‘Tone from the Top’ is Essential in Combatting Corruption
On 5 December 2018, MCRB and the Union of Myanmar Chamber of Commerce and Industry co-hosted the third of MCRB’s ‘responsible business seminars’, with a focus on combatting corruption.
(The first two seminars were held on 5 July on responsible business due diligence and 13 September on workplace dialogue). The seminar was co-sponsored by Coca-Cola and Telenor and the Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI) which on 2 July signed a joint statement on combatting corruption with the Chair of the Anti-Corruption Commission.
Both U Aung Kyi, the Chair of the Anti-Corruption Commission, and U Zaw Min Win, Chair of the Chamber, gave speeches. U Aung Kyi’s speech (MM and EN) referred inter alia to the adoption by the Anti-Corruption Commission of Myanmar on 19 October of their Notification 14/2018 which sets out fundamental principles for private sector organisations to develop a strong business code of ethics as well as to establish appropriate internal control measures to prevent corruption. These principles include:
Strong, effective policy and support from top-level management to fight corruption
Risk assessment to effectively identify and evaluate exposure to corruption
Enhanced and detailed measures for high-risk and vulnerable areas
Application of anti-corruption measures to business partners
Accurate books and accounting records
Human resource management policies complementary to anti-corruption measures
Establish trustworthy reporting mechanisms to report suspected corrupt behavior
Periodic review and evaluation of anticorruption prevention measures.
U Aung Naing Oo, Director-General of the Directorate for Investment and Companies Administration (DICA) then drew the link in his presentation between the reforms introduced in the 2017 Myanmar Companies law concerning corporate governance and disclosure. He outlined the findings of the OECD’s report on awareness of corporate governance amongst listed, public and privately owned companies, and in particular noted the lack of awareness about the Companies Law provisions on disclosure, Directors’ Duties etc. He explained that with the advent of the online companies registry www.myco.dica.gov.mm some information on companies was freely available and full company details and all available online filings would be available for purchase at 10,000 kyats per company/enquiry. The deadline for reregistration was 31 January 2019, and to date 45,000 companies had re-registered and 7,000 companies newly registered.
He noted that Myanmar Investment Commission recognized that corruption was a deterrent to foreign direct investment, and explained that one of the roles of the new Ministry of Investment and Foreign Economic Relations would be to streamline procedures for agencies involved in attracting and overseeing investment, to reduce red tape and opportunities for ‘tea-money’ and corruption. He highlighted low salaries as a driver of ‘tea-money’ demands, and stressed the importance of leadership and tone from the top in combatting corruption, drawing on his own experience of improving the integrity and efficiency of DICA’s processes to bring them as far as possible online. This would in future include online applications for MIC Permits and Endorsements.
Hans Martin Hoegh Heinrichsen, Chief Corporate Affairs Officer at Telenor Myanmar presented on Telenor’s holistic approach to its anti-corruption programme, including their policy and controls, awareness-raising and training, including for suppliers and agents. All employees take an online course and must sign off on a code of conduct which contains zero tolerance for corruption. Anti-bribery principles are also cascaded to suppliers and included in contracts. Breaches and potential breaches are taken to the Ethics and Compliance Committee, and a dedicated Ethics and Compliance Officer reports direct to Telenor HQ in Oslo. Telenor has a ‘no gifts’ policy, other than giving of branded items, which is a challenge to operationalize in Myanmar. Telenor has sometimes had to decline invitations to attend government events because participation included a requirement for a gift or donation. Another defensive measure introduced has been a ‘four eyes’ approach where Telenor employees do not go alone to meetings with government officials. This also aims to address the risk of staff making tea-money payments at their own expense. Telenor’s annual staff survey asks employees to comment on how the company’s business integrity measures are working; there is also a ‘Speak Out’ hotline.’
Phyu Phyu Zin of MCRB highlighted the toolkits and resources on corruption available in Myanmar language (and English), including the Good Governance Toolkit for Myanmar Businesses: A Handbook for Resisting Corruption and Working with Integrity.
A panel discussion and Q&A was moderated by Sandy Chapman, Head of Public Affairs and Communications, Coca Cola Myanmar, and included Daw Thuzar Win, Director Business Development, Alpha Power Engineering, Rowan Kendall of Baker McKenzie, and U Moe Tint Swe, Managing Director, Swe Yi Mon Co, Ltd, and former Staff Officer at Custom Department who regularly blogs on Facebook on business integrity and corruption. Areas discussed included the challenge for business leaders in overcoming Myanmar employees’ perceptions that bribery was essential to win contracts; and the need for integrity in the tendering process at all stages. The Presidential guidelines on tendering (1/2017) needed to be properly applied. This included ensuring that the initial technical evaluation of bids is correctly conducted to eliminate those which are substandard and ineligible on technical grounds even if they are cheaper and would therefore win on the evaluation on price if they were allowed to proceed to the second stage. Furthermore, if companies were blacklisted by government for misconduct in a tendering process, this blacklist needed to be enforced across departments. Responsible companies wanted not to have to pay bribes, which in the end were passed on as a cost to the customer.
The importance of designing a business integrity and compliance programme based on risk assessment was emphasized. Risk assessment should be the base of a pyramid-shaped programme, headed by ‘tone from the top’. Company anti-corruption policies could not be downloaded and cut/pasted. They needed to be tailored to the risks of the business and the consequences of not complying. While all employees should have some training, high-risk staff, such as sales/marketing, and tax/finance, should have intensive, tailored, face to face training. Tips were shared on practical support to high risk employees such as Coke’s card (in EN and MM) for their drivers. Bringing processes online as far as possible was important to establish an audit trail and oversight. This was not only the case for transactions with government, such as those implemented by DICA, but for example use of ride-hailing apps to cut down on undocumented cash payments for taxis and staff claims.
The next responsible business seminar in early 2019 is likely to focus on inclusive and respectful workplaces.