State-owned enterprises (SOEs) are important to many countries because they represent a significant amount of Gross Domestic Product (GDP), are often a country’s largest employer, and provide critical services to a country’s population. SOEs are becoming increasingly global, comprising about one quarter of the Fortune 500 Global Companies.
However, SOEs have specific corruption risks because of their unique relationship with the government and the amount of resources and services they control. Further corruption vulnerabilities in SOEs include poor governance and management, poorly managed conflicts of interest, and lack of accountability. These vulnerabilities can result in bribery, corrupt purchases and sales of assets, illegal financing of political parties, and anti-competitive behavior.
To help guide SEOs in implementing best-practice anti-corruption programs, Transparency International released a new report on 10 Anti-Corruption Principles for State-Owned Enterprises. The SOE principles were developed through a multi-stakeholder process where Transparency International sought advice and recommendations from SOEs themselves, its chapters, academics and governance experts from around the world. They are meant to serve as a code of ethics and a framework for anti-corruption programs. According to the TI report, among the reasons SOEs should implement anti-corruption programs are because such programs:
- save time and money and contribute to the SOE’s sustainability
- promote local and international investment
- reduce risk
- attract other businesses to do business with the SOE because of its ‘clean’ reputation
- establish an attractive culture that aids in the recruitment of talented employees
- benefit the SOE’s board and its members through having an enhanced reputation
- make it easier to obtain loan and equity financing, thus removing a potential burden on national budgets
The principles emphasize accountability through transparency and public reporting.
The 10 Anti-Corruption Principles for SOEs
The SOE board and management, supported by all its employees, shall:
- Operate to the highest standard of ethics and integrity
- Ensure best practice governance and oversight of the anti-corruption program
- Be accountable to stakeholders through transparency and public reporting
- Ensure human resources policies and procedures support the anti-corruption program
- Design the anti-corruption program based on thorough risk assessment
- Implement detailed policies and procedures to counter key corruption risks
- Manage relationships with third parties to ensure they perform to an anti-corruption standard equivalent to that of the SOE
- Use communication and training to embed the anti-corruption program in the SOE
- Provide secure and accessible advice and whistleblowing channels
- Monitor, assess and continuously improve implementation of the anti-corruption program
Download the full report here.