Anti-corruption programme for funders

Aid agencies, multi-lateral development banks, commercial banks, export credit agencies, guarantors and insurers (“funders”) play a central role in infrastructure development, whether by way of providing general budget support, or by providing funding, insurance or guarantees for individual projects. In doing so, they face serious risk of incurring criminal and civil liability for corruption through the activities of their staff and their business partners. In addition, there is the risk that the funds which they provide will be wholly or partially lost due to corruption, or be used for corrupt purposes. Involvement in a corrupt project will also result in reputational risk.

To minimise these risks, funders should take anti-corruption action by implementing a systematic programme to prevent and detect corruption within their own organisation, in their dealings with their business partners, and in the projects funded by them. Because of their role in providing funding, funders can exercise significant leverage over infrastructure development. They have, therefore, a particularly important role in ensuring that adequate anti-corruption measures are implemented in relation to the provision and management of the financing for a project, and in relation to project tendering and execution. An anti-corruption programme for funders should reflect this responibility.

An anti-corruption programme will not guarantee that there will be no corruption. However, it could materially assist in its prevention and detection. In addition, in the event of prosecution of the funder or its employees for alleged involvement in corruption, or in a civil action for breach of duty for failing to ensure proper use of funds, such a programme could provide important evidence that the funder had taken reasonable steps to prevent corruption. This may help to avoid or mitigate liability.

An anti-corruption programme should be modified according to: size of the organisation, value and nature of business transactions, location of project, and perception of risk. Small or low risk contracts or projects would require a lower level of preventive action than large or high risk contracts or projects. However, it should be remembered that while commercial risk may be reduced according to the size of the contract or project, the criminal risk may remain the same. There is no precise recipe for such modification. This is a value judgment to be made by the funder itself.

The following Anti-Corruption Programme may be of use as a template.

Template: Anti-corruption programme

Definitions

The following definitions apply to this programme:

“Business partners” includes project owners, joint venture partners, consortium partners, contractors, consultants, sub-contractors, suppliers, advisors, agents or other intermediaries.

“Corruption” means bribery, extortion, fraud, deception, collusion, cartels, abuse of power, embezzlement, trading in influence, money-laundering and other similar activities.

“Employee” means any officer or employee of the funder, and "employment contract" should be construed accordingly.

"Related company" means a company which is related to another company because it directly or indirectly wholly or partly owns or controls that company, or is directly or indirectly wholly or partly owned or controlled by that company.

Part 1: Internal actions

Anti-corruption code: The funder should develop an anti-corruption code and publish this code on its website.
Statement of personal support: The chief executive and board of directors (or equivalent senior officers) should make a statement of personal support for the anti-corruption code and this statement should be published on the funder's website.
Board responsibility for the programme: The board of directors should take responsibility for the effective implementation and operation of the anti-corruption programme.
Compliance officer: A senior officer should be made responsible for ensuring that the funder complies with its anti-corruption programme. He should be provided with proper authority to implement and monitor all programme activities and should have direct and prompt access to the chief executive and other senior officers.
Employment contracts: All employment contracts should include anti-corruption employment terms to ensure that there are express contractual obligations and penalties in relation to corruption.
Gifts policy: The funder should develop and implement a gifts policy whereby it either prohibits the giving or acceptance of all gifts, hospitality, and donations, or sufficiently limits and monitors this activity.
Training: The funder should provide anti-corruption training on a regular basis to all relevant employees to make them aware of the types of corruption, the risks of engaging in corrupt activity, the funder's anti-corruption code, and how they may report corruption.
Rules: The funder should post up anti-corruption rules for employees which serve as a regular reminder to employees of the corrupt activities that are prohibited by the funder, the funder's gifts policy, and the funder's corruption-reporting procedures.
Detection procedures: The funder's audit processes should check for any indication of corruption. Random checks should also be carried out of contracts, transactions, accounts, and funding arrangements.
Reporting procedures: The funder should set up internal procedures for reporting corruption which enable employees to report corruption in a safe and confidential manner to a responsible senior officer of the funder.
Dealing with corrupt situations: The funder should set up procedures for dealing with corruption which may arise where corruption is reported or discovered by the funder and which may involve employees, business partners, and/or government officials.
Internal review: The funder should carry out an annual internal review of the anti-corruption programme and should revise the programme as appropriate in the light of this review.
Independent assessment and certification: The funder should commission regular independent assessment and certification of the anti-corruption programme and revise the programme as appropriate in the light of this assessment.

Part 2: Actions regarding branch offices and related companies
Due diligence: Prior to setting up a branch office or related company in a particular country, the funder should carry out due diligence on the country and on the anti-corruption law and procedures in that country in order to assess the corruption risk.
Anti-corruption programme: Where it has the power to do so, the funder should require all of its branch offices and related companies to adopt an anti-corruption programme that is at least as stringent as its own, and should develop a procedure for reviewing the implementation and effectiveness of those programmes. Where it does not have power to so require, the funder should request its related companies to adopt such an anti-corruption programme and should request to be kept informed of reviews of those programmes.
Decision-making process: The funder should establish a decision-making process in relation to the business of its branch offices and related companies whereby the decision process and the seniority of the decision-maker are appropriate for the value of the transaction and the perceived risk of corruption.

Part 3: External actions - Projects
Adoption of project anti-corruption measures: A funder should provide finance, guarantees or insurance in relation to a project only if:
- that project adopts an effective project anti-corruption system;
- all procurement and project management procedures in relation to the project are fair, reasonable, objective and transparent
Payment of contractors: Where a funder is providing funding to a project, it should take steps to ensure that payments due to contractors and consultants on the project are paid in full and on time.
Reporting procedures: A funder should:
1. publicly disclose that it is the funder for a particular project and any employee or third party should be able to report matters of concern in a confidential manner to an appropriate senior manager of the funder;
2. report allegations of corrupt practices to the authorities, and to any applicable trade or professional association.
Part 4: External actions - General
Due diligence: Before entering into any business partnership, transaction or project, the funder should carry out due diligence on the country in which the business is to be conducted, on the relevant anti-corruption law and procedures, on its potential business partners, and on the proposed project or business transaction in order to identify as far as possible the risk of corruption.
Publication of anti-corruption code to business partners: At the outset of any business dealing, all relevant existing and potential business partners should be made aware in writing of the funder’s anti-corruption code.
Procurement procedures: The funder should use fair and transparent procurement procedures for procurement which minimise the opportunity for corruption.
Decision-making process: The funder should establish a decision-making process whereby the decision process and the seniority of the decision-maker are appropriate for the value of the transaction and the perceived risk of corruption.
Anti-corruption contract terms: All contracts between the funder and its business partners should contain anti-corruption contract terms which provide express contractual obligations and penalties in relation to corruption.
Adoption of anti-corruption programme: Where it is within the funder’s power to do so, it should require each business partner to adopt an anti-corruption programme that is at least as stringent as its own for the duration of the relevant business dealing, and this requirement should be made a term of the relevant contract. Where it does not have the power to impose this requirement, it should request each potential business partner to adopt such a programme.
Transparency: The funder should, as far as possible, ensure transparency in all its dealings.
Documenting of all dealings: All business dealings which are of sufficient value and which could form part of a corrupt transaction should be documented in writing.
Monitoring execution of contracts: The funder should monitor the execution of all contracts to which it is a party in order to ensure that there is no corruption in their execution.
Debarment: The funder should develop a fair and transparent debarment policy in relation to companies which have been convicted of corruption.
Co-ordinated action with other funders: The funder should co-ordinate its anti-corruption action with other funders, so that they share best practice.
Supporting anti-corruption initiatives: The funder should support anti-corruption initiatives which directly or indirectly seek to reduce corruption in the infrastructure sector. This support should be publicised both to employees and on the funder's website.
Working with other stakeholders: The funder should work with other stakeholders, in the public and private sectors, to reduce corruption in the infrastructure sector, and should encourage other funders to do so. This work should be publicised both to employees and on the funder's website. (See Anti-Corruption Forums.)

Other Resources

Several organisations provide services and/or have developed tools to assist in the implementation of anti-corruption measures. These organisations are listed below in alphabetical order. If the following details are inaccurate or incomplete, or if you wish your organisation to be listed below, please send details to GIACC. Only services and tools which are available free of charge will be listed.

Business Anti-Corruption Portal has produced the following anti-corruption resources and tools:

About Corruption: Definitions, interpretations and references to international and national legislation and initiatives.
Integrity System: Model code of conduct; Model risk assessment tool.
Due Diligence Tools: Tools related to seeking and vetting an agent or consultant, setting up a joint venture and implementing a project.
Country Profiles: Information on various countries.
Information Networks: Contact information to turn to for local help.
Links to relevant documents and websites for further reference.

Control Risks/Simmons and Simmons have published Facing up to Corruption 2007 – A Practical Business Guide. This provides practical advice on the nature and risks of corruption, international legal initiatives, corporate anti-corruption policies, and dealing with corrupt situations.

FIDIC - International Federation of Consulting Engineers has published its Business Integrity Management System (BIMS), which is designed to help businesses deal with integrity risks.

Global Transport Knowledge Partnership (GTKP) is developing a data base of reports and actions in relation to good governance and corruption prevention on road projects.

International Chamber of Commerce (ICC) has published Combating Extortion and Bribery: ICC Rules of Conduct and Recommendations (2005)

Organisation for Economic Co-operation and Development (OECD) has produced the following two tools:

Transparency International has produced, in conjunction with several leading international organisations, the Business Principles for Countering Bribery suite of documents designed to assist organisations to implement and manage an effective anti-bribery system.

Business Principles for Countering Bribery is an anti-bribery code that organisations can either adopt or use to benchmark against their own systems.
Business Principles for Countering Bribery - Small and Medium Enterprises Edition is an edition of the Business Principles tailored to the needs of small and medium enterprises.
The Six Step Implementation Process guides organisations through the various stages of developing, implementing and monitoring their own anti-bribery systems.
The Guidance Document provides background and clarification to the Business Principles, and assists organisations in implementing or reviewing their anti-bribery programme.
A Self-Evaluation Module is in development .

UK Anti-Corruption Forum has published an Anti-Corruption Action Statement recommending anti-corruption actions for business associations and professional institutions, companies, project owners, funders and governments. It has also published the following papers:

World Economic Forum – Partnering against Corruption Initiative (PACI) has adopted the PACI Principles for Countering Bribery which are closely modeled on TI’s “Business Principles for Countering Bribery”.

Page updated on 1st May 2008

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