23 214 211 www.ticambodia.org Facebook: www.facebook.com/ticambodia Twitter: www.twitter.com/ticambodia Photo: ©Freepik

Corruption is regarded as the single greatest deterrent to business in Cambodia.

According to TI Cambodia’s consultation with businesses, key areas of concern, which are consistent with other developing economies around the world, include dealing with third parties and agents, unofficial fees and facilitation payments, gifts and entertainment, and unseen costs in procurement and human resources management.

The country’s business environment is therefore unpredictable and overhead costs are high, a situation that disproportionally affects small firms.

To benefit from the creation of the single market within the ASEAN Economic Community in 2015 and increase Cambodia’s share in the global value chains, it is crucial to curb corruption and ensure a fair level playing field in the region. This cannot go without the promotion and development of cleaner business practices in the Kingdom.

There is substantial evidence from across Southeast Asia that Collective Action mechanisms such as an Integrity Alliance can help achieve these goals.

An Integrity Alliance could greatly improve Cambodia’s reputation and serve as a guarantee for investors, benefitting all actors along the way.

For more information, please contact Mats Stridsman, Business Integrity Programme Technical Ad visor at Transparency International Cambodia, via email: matsstridsman@ticambodia.org or phone: (+855) 17 450 876 Transparency International Cambodia (+855) 23 214 430 / (+855) 23 214 211 www.ticambodia.org Facebook: www.facebook.com/ticambodia Twitter: www.twitter.com/ticambodia Photo:©Maud Salber