CSR Bribery/Ethics

*Which countries is the LEAST corrupt?

New Zealand. Did some say Frodo Baggins?

Which company is a rockstar at CSR (i.e. which company did Gabbi mention in class one of the...err...all of the times we weren't there?)

P&G (Proctor & Gamble)

*What did the grumpy Lindsey executives do when they discovered a 30-year jail sentence was heading their eay?

They decided to take the case to a jury. First FCPA trial in 34 years!

*Closer look: What did the "action taken" in anti-bribery results look like?

__% participated in _____ for anti-bribery: • 17% industry initiatives • 18% multi-stakeholder dialogues • 25% risk assessment • 29% public disclosure of policies & practices • 30% monitoring & evaluating performance • 59% supplier policy development

*Closer look: What did the "action taken" in environmental results look like?

__% participated in _____ for environmental sustainability: • 27% multi-stakeholder dialogues • 33% industry initiatives • 49% public disclosure of policies & practices • 50% risk assessment • 54% monitoring & evaluating performance • 61% supplier policy development

*FCPA is common law...

...which means indictments against non-USA citizens increase.

*What is the CPA reporter's management checklist (9 items)?

1. Establish the right corporate culture 2. Support it from the top 3. Perform a corruption and bribery risk assessment 4. Evaluate third-party relationships 5. Improve internal controls 6. Avoid Avon's mistakes! 7. Develop clear and practical policies and procedures 8. Establish a violation reporting system 9. Provide ongoing training

*What are the four consumer segments according to a global brands study?

1. Global citizens 2. Global dreamers 3. Antiglobals 4. Global agnostics

*What are the four elements of the UN global compact?

1. Human Rights 2. Labor Standards 3. Environment 4. Anti-Corruption

*What are the three key dimensions of brand evaluation according to a global brands study?

1. Quality signal 2. Global myth 3. Social responsibility

What is Corporate Social Responsibility (CSR)?

Any corporate activity designed to benefit society as a whole or in part that may or may not directly benefit the corporation itself. Exceeds all facets of expectations from all stakeholders (environmental; legal; ethical; commercial).

*What if the management checklist is ethnocentric AND intrusive?

Build a bridge and GET OVER IT. Compliance training annoys everyone. It really annoys non-Americans.

*Did the U.S. FCPA clean up corruption in the U.S. MNC?

CRICKETS. That's what I'm wondering too. All Gabbi gave us nothing. (WILL LOOK UP IN THE BOOK)

*Did the U.S. FCPA put U.S. firms at a competitive disadvantage?

CRICKETS. That's what I'm wondering too. All Gabbi gave us nothing. (WILL LOOK UP IN THE BOOK)

*What are some cultural limitations of CSR?

CRICKETS. That's what I'm wondering too. All Gabbi gave us nothing. (WILL LOOK UP IN THE BOOK) Slide 19 of this presentation only has a vague picture of a middle eastern city with some mosque-like architecture. Hmm. More on that later. But it's important. It has a star.

*Did the U.S. FCPA topple friendly governments?

CRICKETS. That's what I'm wondering too. All Gabbi gave us on slide 31 was a picture of another random city. (WILL LOOK UP IN THE BOOK)

*Does violation reporting work in collectivist setting?

CRICKETS. Will find the answer.

*What does Transparency International do?

Conducts _(below)_ and lists results on its website: • Corruption Perceptions Index - Based on cross-national surveys of business people, general public, and country analysts (Shows only receiving, end-demand side of corruption; it does not measure the supply side) • Bribe Payers' Index - Based on cross-national surveys of 55-60 chief executives of foreign and national companies covering a wide array of business sectors, principles in commercial law (Leading export countries are included to see who is paying bribes abroad) • Global Corruption Barometer - the largest survey in the world tracking public opinion on corruption

Geocentric vs. Ethnocentric?

Geocentric: no right or wrong answer, we can all come together, compromise, pick best practices. Ethnocentric: it's MY way or the highway. Tough cookies.

Bribery. What is it?

Giving something of value to an individual in a position of trust to influence judgment or behavior

*Bribery. Is it worth it?

Heck no. Fines are often much higher for covering up a bribe than for the bribery itself!

*Why was the 1998 ammendment to the FCPA significant?

It made it legal to prosecute any company listed on a US stock exchange for bribery.

How are CSR and sustainability connected?

Meeting humanity's needs without harming future generations in the areas of economics, environment and ethics (social justice).

*Which country pays the most in bribes?

Russia. Excuse me as I wipe the vodka from my lower lip. (that's actually the ASL sign for Russia!)

*Which countries is the MOST corrupt?

Somalia. Those dang pirates.

If ethical behavior were to be depicted in a pyramid, what would it look like?

TOP: CSR MIDDLE: Ethical behavior BOTTOM: Complyingwith laws and regulations

*Which country pays the least amount in bribes?

The Netherlands. Double Dutch, anyone?

*Hold up. Is that management checklist "ethnocentric"?

USA companies rarely accept negative feedback about their ethics guidelines. No geocentrism here!

*Is the number of individuals getting indictment going up or down?

Up, up, up! In 2008 only 9 humans got indicted. In 2009, 28 humans got indicted. Crack down is upon us. Before 2008, very very few people were indicted.

*Do "whistleblowers" get any perks for turning in their fellow, or not so fellow, bretheren for bribery misconduct?

You betcha. • Dodd-Frank Act allows whistleblowers to receive 10-30% of monetary sanctions if fine is at least $1 million • Law encourages whistleblowers to report problems first to their firms • However, it's not all rainbows and sunshine. Some people are excluded from receiving rewards.

Is CSR good for recruiting?

¡Si! It enhances brand equity by promoting goodwill toward the organization.

*Describe a "Global Citizen"

• A consumer who relies on global brands to indicate products of quality and innovation. • He/she wants transnational firms to respect worker rights and the environment. • Label applies to 55% of consumers in the global brands study • Fewer global citizens in the UK and U.S. • Proportionately more global citizens in Brazil, China and Indonesia

*Change is a-brewin' at the Department of Justice and FBI. What kind of change?

• Added dedicated anti-bribery agents to target bribe-prone industries like Energy & Medical devices. • They now prvoide for forensic training to other countries.

*What is the U.S. Travel Act?

• Although rarely invoked, this act allows US citizens and firms to be prosecuted for committing acts overseas that are forbidden under US law. • A firm was threatened with prosecution for bribing someone in a private-sector firm abroad. The firm was headquartered in California, and there is a California law forbidding this.

What are the benefits of CSR?

• Can help differentiate the firm and enhance its brands. • Helps cut costs, as when the firm takes steps to minimize packaging, recycle, economize on energy usage, and reduce waste in operations. • Can help the firm avoid increased taxation, regulation or other legal actions by local government authorities.

*What are some other rockstar resources on the Transparency International Web Site?

• Country Surveys • CORIS - Corruption Online Research & Information System http://www.corisweb.org/

*Why was 2010 a "record year" for bribery fines?

• Daimler AG (Germany) was forced to pay $185 million in fines for bribery. • Technip (France) was forced to pay $338 million in fines for bribery as part of a Nigerian deal. • ENI (Italy/Holland) was forced to pay $365 million in fines for bribery as part of a Nigerian deal.

*Tell me about the Lindsey case. And no, I don't mean Lohan.

• Executives at Lindsey Manufacturing were indicted for paying an agent to pass on bribes to an official in a Mexican public utility company. • What was the "fine" damage, that was really not so fine? $297,500 Ferrari | $1.8 million yacht | $170,000 for credit card bills

*What is the Foreign Corrupt Practices Act (1977)?

• Forbids U.S. citizens to bribe foreign government employees or politicians - or to give money to agents that is subsequently used to bribe • Expediting payments paid to civil servants to do their jobs are allowed. • Citizens must report bribery in their organization. • Records must be transparent and well kept. • Failure to comply can result in fines and jail time!

*Which company does a stellar job of aligning its core competencies with its CSR initiatives? How so?

• GlaxoSmithKline (Pharmaceuticals) • Devotes substantial R&D to poor-country ailments such as malaria and tuberculosis • Was first to offer AIDS medication at cost

*What did the Corporate Sustainability Snapshot look like?

• Global Compact Annual Implementation Survey, 2012 • 1712 companies responded Measured environmental and anti-bribery "action taken" as a percentage in the following categories: • Participate in industry initiatives • Risk assessment • Supplier policy • Monitor & evaluate performance • Public disclosure of policies and practices • Multi-stakeholder dialogue

*What was the verdict of the Lindsey executives' trial?

• In May 2011: GUILTY. Womp womp. To the jailhouse! Wait. Kidding... • In December 2011: A federal judge throws out the Lindsey conviction due to prosecutorial misconduct. Womp womp womp.

*Expediting payments: legal or nah?

• It's still okay to pay to expedite your products through customs. • But not if it gives you a competitive advantage. • UPS is forbidden to pay expediting payments to customs officials. • And it is not okay to pay to reclassify product category to pay lower tariff.

*What questions arise from Dannon's donated dairy-lovin' actions in South Africa?

• Must Danimal breakeven? • Must it make a profit?

*How does Dannon make South Africa a better place?

• Offered "Danimals" yogurt in South Africa, which is nutritious for poor children • Provided employment in black townships

*Why is P&G's rockstar CSR status questionable in India?

• P&G is sending thousands of marketers to hospitals & door to door to explain the benefits of disposable diapers • Is this sustainability?! (questionable. questionable at best.)

*Why is P&G a rockstar at CSR, particularly in Egypt?

• P&G provided cash & in-kind donations to Egyptian victims of the 1992 earthquake; mentally-challenged children; cancer patients; orphans; others (others- really?!?!) • P&G helped invest in sustainable development by building: 50 one-room classrooms in the rural areas; clinics in underserved areas; the Young Innovators Program; the Pampers Child and Baby Development Program

*What is "strategic" CSR?

• When CSR is aligned with core competencies and linked to specific business objectives.

*How are countries and companies now going above and beyond the FCPA of 1997?

• Will an Organisation for Economic Co-operation and Development (OECD) anti-bribery pact level the playing field? CRICKETS. • Europe joins fight against MNE bribery • Britain's new anti-bribery legislation (expediting payments outlawed; jurisdiction encompasses all firms with operations in UK)