Corruption

Week 4 Lecture 2 Control By Firms

Professor Phil Nichols

Control by Firms

2
Corruption

Control by firms
DOJ/SFO Recommendations
Compliance/Integrity
Mock Investigations

3
Corruption

DOJ/SFO Recommendations
Nine Step Program

4
Corruption

DOJ/SFO Recommendations
1. Assess risk
Particularly important in high risk industries or regions must include
related parties such as suppliers and distributors
2. Develop a very clear program that addresses risk
Proportionate
Probably a written code of conduct
It must address issues that are most difficult:
Gifts, entertainment, travel, extortion

5
Corruption

DOJ/SFO Recommendations
3) Implement in a meaningful way
Communicate clearly
Training and continued training
4) Senior management must show that it is serious
Tone at the top
5) Structure
Person or persons responsible for controlling Corruption
Mechanism for asking questions
Mechanism for reporting violations
Very clear procedure for dealing with violations

6
Corruption

DOJ/SFO Recommendations
6) Due Diligence
Business organizations change
New relationships (suppliers, distributors, partners, more)
New industries or regions
7) Auditing and third party certification
8) Periodic review

7
Corruption

DOJ/SFO Recommendations

8
Corruption

Compliance/Integrity
Rules that dictate actions
Norms that guide actions

9
Corruption

Compliance / Integrity

Rules that
dictate actions
Norms that
guide actions

Ethical leadership lead by example

Active management and supervision
Employ the right people
Risk management processes
Confidence in reporting

Guide to Building Workplace Integrity,

Office of Police Integrity
10
Corruption

Compliance / Integrity
Rules that dictate actions
Norms that guide actions

11
Corruption

Mock Investigations

12
Corruption

Mock Investigations
Tend to teach people how to avoid detection
Try mock audits or better yet, self audits

13
Corruption

Balanced Scorecard
STAKEHOLDER
CUSTOMERS

STRATEGY

CRITICAL SUCCESS
FACTORS

KPIs

- High quality products

- Good quality control process

- Low /improving error rates

- Good customer service

- Competent workforce

- Customer survey scores

- Fair pricing

EMPLOYEES

- Customer retention rates

- Opportunity for growth

- Training opportunities

- Low turnover rates

- Fairness

- Competitive wages

- Employee survey scores

- Good working conditions

WEIGHT
(E.G., 1 5)

- Rates of internal promotion

14
Corruption

Control by firms
DOJ/SFO recommendations
Building integrity
Mock or self audits balanced scorecard and Stakeholder trust

15
Corruption