The “do-it-yourself” approach to governance related risks: Sector-specific initiatives bring together companies facing similar issues and aim at the facilitation of joint action to collectively address corruption risks and governance issues. These joint efforts translate into principles, standards and processes, which are then endorsed and implemented by all participants.
Goal
Facilitating anti-corruption standard setting in the private sector.
Expertise
- Assessing best practices for anti-corruption standards
- Facilitating standard setting exercises involving various stakeholders
- Initiating sector specific processes
Main business sectors
- Banking industry
- Power systems industry
- Logistics and transport industry
- Cross industry
Methodology
- Close to stakeholders’ needs
- Academic expertise
- Practice-oriented advice
- Innovative capacity
Examples of facilitated initiatives
- Wolfsberg Group
- Partnering Against Corruption Initiative of the World Economic Forum (PACI)
The Basel Institute`s track record
The Basel Institute on Governance (Basel Institute) has been instrumental to the design, development and implementation of several Industry Standards through collective action across the world in a wide variety of sectors. A good example of this is the 'Wolfsberg Anti-Money Laundering Principles' (cf. www.Wolfsberg-Principles.com). This initiative took off in 2000 when the Basel Institute facilitated a process whereby the world's 10 largest private banks joined efforts to unify their money laundering prevention strategies. Other initiatives promoted and facilitated by the Institute include the development and launch of the so-called Clovis Principles, whereby participant companies in the Defense industry succeeded in agreeing on a sector-specific standard, with a strong focus on relationships with, and schemes of remuneration of agents. More recently, the Basel Institute has promoted an initiative in partnership with the World Economic Forum concerning the Logistics &Transport (L&T) companies. At the initiative of Professor Mark Pieth at the WEF in Davos in 2008, this effort has managed to gather a dozen of major L&T companies and participants who have agreed to focus on facilitation payments, a problem particularly challenging for this industry. Another on-going effort is the “Power Systems Integrity Initiative” which was first launched by the Basel Institute and carried out between 2000 and 2002, and then revived in 2008. In our view, there is huge potential for similar endeavors in other economic sectors and countries.
Why are Industry Standards necessary and effective?
In response to an increase in regulatory complexity as well as law enforcement activities, many international companies have developed compliance programs to ensure lawful and ethical business practices and, especially, to prevent corruption in their business activities. However, these companies might still be confronted with local counterparts who have different views and expectations regarding illegal payments and other inappropriate behavior. Ensuring both business performance and integrity is particularly difficult if competitors do not operate on the same level of business standards and engage in illegal and unethical behavior. Collective action by market players to level the playing field is the most effective way to mitigate the risk of unethical business practices and to ensure fair competition.
What does “collective action” mean here?
Collective action, in this context, means that companies operating in specific geographical/product market areas agree on common integrity standards. This includes the identification of concrete integrity related problems and joint mechanisms to address them. Such standards can include mechanisms to ensure participants’ compliance and preventive measures. In the long term, such activity (or “dialogue space”) aims to include all relevant competitors and stakeholders as a way to generate “multi-stakeholder” activities.
What is the role of the Basel Institute in these Initiatives?
Collective action is built on trust and mutual respect and requires some time. The Basel Institute on Governance has the role of a mediator/facilitator and an independent contributor to the process and the initiative. The presence of an independent institution helps provide a space for trust-building and supports the process with knowledge and expertise. This approach is also helpful to avoid any misunderstandings with respect to anti-trust issues.
It is also important that participants to these efforts have equal rights and responsibilities. Furthermore, success is dependent on the long-term commitment and involvement of important market players.
Usually the participant company representatives are senior functional (legal/compliance) and commercial managers.
What we do
The Basel Institute has at its disposal a pool of internationally renowned academic and corporate experts and offers high level expertise as well as long-standing experience in supporting collective efforts with:
Initiation of sector-specific processes in industries such as banking, power systems, logistics and transport as well as cross-Industry Initiatives.
Facilitation of standard-setting exercises involving various stakeholders.
Assessment and benchmarking of sector-specific best practices for anti-corruption standards close to stakeholders’ needs.
Continuous collaboration beyond the initial stages by ways of innovative and practice-oriented advice.
Projects
2008
06/20
Logistics and Transport (L&T) Industry Initiave
Another major novelty is that the Basel Institute on Governance initiated in 2008 a gathering of major Transport & Logistics industry players in order to address specific problems encountered by this sector with regard to corruption. The Institute facilitated three meetings up to now where the...
[details]
2006
12/19
World Economic Forum Partnering against Corruption Initiative (PACI)
The Partnering against Corruption Initiative (PACI) was established under the auspices of the World Economic Forum (WEF), the Basel Institute on Governance, and Transparency International at the WEF 2003 annual meeting in Davos. The Basel Institute on Governance is represented on the PACI Board by...
[details]
2002
09/19
The Wolfsberg Group principles
The Wolfsberg Group is an association of eleven global banks, which aims to develop financial services industry standards, and related products, for Know Your Customer, Anti-Money Laundering and Counter Terrorist Financing policies. The Group came together in 2000, at the Château Wolfsberg in...
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