RAISING THE BAR THROUGH COLLECTIVE ACTION Anti-Corruption Efforts in Action in India


Published on

RAISING THE BAR THROUGH COLLECTIVE ACTION Anti-Corruption Efforts in Action in India

Published in: Business
  • Be the first to comment

  • Be the first to like this

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

RAISING THE BAR THROUGH COLLECTIVE ACTION Anti-Corruption Efforts in Action in India

  1. 1. RAISING THE BAR THROUGH COLLECTIVE ACTION Anti-Corruption Efforts in Action in India Editors Shabnam Siddiqui & Yamini Suvarna A Collective Action Project Publication GLOBAL COMPACT NETWORK, INDIA
  2. 2. Acknowledgements We would like to express our sincere appreciation to all the authors who have contributed valuable insights and inputs for this guide, and responded to multiple queries with enthusiasm. A special thank you to Ms. Chetna Kaji for being on hand for language correction throughout the process of publication. This publication was edited by Shabnam Siddiqui and Yamini Suvarna. Disclaimer The views expressed in this publication are the authors’ own and do not necessarily represent the views of the Global Compact Network, India. The Global Compact Network, India makes no representation concerning, and does not guarantee, the source, originality, accuracy, completeness or reliability of any statement, information, data, �nding, interpretation, advice or opinion contained within the publication. This publication is intended strictly as a learning document. The inclusion of case stories and examples of company experience sdoes not in any way constitute an endorsement of the individual companies nor their anti-corruption policies by the United Nations Global Compact Office and/or Global Compact Network, India. The material in this publication may be quoted and used provided there is proper attribution. This publication is brought out through the generous contribution of the Siemens Integrity Initiative Fund. Editors ii  ACKNOWLEDGEMENTS
  3. 3. CONTENTS  iii Contents Acknowledgements ii Foreword iv Introduction vii Developing an Anti-Corruption Policy: Paharpur Business Centre 3 E-Procurement at Neyveli Lignite Corporation 17 Governance and Culture at Tata Chemicals Limited 29 Ethics and Compliance for Pro�table Businesses: The Siemens Experience 39 Anti-Corruption and Anti-Bribery Program: Enlightening Practices in Tata Steel 51 Anti Corruption Practices at Infosys Ltd 59 Bill Watch System: A Case Study of Gail 71 Vigilance and Transparency: Issues and Challenges 81 Collective Action Across Private and Public Enterprises: Mjunction’s Movement for Efficiency and Transparency (MET) 91 Looking Ahead 101 About Collective Action Project in India 104
  4. 4. iv  FOREWORD Foreword The United Nations Global Compact (UNGC) recognizes corruption to be one of the greatest challenges and a major hindrance to sustainable development, with a disproportionate impact on poor communities and is corrosive on the very fabric of society. In rapidly evolving markets, like India, corruption is a bottom-line business issue that directly affects the abilityofacompanytocompeteinafairplaying�eld.AccordingtoaGlobal Financial Integrity report, India lost a total of $462bn in illegal capital �ows between 1948 -2008. The same report further states that the illegal �ight of capital through tax evasion, crime and corruption has widened inequality in India. Citizens lose faith in their government in societies where bribery persists and corrupt officials are not held accountable. A survey conducted by The Times of India published in Feb 2011 reinforces this; over four-�fths of the respondents opined that corruption was at an all-time high, two-thirds maintained that the government was not serious about tackling it, while over ninety percent stated that corruption had tainted the government’s image. The United Nations Convention Against Corruption (UNCAC) was rati�ed by India on May 1, 2011. The 10th UNGC principle states that “Businesses shouldworkagainstallformsofcorruptionincludingbriberyandextortion”. In pursuance of this principle, in December 2010, United Nations Global Compact (UNGC) launched the Anti-Corruption Collective Action Project (CAP) in �ve countries – Brazil, Egypt, India, Nigeria and South Africa – with support from Siemens Integrity Initiative Fund. The aim of the project is to foster a high-impact collective action platform on anti-corruption by facilitating on-going dialogue between private and public sectors and devising business integrity measures, on the basis of the 10th UNGC
  5. 5. principle, to facilitate companies to operate with UNCAC recommended standards. Additionally, it attempts to provide an enabling platform at the country level where multiple stakeholders can address issues related to corruption. CAP is a forum to share information and experiences and �nd ways and means to collectively �ght against corruption. This publication is an effort by CAP to bring to the fore, the work done by public and private enterprises in India to combat corruption and enhance compliance. It showcases how companies from both private and public sectors contribute to advancing the anti-corruption agenda through speci�c actions beyond the introduction of policies. It includes nine case studies (3 public and 6 private) that focus on different aspects such as the developmentofanti-corruptionpoliciesandrelatedprocesses,operational aspects of such policies, challenges faced when implementing the policies and efforts towards collective action. I would like to acknowledge and appreciate the support of the senior management of the participating companies for their contributions to this study. It is my sincere hope that this book will prove to be a guide and an inspiration to all those seeking to overcome corruption dilemmas in India. (Sudhir Vasudeva) President Global Compact Network, India FOREWORD  v
  6. 6. “Hard but necessary choices lie ahead. We need an outcome that is simultaneously practical and transformational. We must use Rio+20 to promote better respect for nature and to cultivate an environment – natural and social – in which all children feel safe and all people can prosper. Mother Earth belongstousall;Rio+20isaonce-in-a-generationopportunity that all of us must seize.” — UN Secretary-General, Ban Ki-Moon vi 
  7. 7. Introduction Transforming the business climate in India from one where corruption is not only tolerated but sometimes even encouraged, into a zone of zero- tolerance for corruption where compliance and governance is a norm, is a daunting task and requires effort at multiple levels. The three levels to �ght corruption identi�ed by stakeholders of United Nations Global Compact are: i. Internal – where a company assesses risks, implements anti- corruption policies and compliance programs and provides guidance to managers. ii. External – shares internal policies, experiences, good practices and success stories with external stakeholders. iii. Collective – reaches out to industry peers, suppliers and other stakeholders and initiates joint activities to �ght corruption. Pettigrew and Whipp (1991)1 further identi�ed three dimensions of strategic change. They maintain that there is continuous interplay between these change dimensions and that successful change is a result of the interaction between the content (objectives, purpose and goals); the process (implementation) and the organizational context (the internal and external environment). Please see Figure 1 for a diagrammatic representation of these dimensions with reference to the creation of an anti-corruption business culture. Content centres on the objectives, purposes and goals of the change required.Atthispoint,thequestiontobeanswerediswhatistobechanged. Figure 1: Three Dimensions of Strategic Change INTRODUCTION  vii 1 http://www.vectorstudy.com/management_theories/3_dimensions_of strategic_change.htm
  8. 8. In the context of the Collective Action Project, the focus is on changing or transforming the business culture to one that is more transparent. The process implies implementation and the focus is on developing strategies to bring about the change. The development of anti-corruption practices by companies in both the public and private sectors can be viewed as the �rst stage in the process of strategic change. As a part of the second stage, companies would be required to take the necessary steps to ensure the actual implementation of these policies. Context refers to the environment where the change is taking place and comprises both the internal and external environment. The development and implementation of anti-corruption policies within companies are indicators of change in the internal environment while meetings, consultations, seminars and training programs organized by the Collective Action Project are changes that take place in the external environment. Steps are taken by companies to ensure that all business practices conducted with their suppliers/vendors/customers also fall within the ambit of the external environment. An Overview of this Book The nine cases presented in this publication are drawn from both public andprivateenterprises.Mostofthecasestudieseitherexamineaparticular aspect of policy or practice that a particular business has implemented, or is in the process of implementing, and one case details implementation challenges encountered and the eventual impact. The publication is divided in three sections: the �rst section outlines case studies that have focused on process development; second section mentions a case that is a bridge between process and implementation; and the third section details cases of implementation and operation. viii  INTRODUCTION
  9. 9. The �rst three case studies (in the �rst section) focus on the anti-corruption policies developed by the companies and detail the processes involved in the creation and implementation of these policies. The �rst of these cases presents the rationale and the processes followed for the development of the Anti-Corruption and Ethical Policy information by the Paharpur Business Centre & SoftwareTechnology Incubator Park whilst emphasizing the company’s commitment to safeguarding the environment. The second case, taken from the public sector, focuses upon the efforts made by Neyveli Lignite Corporation to implement the Integrity Pact and describes the E-Procurement system and the Online Integrated Material Management System set up as part of the company’s efforts to prevent corruption and encourage transparency in their business dealings. The third case outlines the Governance Policies at Tata Chemicals Limited, and discusses the formal as well as informal systems and practices that have been put in place to ensure ethical compliance. The fourth case draws on the Siemens experience and details the Siemens Compliance Guide for Anti-Corruption. This case highlights the fact that businesses can be both, ethical and successful. Thenextthreecases(thirdsection)aremoreoperationalinnaturefocusing on the implementation of the policies in the concerned companies. The �rst of these comes from theTata Group and details the different policies in place at Tata Steel and the steps taken to implement these so as to curtail corruption and create an appropriate anti-corruption and anti-bribery environment across Tata Steel. The second case of this section provides information on the Value Program implemented by Infosys to ensure that all employees assimilate the Infosys corporate and business values and practice it in their daily work-life. The seventh case study, also the last one in this section details the efforts of Gas Authority India Limited, a public INTRODUCTION  ix
  10. 10. enterprise, to make the entire billing process more transparent and user friendly. The penultimate case study is unique in that it presents a case of irregularities in maintenance work done and related corrupt practices in a premier public management institute which resulted in a formal fact �nding enquiry. [The name of the company, and people involved have been changed for purposes of con�dentiality].The �ndings of this enquiry and resulting disciplinary action is mentioned. And the last case study is an example of collective action in practice, in the steel industry. It details the formation of mjunction Services Limited, a public-private joint venture which combines technology and the Internet to reach out to a large customer base and ease the process of sales for enterprises. The last case study also showcases the Movement for Efficiency and Transparency (MET) initiative that aims to recognise, appreciate and felicitatepeoplewhohavetranscendedbarriersofbureaucracy,inefficiency and opaqueness, where they can share their success stories and ideas for the future. The publication ends with a special chapter titled ‘Looking Ahead’ contributed by Dr. A.K. Balyan, Governing Council member of Global Compact Network, India wherein he outlines the strategies of Collective Action that need to be taken in the times to come. Dynamics of Change The above mentioned case studies respond to four aspects of change as enumerated in Figure 2. x  INTRODUCTION
  11. 11. • Personal – This centers on the anti-corruption policies in place in the company and are applicable to all the personnel across the company and its subsidiaries. The Anti-Corruption and Ethical Policy at Paharpur Business Centre & Software Technology Incubator Park (Case 1), Tata Code of Conduct (mentioned in Cases 3 and 5), the Siemens Compliance Guide for Anti-Corruption (Case 4) and the Code of Conduct at Infosys (Case 6) are a few examples of such policies mentioned in this publication. • Relational–Atthislevel,thefocusisonintra-companyanti-corruption policies as well as the interactions and linkages between the different subsidiaries/departments of the parent company. This could take the form of speci�c policies created for different areas or departments or functions as in the case of the Code of Ethics for Principal Executives and Senior Finance Officials in place in Infosys (Case 6), Gift and Hospitality policy at Paharpur Business Centre & Software Technology Incubator Park (Case 1) or the whistle blower policies in place in many of the participating companies (Case 4 and Case 6 contain two examples of such policies). Case 8 in this publication highlights the pitfalls of not having independent departments and shows how the absence of these can enhance a company’s vulnerability to corrupt practices. • Structural – Bringing about change at the structural level requires companies to examine how their anti-corruption laws have been structured and monitor the systems in place to ensure their implementation. The E-procurement system and the Online Integrated Material Management System (OLIMMS) set up by Neyveli Lignite Corporation (Case 2) and the Bill Watch System in place in Gas Authority India Limited (Case 7) depict policies that have led to structural changes. Figure 2: Four Aspects of Change INTRODUCTION  xi
  12. 12. • Cultural – The focus at this level is on determining how companies can go beyond their own employees to take anti-corruption policies to others thereby creating a business climate that displays zero- tolerance towards corruption. Many of the companies featured in this book have policies in place to ensure that their customers/vendors/ clientele also conduct business in an ethical manner eschewing corrupt practices. However, the MET initiative mjunction (Case 9) is a �ne illustration of how collective action as well as recognizing, appreciating and felicitating people who have transcended barriers of bureaucracy, inefficiency and opaqueness can contribute to the creation of a business climate conducive to compliance. The editors hope that this book would inspire other Indian enterprises to share and contribute their own insight and experiences on tackling corruption in an effective manner. xii  INTRODUCTION
  13. 13. Developing an Anti-Corruption Policy: Paharpur Business Centre
  14. 14. DEVELOPING AN ANTI-CORRUPTION POLICY: PAHARPUR BUSINESS CENTRE  3 Abstract This article provides information on the Paharpur Business Centre & Software Technology Incubator Park (PBC™- STIP). The rationale and the processes followed for the development of the Anti-Corruption and Ethical Policy in keeping with the principles of the UN Global Compact are detailed in this article. The author also draws attention to PBC’s commitment to safeguarding the environment. Developing an Anti-Corruption Policy: Paharpur Business Centre Introduction PBCTM – STIP is a Micro Small and Medium Enterprise (MSME) in the service sector, housed in an independent six-storied building with an area of 50,000 sq. ft. It is a 25-year-old building located within Nehru Place Greens and built to Government speci�cations. It is the �rst office building in India to be USGBC LEED1 Platinum certi�ed under Existing Buildings (Operations & Maintenance) category – sustainable building. It also has a Bureau of Energy Efficiency (BEE) with a �ve star rating, with a certi�ed annual energy consumption of 28Wh/hr/m2. It is an ISO (International Organisation of Standardisation) 9001, 14001, 22000, OSHAS (Occupational Health and Safety Advisory Services) 18001 and SA (Social Accountability) 8000 certi�ed company. Paharpur Business Centre (PBC) has been recognized for its transparent business practices and was presented an‘Ethics is Good Business’award, in December 2005 by Dr. A. P. J. Abdul Kalam, the President of India at that time. PBC began its operations in the 1990s with an equity capital of less than US $ 15,000. Today the current net worth is US $ 13.94 million. PBC is a ‘partner of choice’ offering a suite of 28 support services in Delhi and NCR. It has been a leading provider of office facilities and services to corporates as well as fortune 500 companies planning forays into the Indian marketplace, for nearly two decades now. One of PBC’s USP is the promotion of the concept of entrepreneurship where each HOD (Head 1 U. S. Green Building Council – Leadership in Energy and Environmental Design
  15. 15. 4  DEVELOPING AN ANTI-CORRUPTION POLICY: PAHARPUR BUSINESS CENTRE Figure 1: Organogram ORGANIZATION CHART Paharpur Business Centre & Software Technology Incubator Park (PBCTM – STIP)
  16. 16. DEVELOPING AN ANTI-CORRUPTION POLICY: PAHARPUR BUSINESS CENTRE  5 of Department) is given the opportunity and independence to run the department as they would run their own business. Please see Figure 1 for the organogram. Services Offered The client list of PBC includes several Fortune 500 companies - Microsoft, Hewlett Packard, Mobil, Motorola, British Telecom, SAP, Singapore Telecom, Comverse Network, GEC Alsthom, Intel, Matsushita Electric, Sun Microsystems, Alta Vista, Hitachi, Daiken, Associated Press and Symantec. Apart from providing serviced and furnished offices on a ‘plug and play’ basis, the services offered by PBC are as under: 1. Clean AirTM - Maintaining indoor air quality as per speci�ed by the ASHRAE (American Society of Heating, Refrigerating and Air- Conditioning Engineers) standards. This service focuses on providing indoor consulting services to corporate and Business houses. 2. Spring CleanTM – Housekeeping and maintenance services. Mechanized cleaning and maintenance solutions for buildings, offices and homes are offered as part of this service. 3. Happy GreensTM – Horticulture services.“Say it with �owers”is the motto followed.Activitiesinclude�owerarrangementsanddelivery,supplyand maintenance of plants, garden maintenance and landscaping. 4. Be AssuredTM – Security services. The security services team provides consultancy, private investigation, as well as guarding and canine services. 5. My ConferenceTM – Conference facilities. This is ideal for corporate meetings,professionalpresentations,smallgroupworkshops,training, seminars, board meetings and private client meetings. It is equipped
  17. 17. 6  DEVELOPING AN ANTI-CORRUPTION POLICY: PAHARPUR BUSINESS CENTRE with state-of-the-art facilities like VOIP, WiFi, LAN and audio/video conference facility. 6. ImplementTM – Engineering and safety services. On offer is a highly quali�ed and professional team that provides engineering, safety and audit services for office and building equipment. 7. Indian SpiderTM – The Internet Service Provider. It provides broad bandwidth and VOIP along with other modern technology to complement business needs in Delhi. 8. Office SupplyTM – Office Supplies. Office stationery and computer related supplies at the doorstep at economical prices. 9. Cuisine ArtTM – an ISO 22000 certi�ed provider of food and beverage services. CuisineArt is an exclusive preserve providing gourmet cuisine backed by a team of professionals. It is a favorite with Corporates and Embassies and known for its high quality of food and courteous service with a smile. 10. Café EinsteinTM – A gourmet-eating experience at the Centre with organic options. The restaurant specializes in power buffet lunches, corporate get-togethers and dinner parties. 11. Fin TaxTM – Financial and Legal services. This takes care of tasks like processing of payroll, tax advice, insurance and bookkeeping and ful�lling government regulations. 12. Micro ManageTM – A Green Integrated Facility Management service provider. This unit provides both soft and hard services, which include turnkey facilities and management solutions customized to the needs of the clients. 13. PBCTM – Corporate Valet Service.This service is a facilitative one, which puts clients in touch with leading professionals providing a variety of services related to law, accounting, auditing, market research, recruitment and taxation.
  18. 18. DEVELOPING AN ANTI-CORRUPTION POLICY: PAHARPUR BUSINESS CENTRE  7 14. Travel SpiderTM – Travel management services. An IATA & ASTA approved travel agency with a corporate focus, it is a preferred travel agent for corporates operating in India. 15. ReLo cateTM – Realty services. This team provides assistance for short and long-term real estate needs, both commercial and residential. 16. Business PointTM – Virtual Office facilities. Resident secretaries for traveling executives, mail and message forwarding, appointments, fax and secretarial assistance are all provided through this service. 17. PBC Art Gallery – A free art platform to encourage the emergence of new artists, in line with the organization philosophy - Art for a Cause. 18. Green GrocerTM – Farm fresh fruits and vegetables, organic vegetables and grocery services. 19. Out ReachTM – Training and HR consulting services. 20. Quality LifeTM – Quality management services. 21. Clear VoiceTM – High quality VOIP service. 22. PBCPR – Corporate Communications division that functions as an image consultant enabling one to present one’s best fact to the world. 23. My OfficeTM – Fully equipped offices and workstations designed for an instant start-up. 24. My TrainingTM – Training facilities 25. My InterviewTM – Interview rooms 26. Legal SpiderTM – For independent research on Indian and UK laws. 27. Deutsches Haus – This unit provides German language support, translation and interpretation services to MNCs. Employment Standards PBC is deeply committed to maintaining excellent employment standards. While attracting and retaining great talent is a given objective at PBC, it
  19. 19. 8  DEVELOPING AN ANTI-CORRUPTION POLICY: PAHARPUR BUSINESS CENTRE also works consistently to hone skills of existing employees to reduce the gapbetweenexpectationsanddeliverablesinordertocreateameaningful business model for all. A positive/enabling work environment is essential to allow employees to achieve their potential. It also helps attract new employees to PBC and motivates them to stay on. Components of the enabling work environment include numerous opportunities for employee development and professional growth, competitive compensation and bene�ts, focus on health and safety, and approach to diversity and inclusion. Table 1: Employee Information Employee Details 2010 – 2011 Number of employees: Permanent 210 Number of management (or executive/officer) 31 grade employees (Nos.) Ratio of non-management cadre to management 14.76% cadre employees Segmentation of employees by gender Male (Nos.) 174 Female (Nos.) 36 Segmentation of top management by gender Male (Nos.) 17 Female (Nos.) 14 Commitment to Principles of UN Global Compact PBC is strongly committed to the ten principles of UN Global Compact. It conducts itself in a responsible and ethical manner, ensuring transparency in all its dealings, especially in its supply chain management to assure all stakeholders of its accountability and responsibility. Strict adherence to
  20. 20. DEVELOPING AN ANTI-CORRUPTION POLICY: PAHARPUR BUSINESS CENTRE  9 the laws of the land; both statutory and regulatory compliances, are an essential aspect of all PBC business operations. Regular internal audits are carried out by their Quality Assurance (QA), Finance, Human Resources (HR) and Legal Departments to ensure standards, codes and other statutory and regulatory requirements are regularly updated whilst also controlling and monitoring all operations. Third party audits of the various management systems provide an unbiased audit of the systems concerned. The SOPs and standards of PBC take care of all legal requirements, which are an inherent/intrinsic part of its operations. In case any business unit/department is found to be non-compliant during the audit process, immediate corrective action is taken in terms of re-de�ning of SOPs (Standards of Operation), getting the same in place and reviewing it for further compliance and adequacy. At PBCTM – STIP, policies are developed in a transparent manner to prevent corruption. Effective controls that check unethical behavior whilst ensuring that PBC’s core values and ethics are clearly understood by all the important stakeholders are embedded in all its operations. The company manual‘Management Standing Instructions’(MSI) lists down all the policies as well as the ‘Dos’ and ‘Don’ts’, which is an integral aspect of the formal induction process that every new employee undergoes. In addition, regular training programs and workshops conducted by the HR department ensure that the team members are aware of the core value system of the organisation. At PBC, personal integrity and integrity in business are regarded as important prerequisites for recruiting/employing talent, signing business
  21. 21. 10  DEVELOPING AN ANTI-CORRUPTION POLICY: PAHARPUR BUSINESS CENTRE MOUs, �nalizing vendors/sub-contractors or forging new partnerships. Each department identi�es its speci�c legal requirements and receives assistance from the commercial and legal department to put these in place. The company does not condone any violation of the law, unethical business,dishonestyorotherparticipationinanyillegalactsuchasbribery, fraud and theft. Any employee violating the company’s code of conduct and/or exhibiting unethical behavior is subject to an investigation and appropriate action is taken against the violator in an impartial/unbiased manner. In keeping with PBC’s Gift and Hospitality policy, no PBC employee or any member of his/her immediate family is allowed to accept any form of gifts or favors from contractors, suppliers, clients/customers, or any other party having business dealings with the company. However, in such circumstances where it is customary to do so, employees are permitted to accept such gifts of nominal value or favors provided that such gifts or favors are not extended and/or accepted for the purpose or with intention of: • In�uencing any present or future act decision by that employee. • Inducing such employee to perform or omit any act in violation of his proper duties and responsibilities. • Inducing such employee to use or direct any other person to use his in�uence with a government, or any of its representatives, divisions or agencies to affect or in�uence any act or decision of any such government, representative, division or agency and in any or all of the above cases, for the purposes of expediting, bene�ting, prejudicing or affecting in any way whatsoever whether directly or indirectly the business dealings or relationship of the gift giver with the company.
  22. 22. DEVELOPING AN ANTI-CORRUPTION POLICY: PAHARPUR BUSINESS CENTRE  11 • For the purpose of this section, “Nominal Value’ of a gift is de�ned as the sum of the gift(s) having the aggregate monetary value of not more than Rupees Three Hundred only (Rs. 300/-). Employees are required to report to their respective Head of Department on all gifts or favors received which exceed the above nominal value. • Any employees in doubt as to the nature or purpose of the gift or favor must consult the HR Manager who will decide, either in consultation with or through his/her own accord, the course of action in respect of such gift or favor. • Gifts that exceed the nominal value stated above, cannot be accepted by PBC employees and will be returned to the donor; or if such return is not possible, the company will retain the same for distribution to recognized charitable organizations. PBC’s determination to go beyond compliance is evidenced from the fact that it is a signatory to policies and frameworks developed by international bodies like UNGC and GRI – OS. The company strongly believes that voluntary compliance to international standards and benchmarks is the way forward. PBC’s Anti-Corruption and Ethical Policy PBCTM – STIP has a stated anti-corruption and ethical policy monitored by Human Resource Department and all the HODs in their respective business area. PBC provides the wherewithal to all the departments to ensure the success and pro�tability of their business ventures without compromising on the core values of conducting business such as responsibility, transparency and sensitivity towards the environment. This makes it necessary to have clear cut policies and guidelines that constantly guide business heads.
  23. 23. 12  DEVELOPING AN ANTI-CORRUPTION POLICY: PAHARPUR BUSINESS CENTRE The anti-corruption policy was initiated on April 28, 2011 by Quality Assurance (QA)/Sustainability Department. It was then discussed with the CEO who was dedicated to the formation of a proper system to address corruption and ethical dilemmas faced by the employees. The framework of the policy was created by the Heads of the various departments, the General Managers and the CEO, with inputs from speci�c departments like HR, Finance and QA. The process involved two or three brainstorming sessions where practices adopted by other organizations were discussed. The nature of business conducted at PBC and the interaction of the various HODs with various stakeholders of PBC were kept in mind to arrive at a policy that addressed the speci�c needs and concerns of the PBC family. The �rst step in the development of the policy focused on the Heads of the departments.The involvement of the HODs ensured that they understood the signi�cance of the development of this policy and its impact on the business practices of the company. It also provided the HODs an opportunity to present their views and provide inputs on the components of the policy. Drawing from the inputs from the business heads, a team comprising key players from the QA and HR department and the GM’s Committee developed a policy framework. This was discussed with the CEO for inputs which were included in the preparation of a policy document. This was presented to the board by the CEO for the �nal approval which was given on May 26, 2011 indicating that the entire process took less than one month. This policy (detailed in Box 1) was then circulated to all the employees of PBC who are required to ensure strict adherence to the policy and behave BOX 1: Anti-corruption & Ethical Policy at PBCTM – Stip As employees in PBC, we: • Will ensure to behave in an honest and ethical manner. • Will set a good example by being trustworthy. • We will make sure that our behavior complies with the policies and rules of the organization/PBC. • We will use the resources of our company in the best interest of the company, and not for personal and gainful reasons. We will not misuse these resources. • We will not pay or accept bribes/anything of value/cash/gift/gratuities, offer of employment etc, for the purpose of in�uencing placement of contracts, obtaining a business advantage or any other reason. • We will make a clear distinction between the interests of our company and our personal interests, and avoid possible con�icts of interest; we do not accept gifts, invitations or other advantages, which could contradict this principle or in�uence our business decisions that are against the norms of our company. • Ensure that we comply with law of the land, including National legislations and statutory compliances. • All commissions and fee contracts shall have prior approval of our CEO. • Report incidents, risks and issues which deviate from our policy, to your immediate reporting authority, or Head-HRD or CEO.
  24. 24. DEVELOPING AN ANTI-CORRUPTION POLICY: PAHARPUR BUSINESS CENTRE  13 in a manner suited/appropriate to the stated policy and rules of the organization. It is expected that they will not only behave in an honest and ethical manner but will also set a good example by acting in a responsible and transparent manner. • Are continuously conscious about and aim to maintain our integrity, thereby maintaining the integrity of the organization. • All employees must adhere to this policy and any violation to the above may result in termination/legal action, as deemed �t by the management. • The CEO must approve any exceptions to this policy. As owners of PBC, we: • Commit ourselves to this policy, and to an ongoing effort to maintain our integrity. • Make sure that PBC complies with national regulation and commit PBC to an open and transparent management approach. • Expect our partners and other business associates to respect this policy and wherever possible we will in�uence them to also adopt this policy.
  25. 25. E-Procurement at Neyveli Lignite Corporation
  26. 26. Abstract This article focuses upon the efforts made by Neyveli Lignite Corporation (NLC) to implement the Integrity Pact, a tool developed by Transparency International to help Governments and Civil Society in �ghting corruption in the Public Procurement Contracting. It also describes the E-Procurement system and the Online Integrated Material Management System (OLIMMS) set up by NLC as part of their efforts to prevent corruption and encourage transparency in their business dealings. The author points out that the initiation of the new online system has not only enabled them to curtail corruption but has enabled them to shorten the procurement cycle. E-Procurement at Neyveli Lignite Corporation Introduction Neyveli Lignite Corporation was started in 1956. It is a Government of India enterprise based in Tamil Nadu. NLC signed an MOU with Transparency International India (TII) on 29.12.2007 for implementing the Integrity Pact (IP) in the organization making it one of the pioneering companies that voluntarily signed the MOU with TII even before the Chief Vigilance Commissioner (CVC) issued guidelines for implementation of IP in PSU’s. In NLC, Integrity Pact Program (IPP) covers the Tenders/Contracts value at Rs. 1 crore and above, which is more that 90 percent value of the total contracts/purchase executed by NLC. The IPP in the present form at NLC has three players: • The Principle (Govt. Companies) • The Vendors/Contractors and • The Independent External Monitors (IEMs) A panel of three IEMs was proposed and accepted in 2008; their tenure as IEMs at NLC has been extended up to Feb. 2013. In keeping with the IPP, NLC has made the tender process in a transparent manner by adopting the following activities, using its website and electronic media. • All tenders are hosted in downloadable format on the company website since 2002. • All the pre-bid clari�cations, outcome of the meetings are being hosted on the website. E-PROCUREMENT AT NEYVELI LIGNITE CORPORATION  17
  27. 27. 18  E-PROCUREMENT AT NEYVELI LIGNITE CORPORATION • Monthly reports of award of tenders are hosted on the website since 2006. • LOA/Award of Contract and Return of EMD/Bid guarantee details hosted since March 2007. • All operations in connection with the purchase of spares such as vendor registration for e-procurement, bid submission by e-tendering, all tender processing by Material Management Complex through OLIMMS (Online Integrated Material Management System) are done online including the online sending of digitally signed purchase orders (PO) to LI1 bidders. Each of these is detailed in the subsequent sections. After the implementation of the IPP, the following were done at NLC: • Two meetings of the Vendors and Contractors with IEMs were organized (on 06.10.2010 at Chennai and 07.10.2011 at Neyveli). • ThreemeetingswereconductedbytheIEMsregarding“PeriodicReview and Evaluation of IPP and its effectiveness in NLC” (on 06.10.2010 at Chennai, 09.06.2011 at Neyveli and 08.10.2011 at Neyveli). • Steps have been taken to offer the tendering process through e- procurement for “Contracts” also. In connection with the same, an order has been placed recently on IIT, Kharagpur. Electronics Procurement (E-Procurement) With the advent of the Internet in India in the late 1990s, individuals and organizations started identifying ways and means of automating 1 The person/entity that has bid the lowest in a tender out of all the pre-quali�ed bidders is called L1. Typically, the entire or the majority quantity/work is then offered to the L1 bidder. Where other qualifying bidders are also offered part of the quantity/work, they are then required to match the price and conditions offered by the L1 bidder.
  28. 28. E-PROCUREMENT AT NEYVELI LIGNITE CORPORATION  19 their key processes. E-Procurement (Electronic procurement) is one such area, where the Internet was instrumental in automating the purchase process, thereby signi�cantly reducing cost and time. E-procurement is the integration and management of all procurement activities comprising purchase request, �oating enquiries, submission of bids by the vendors, clari�cations, price negotiation, evaluation and placement of order online using Internet. Thus e-Procurement is the electronic B2B (or B2C or B2G) sale and purchase of goods and services. The medium used might be the Internet or any other media like EDI (Electronic Data Interchange) and Enterprise Integrations (formerly known as EAI). E-Procurement enables the user to introduce ease and efficiency without compromisingtherequiredproceduresoftheorganization.E-Procurement provides transparency, results in saving of time and money, shortening of procurement cycle as well as ease of operation to the implementing organization and to the vendors. As per Government of India guidelines, E- Procurement was introduced for the purchase of all items integrated with OLIMMS. E-Procurement solutions enable organizations to automate their purchasing process and reduce processing costs. With the web enabling one of the critical areas of business process, organizations can now have access to new strategic partners, uncover new suppliers and streamline purchasing processes while simultaneously lowering the cost. Adopting an e-procurement solution could save on the money, time and labour that are normally wasted on sieving through reams of papers. While implementing the e-procurement system captures approval routing, it also captures data vital for creating more effective strategic suppliers management; moreover, it produces reports on product use and supplier performances. Thus, the organization is rendered more efficient and more
  29. 29. 20  E-PROCUREMENT AT NEYVELI LIGNITE CORPORATION productive. E-procurement affords companies the opportunity to simplify and streamline the purchasing processes, thus harnessing the power of the web to ensure savings for the implementing organizations. The e-procurement program was launched by NLC in 2007 using software developed by IIT, Kharagpur to NLC speci�cations. Till date, 8202 enquiries have been �oated on 7785 purchase orders placed through e- procurement. It was noted that the procurement lead time has reduced drastically. Vendor enrolment too is increasing and around 1800 vendors have enrolled through the e-procuremet package so far. Types of Indents handled in Online Integrated Material Management System (OLIMMS) are • Regular Indent • Price Agreement Indent • Rate Contract Indent The different aspects of E-Procurement in the OLIMMS project at NLC are explained below. Vendor Enrolment Vendors who wish to participate in NLC e-procurement must necessarily possess a class III Digital certi�cate with the name of the organization. An online enrolment for participating in e-procurement is available on the NLC website. The software automatically captures important information such as the company name, address and email ID from the digital key of the vendor. Vendors have to �ll in additional details and submit their applications online. The application is then scrutinized by the vendor registration cell before approving of the vendor enrolment. Following this,
  30. 30. E-PROCUREMENT AT NEYVELI LIGNITE CORPORATION  21 the system automatically generates an acceptance email and sends it to the vendor at the email ID provided in the enrolment form. Enquiry All tenders, Limited Tender Enquiry (LTE), Short Tender Enquiry (STE) and Press Tender Enquiry (PTE), are displayed on the main page of the NLC website. Any vendor, whether registered or unregistered, can view any of the tenders from here if they have Internet connection. A checklist is automatically generated by the system irrespective of the value of purchase. Details like enquiry number, enquiry method, enquiry date, date on which the tender was opened, P.R.No., P.R. date, number of enquires issued, whether the offer was considered, number of material, estimated value, total order value, total site cost, material description, basic price, quantity, deviation, commercial terms, vendor name and vendor code are automatically displayed by the system in the enquiry. The Dealing Assistant at the Purchase Department checks the �elds in the enquiry and veri�es that all the requisite annexure as mentioned in the PR are attached in physical copy. Addition/Deletion of the vendors can also be done in the enquiry. Following this, an enquiry number is generated by the system. The Dealing Assistant then submits the form, which is sent to the approval cycle depending upon the enquiry value through work�ow online. After approval from the competent authority, the Dealing Assistant takes a print out of the enquiry and sends it to the vendors. At this time, it is also automatically published on the website in PDF format and an email alert is sent to the concerned vendors who have already enrolled themselves in case of STE and LTE. In case of PTE marked for e-tendering, the same is available to all vendors who are enrolled. The integrity of
  31. 31. 22  E-PROCUREMENT AT NEYVELI LIGNITE CORPORATION enquiries can be veri�ed by the vendors if required as these are digitally signed. Capture Quotations The tenders are opened on the pre-determined date by Account and Purchase Executives using their Digital Keys. All the quotations are automatically decrypted by the application and available for further processing. Simultaneously a copy of the quotation opened is published on the website in the vendor’s homepage for the vendors to view. Generation of Comparative Statement For single cover system, price and techno-commercial comparisons are made available as soon as the tender is opened. For two cover systems, �rst the techno-commercial cover is decrypted and after cover one success, the second cover is decrypted on the date speci�ed. In case of press tenders, PQR and Techno-Commercial statement are made available as soon as the cover is opened and the price statement is made available after cover one success. All the statements are system generated and no alternation/modi�cation/deletion is possible. Clari�cations Clari�cations, both technical and commercial can be made through e- procurement system for which vendors can give their response online. Price negotiation/reduction can also be done through e-procurement system online and replies obtained online. Classi�cation request, response and negotiations are tracked by the system. Purchase Order A digitally signed electronic purchase order is sent to LI vendors on �nalization of the tender. The vendors have to acknowledge its receipt by
  32. 32. E-PROCUREMENT AT NEYVELI LIGNITE CORPORATION  23 email. Email alerts are sent automatically to the vendors at every stage to the email ID given at the time of enrolment and a copy is marked to the respective sections of the purchase branch. All the documents starting from indent and inclusive of payment to vendor require approval from Competent Authorities as per DOP. Approval of all the documents in OLIMMS is carried out through the system itself and is paperless,exceptattheleveloftheDirectors,theChairman-cum-Managing Director and the Board. The approval processes follow the prede�ned work�ow sequence incorporated in the system. In case the approving authorities require any modi�cation in the document, the document in question is ‘rejected’ with corresponding remarks and sent back to the initiator who then makes the necessary modi�cations and resubmits the document for approval. Price Agreement This agreement (Main Order) will specify that NLC will purchase materials of speci�c value within the speci�ed period of agreement. After the issue of main price agreement order, vendors can place any number of suborders within the speci�ed value as mentioned in the agreement. The agreement is generally entered for a period of one year. Both the main order and suborder are generated through the system. Necessary checks are built into the system so that suborders cannot be issued beyond the main order value. Rate Contract This agreement speci�es that NLC will purchase material on �xed rates as mentioned in the main order within the duration of the agreement. The rate contract is generally valid for one year. The main order contains the delivery schedule of the suborders also. After the issue of main rate
  33. 33. 24  E-PROCUREMENT AT NEYVELI LIGNITE CORPORATION contract order, vendors can place any number of suborders indicating the quantities required. Both the main rate contract order and suborders are generated through the system. Bene�ts of E-Procurement The value proposition of an e-procurement solution includes expansion of supplier base, better price negotiations and shorter procurement cycle that help reduced inventories, clarity of speci�cation and adherence to time frame. Other bene�ts include: • Promoting competition among bidders • Providing equitable treatment to bidders • Promoting fairness and transparency in bidding offers • Eliminating face to face contact • Publicizing bid information online, in real time • Providing rich MIS and analytical data Further, e-procurement system can be designed to factor in all rules and orders on subjects such as: • Rules relating to procurement • Policy preference for PSUs/cottage and small industries • Central Vigilance Commission Guidelines • Comptroller & Auditor General Observations • Delegation of Power • Best International Practices Last but not least, e-procurement holds the potential to free the authorities from endless paper work and worries relating to inadvertent non-compliance to above requirements.
  34. 34. E-PROCUREMENT AT NEYVELI LIGNITE CORPORATION  25 E-Payment E-Paymentisasubsetofane-commercetransactionthatincludeselectronic payment for buying and selling goods or services offered through Internet. Generally, electronic payment refers to online transaction on the Internet; however, there are actually many forms of electronic payment. As technology is developing, the range of devices and processes to transact electronically continues to increase while the percentage of cash and check transaction continues to decrease. Conclusion Implementing the e-procurement and e-payment system is not without its challenges. The two biggest challenges are ensuring that the transactions remain secure so that private information does not leak out and averting fraudulentcharges.Keepingupwiththelatestdevelopmentsintechnology could also prove to be a challenge. However, the scope of e-procurement too is immense and the technology of e-payment, i.e. the payments of �nes, citations, taxes, bills and rentals are already in place or are becoming common place. By implementing the Integrity Pact and the E-Procurement systems, NLC ensures that all tendering takes place in a fair and transparent manner. This system further ensures that the principles would not seek or accept any bene�t from the bidders whilst making certain that all bidders are treated with equity and reason, thereby reducing corrupt practices.
  35. 35. Governance and Culture at Tata Chemicals Limited
  36. 36. GOVERNANCE AND CULTURE AT TATA CHEMICALS LIMITED  29 Abstract Business at Tata Chemicals Limited (TCL) has always been value-driven. TCL believes that the importance of adhering to good Corporate Governance cannot be emphasized enough. This article outlines the Governance Policies at TCL whilst discussing the formal as well as informal systems and practices that have been put in place to ensure ethical compliance. Governance and Culture at Tata Chemicals Limited Introduction The foundations of Corporate Governance and a deeply embedded Tata culture have helped Tata Chemicals Limited (TCL) to serve its stakeholders and the society over the years. While Corporate Governance consists of a framework of formal systems as well as policies and legal processes, it is the organizational culture that acts as an enabler and supports the governance systems in balancing the interests of various stakeholders.TCL Culture, drawn from its core values (Integrity, Excellence, Safety, Care, and Innovation), is re�ected in the way it conducts business, as also in the way inwhichTCLinteractswithitsclients,suppliers,employeesandtheexternal business environment. Leadership atTCL is committed to these values and spends considerable time and effort in communicating and reinforcing these values across the organization and to relevant stakeholders. Ethics and integrity are deeply rooted and widely shared values among TCL employees while transparency, empowerment, accountability and integrity are perceived as cornerstones for culture-building at TCL. Governance Policies at TCL Thefundamentalobjectiveofanycorporategovernancepolicyistopromote corporate fairness, transparency, accountability and responsiveness. Such policies focus on enhancement of stakeholder value with integrity, social responsibility and compliance with the laws, thereby satisfying the law in spirit and not merely in word. Tata Chemicals Limited adheres to the principles of corporate governance by consistently endeavoring towards improved operational performance
  37. 37. 30  GOVERNANCE AND CULTURE AT TATA CHEMICALS LIMITED through theTata Business Excellence Model and theTata Code of Conduct. Please refer to Figure 1 for the guiding principles for Governance at TCL. The �gure above enumerates the guiding principles for Governance in the organization, which rests on Business Excellence Model and Code of Conduct. The Board of Directors and Audit Committees form the supporting mechanisms, by constituting various fora such as the Ethics Committee. While these serve as supporting mechanisms, the onus of its execution lies with both, the leadership as well as the employees, the roles of each of which are described below. The role of the Company Leadership covers the following: • To make compliance a vital part of business activities. • To establish and maintain the Company’s conduct of business in accordance with the Code. Supervise compliance with the Code. • Create a culture which promotes compliance, encourages employees to raise their questions and concerns, provides for counselling and prohibits retribution. Figure 1: Guiding Principles for Governance at TCL
  38. 38. GOVERNANCE AND CULTURE AT TATA CHEMICALS LIMITED  31 • Tosetupaformal,retribution-freemechanismforaddressingemployee concerns and take prompt remedial action where required. • To actively assist employees in all aspects related to understanding and complying with the Code. • To widely communicate all aspects of the Code and its management to all employees. The role of the Employees includes the following: • Ensure personal and organizational compliance with the Code. • Seek assistance from managers and other company resources with regard to application of the code. • To promptly report: – Any concerns about violations of the Code – Any concerns about likely possible violations of the Code – Any concerns about a possible request to violate the Code • Ensure that no retribution is meted out to anyone reporting or supplying information about a concern. At TCL, management practices and espoused values help employees develop the ability to recognize ethical issues and respond to these in a sensitive manner. Moreover, formal and informal systems are in place for the Management of Business Ethics. All these combine to create an environment and culture that supports and enhances ethical behavior amongst employees. Formal Systems for Management of Business Ethics (MBE) The governance structure is supported by a well-de�ned organization structure and a comprehensive concern resolution mechanism (detailed in a subsequent section of this document). The roles and responsibilities
  39. 39. 32  GOVERNANCE AND CULTURE AT TATA CHEMICALS LIMITED of each role holder is clearly de�ned and communicated. Moreover, the Central Ethics Committee at Group Center provides guidance to companies, formulates policies, guidelines and procedures, monitors compliance within companies, address unresolved possible violations as well as inter–company concerns. The formal systems in place for the management of business ethics comprise the following: • Formal structure for deploying and enforcing ethical compliance • Formal procedures for resolving ethical concerns • Formal policies like a Gift Policy and the Whistle-Blower Policies • Formalpolicyforredressofgrievancespertainingtosexualharassment at the workplace • Processes for engaging and disengaging dealers/distributors • Regular programs to educate supply chain partners on the Tata Code of Conduct • Ethics-assurance surveys by third parties • Direct access to leadership (Chairman, Principal Ethics Officer) to register concerns • Mandatory induction on Ethics for newly joining employees • Regular training and refresher courses for employees, suppliers, dealers, contractors and customers. – Annual declaration by the Managing Director to abide by the Tata Code of Conduct Management of Business Ethics (MBE) at TCL is embedded in all TCL Activities and Initiatives as can be seen from Figure 2. Tata Chemicals implements its MBE philosophy through a structure of Figure 2: MBE in TCL Activities
  40. 40. GOVERNANCE AND CULTURE AT TATA CHEMICALS LIMITED  33 Principal Ethics Officer (PEO), Company Ethics Counsellors (CECs) and Local Ethics Counsellors (LECs) as shown in Figure 3. Principal Ethics Officer (PEO) The PEO is also the Managing Director of the company. As the PEO, his main chief responsibility is to ensure that the code of conduct is followed not just in word, but also in spirit, whilst also ensuring the integrity of the ethics reporting and monitoring system. To do so, the PEO is expected to do the following: Figure 3: Organizational Structure for Implementation of MBE
  41. 41. 34  GOVERNANCE AND CULTURE AT TATA CHEMICALS LIMITED Figure 4: Process for Handling Concerns Key to the above chart: Process Process Enabler Input to the process Options at the process step
  42. 42. GOVERNANCE AND CULTURE AT TATA CHEMICALS LIMITED  35 • Set the tone of organizational integrity at the top • Lead by serving as a role model • Encourage ethical behavior by facilitating and legitimizing ethical dialogue, appropriately selecting and placing ethics counsellors • Allocate adequate resources and sufficient �exibility to the ethics counsellors so as to enable them to effectively undertake their functions The PEO also ensures that the Ethics Counsellor have access to the PEO, the Chief Financial Officer and the Board of Directors. The PEO is also responsible for presenting the compliance report to the Board of Directors. Location Ethics Counsellor (LEC) The Location Ethics Counsellors (LECs) are a vital link between the employees and PEO. LECs are drawn from existing TCL employees who have a high degree of personal integrity, show respect for individuals, display courage of conviction, demonstrate the ability to take stands and maintain con�dentiality. Good listening and documentation skills are also essential prerequisites for this role. The term of the LECs is usually restricted to around two years so that more employees can be given the opportunity to take on this role facilitating the development of leadership qualities in them. Concern Resolution Mechanism A concern would include anything that reveals or indicates an actual or possible violation of one or more of the 25 clauses of the Tata Code of Conduct. The process for handling concerns is pictorially depicted in Figure 4. Investigators who examine these concerns are selected based on
  43. 43. 36  GOVERNANCE AND CULTURE AT TATA CHEMICALS LIMITED their capabilities to work independently, impartially and analyse data in an unbiased manner, maintain con�dentiality, timeliness, good listening and documenting skills. Based on the �ndings of the investigation, appropriate actions are initiated by the Principal Ethics Officer. Informal Systems and Practices Informal systems and practices comprise: • Incorporate TCL Values and Tata Code of Conduct (TCoC) reviews during meetings with supply chain partners • Discuss on TCoC during business review meetings • Leaders sharing experiences on ethics during communication meet with employees • Encourage employees and suppliers/customers to raise issues that have ethical dimensions • Openly encourage stakeholders to report ethical infractions that they observe • Telling stories about the Tata Culture • Transparency in dealing with employees and external agencies • Embedding elements of the Tata Code of Conduct in all their policies, processes and initiatives ranging from Affirmative Action program, CSR, Risk Management, to HR policies. This judicious mix of formal and informal mechanisms have not only helped in the consolidation of ethical values in TCL but have also aided employee understanding of the same and ensured that they act in line with values of integrity.
  44. 44. Ethics and Compliance for Pro�table Businesses: The Siemens Experience
  45. 45. ETHICS AND COMPLIANCE FOR PROFITABLE BUSINESSES: THE SIEMENS EXPERIENCE  39 Abstract This article presents information on Siemens, a multinational company that operates globally. It traces the genesis of the Siemens Compliance Guide for Anti-Corruption whilst highlighting the salient features of the same. The author points out that the Siemens experience is a positive indication that businesses can be both ethical and successful. Ethics and Compliance for Pro�table Businesses: The Siemens Experience Introduction Siemens is a large multinational company that operates in over 190 countries and employs approximately 360,000 employees globally. Siemens Ltd., in which Siemens AG holds 75 percent of the capital, is the �agship listed company of Siemens AG in India. Siemens in India including Siemens Ltd. comprises 13 legal entities, is a leading powerhouse in electronics and electrical engineering with a business volume aggregating about Rs. 12,000 crore. It operates in four business segments – Industry, Infrastructure & Cities, Energy and Healthcare. Siemens has 21 manufacturing plants with well entrenched nation-wide sales and service networks across India with close to 18000 employees. Being responsible is one of the fundamental values that Siemens pursues with the thrust being – “Only clean business is Siemens business”. The company’s compliance system promotes fair practices within and outside Siemens. The goal is to root out the menace of unscrupulous practices and create a level playing �eld. In Siemens, compliance is far more than just a program: it is the way Siemens does business. At Siemens, compliance is seen as more than a business value, it forms the very backbone on which all their operations are based and provides Siemens a competitive edge.This is evidenced by a BusinessWorld survey in February 2011 where Siemens was judged the“The Most Respected Company”in Engineering Sector in India. Development of the Compliance Guide for Anti-Corruption Ethics has always been a part of Siemens corporate philosophy with the founderWernervonSiemenslayinggreatemphasisonbusinessvaluesand
  46. 46. 40  ETHICS AND COMPLIANCE FOR PROFITABLE BUSINESSES: THE SIEMENS EXPERIENCE principles. He maintained: “I won’t sell the future for quick pro�ts”. For decades, this formed the corner stone of all Siemens business practices. Around six years ago, Siemens faced charges of corruption despite the existence of policies to counter corruption. Siemens was accused of rigging bids and indulging in corrupt practices to win contracts as part of a Consortiumintheendof2006andcaseswere�ledagainstSiemensintwoof the biggest markets in the world: USA and Europe. It also led to a great deal of introspection within Siemens as to where things had gone wrong. Internal investigations revealed that although Siemens had policies in place: • These policies were not lived • The corporate values were not incorporated • The leadership had failed Realizing this, the top management at Siemens swung into action. Their action plan was implemented in three phases as shown in Figure 1. Figure 1: Action Plan to Reduce Corruption and Enhance Compliance
  47. 47. ETHICS AND COMPLIANCE FOR PROFITABLE BUSINESSES: THE SIEMENS EXPERIENCE  41 The Culture of Compliance in Siemens With a view to establishing a foundation of trust, four years back, efforts to build a Culture of Compliance started with the aim to build a reputation recognizable for its rock steady integrity. For a company as large and diversi�ed as Siemens, a strong code of conduct is essential to enable the company to weather storms and attain greater heights. Today, Siemens has developed a comprehensive Compliance System (detailed in the subsequent section) which has proved to be very successful and effective. The company actively works with external partners to extend this policy beyond Siemens. Compliance, at Siemens, is more than just a management principle. Over the years, it has evolved into a way of life for Siemens employees. The compliance system at Siemens is embedded in the company by a �rm belief that compliance pays off economically. It therefore seeks to anchor integrity more �rmly in the Siemens’organizational culture. For a “culture of compliance” to work, it is important for every person within the organization to make ethical business decisions and ensure that his or her actions are consistent with the law and relevant Siemens policies. This means understanding the policies and principles that they represent. It also means that when a question or problem occurs, people should respond with care rather than ignoring the issue or simply guessing. However, a culture of compliance goes much further than that. It means reporting concerns and making sure that suspect behavior does not go unchallenged. Everyone needs to take compliance seriously and encourage others to do the same. It is vital to follow the processes and procedures for dealing with risky situations and involve the Compliance Organization at an early stage when there are any problems. The mantra followed is ‘When in doubt, ask!’ It also means making sure that every‘When in doubt, ask!’ It also means making sure that every‘When in doubt, ask!’
  48. 48. 42  ETHICS AND COMPLIANCE FOR PROFITABLE BUSINESSES: THE SIEMENS EXPERIENCE employee should make certain that his/her own record keeping and documentation is accurate and complete. In general this means that every individualmustmakesurethathis/hercompliancewiththeanti-corruption procedures has been properly recorded and there are documents showing the necessary approvals. Compliance at Siemens is not just limited to internal employees. Vendors, customers, contractors and business partners as well as external stakeholders are integral to the business. Raising awareness through training and education amongst these associates is a must in order to ensure clarity amongst these groups on the Siemens approach to doing business. To this end, Siemens collaborates closely with all its stakeholders in order to initiate and foster fair business practices in all spheres of business and beyond and to create and sustain a level playing �eld. The following section highlights the salient features of the Siemens Compliance System. The Siemens Compliance System The basic principles of behavior are laid down in the Business Conduct Guidelines. Additionally, Siemens has a number of policies that deal with the most important areas of anti-corruption legislation. These policies apply globally to the management and employees of Siemens AG and its affiliated companies. The general principles and prohibitions also apply to consultants and other third parties working on behalf of Siemens, as well as suppliers, customers, business partners and others they do business with. To ensure that these policies work properly across all business areas, as well as to provide support and assistance for everyone, Siemens has expanded its Compliance system.
  49. 49. ETHICS AND COMPLIANCE FOR PROFITABLE BUSINESSES: THE SIEMENS EXPERIENCE  43 The current Siemens Compliance System was developed in 2007 and 2008 and the global compliance organization engages around 600 employees worldwide and gaining experience in this function is seen as an important part of career development. The Siemens Compliance System aims at maintainingsynergiesofallthreedimensions:Prevent,DetectandRespond as shown in Figure 2. At Siemens, the principle “Tone from the Top” that focuses on management, especially middle management, is very crucial for the success of compliance. In keeping with this principle, the entire management is expected to ensure that these processes and procedures are applied in a consistent manner, and that their spirit is embraced in the day-to-day business across all Siemens companies. The intention is to prove that actions do speak louder than words. Mr. Peter Loescher, the Global CEO, believes that “Compliance as part of corporate responsibility is our �rst priority.” At Siemens, the anti-corruption policies apply to both the public and the private sectors. However, because the risks are different, their compliance policies, procedures and controls sometimes make a distinction between the public and the private sectors. Various activities are undertaken as part of the ambit of Compliance System. Siemens’ business values aim at attaining highest levels of performance whilst maintaining the highest ethical standards. To achieve this, Siemens’ business conduct guidelines are simpli�ed and integrated into the business processes. In order to safeguard the company, Siemens has formulated various compliance related policies like High Risk Payment, Gift & Hospitality and dealing with business partners. Siemens has also formed a Compliance Help Desk, to assist in prevention and detection of the non-compliant conduct. It works as a platform for the employees to get information and to give feedback and suggestions. Figure 2: Pictorial Representation of the Siemens Compliance Policy
  50. 50. 44  ETHICS AND COMPLIANCE FOR PROFITABLE BUSINESSES: THE SIEMENS EXPERIENCE ‘Ask Us’ and ‘Tell Us’ functions are a part of the services offered by the Compliance Help Desk. The ‘Ask Us’ function enables an employee to ask detailed, speci�c questions regarding Compliance, with an assurance of receiving an answer from experts. Employees who are not sure how a particular policy should be applied in practice can also avail of this function. The ‘Tell Us’ function enables an employee to inform the management regarding the breaches of Business Conduct Guidelines. It is a 24 hour Whistleblower hotline, operated by a third party and available in 150 languages. The compliance investigation department assesses misconduct following an official investigation. In addition Siemens has devised a global case tracking tool to improve its information �ow regarding potential misconduct. Siemens adopts ‘Zero Tolerance’ towards compliance violations. This enforcesaculturethatallviolationswouldbedealtwithstrictly.Disciplinary sanctions are awarded as an outcome of the investigation and can include either of the following depending on the severity of the case: • Informal warning (slight compliance violations only) • Formal warning which impacts the earnings • Separation from the organisation The disciplinary process may be invoked at the central or the local level, depending on the level of the offender and the nature of the offence. Every employee who commits a compliance violation will have to complete remediation compliance training.
  51. 51. ETHICS AND COMPLIANCE FOR PROFITABLE BUSINESSES: THE SIEMENS EXPERIENCE  45 Other Compliance Related Activities Siemens India has embraced the “Integrity pact” concept, which Transparency International developed to prevent corruption in public procurement context and which has been strongly advocated by the Central Vigilance Commission, India. Siemens, as a part of the Global settlement with World Bank, supports awarenesscampaignstocombatcorruption.Asapartofthatcommitment, Siemens has provided a grant of US$ 4.35 million over 4 years to the United Nations Global Compact Project to promote Collective Action against corruption in key markets, including India. The compliance department at Siemens imparts regular trainings [in person as well as Web based training] to their employees at all levels. New recruits sign the BCG [Business Conduct Guidelines] forms and are trained within 6 weeks of joining. Middle and senior managers are regularly nominated for the Residential Seminar on ‘Heart of Effective Leadership’ conducted by Initiative of Change. Atthecorporatelevel,seniorexecutivesfromSiemensregularlycollaborate with other business groups and organizations such as Tata Group of Companies; Transparency International, India; Confederation of Indian Industries; Indian Electrical and Electronics Manufacturers Association; Indo German Chamber of Commerce; Global Compact Network, India and United Nations Office of Drug and Crime to share and learn the best practicesinthe�eldofcompliance.Siemenshasenteredintocollaboration with some of the leading industrial and corporate houses to promote fair business practices. Please see Figure 3. Being ethical has enabled Siemens to achieve success in the following ways: • Employees: Decision making becomes easier with well de�ned policies that guide them through challenging situations • Vendors: Transparency in dealings with vendors provides Siemens a competitive edge • Customers: Customers feel more comfortable dealing with Siemens • Growth: The business �gures of the company show stupendous pro�table growth • Shareholders: Siemens is now ranked no 1 in Dow Jones Sustainability World Index.
  52. 52. 46  ETHICS AND COMPLIANCE FOR PROFITABLE BUSINESSES: THE SIEMENS EXPERIENCE Figure 3: A diagrammatic representation of the collaborative partners
  53. 53. ETHICS AND COMPLIANCE FOR PROFITABLE BUSINESSES: THE SIEMENS EXPERIENCE  47 Outcomes The rewards and accolades of being compliant are numerous. A major customer invited Siemens’ compliance officer to discuss the company’s anti-corruption initiatives during its recent tendering process. Siemens India participated in bidding and won a US$ 68 million order. In June 2011, a consortium led by Siemens won a US$ 4.7 billion government contract to build carriages for the UK’s Thameslink upgrade program. In September, the Swiss Federal Railway selected Siemens Rail Automation for a 125 million contract to update the Swiss rail network’s safety technology over the next 6 years. Overall the value of US public contracts awarded to Siemens has risen by 20 percent. In conclusion, Siemens is a company which believes that business can be Ethical and Successful, as opposed to having to choose between Ethical or Successful. Its business practices in the past six years have proved this belief whilst making the name Siemens synonymous with clean business.
  54. 54. Anti-Corruption and Anti-Bribery Program: Enlightening Practices in Tata Steel
  55. 55. ANTI-CORRUPTION AND ANTI-BRIBERY PROGRAM: ENLIGHTENING PRACTICES IN TATA STEEL  51 Abstract Tata Steel has been following ethical business principles and practices since the time of its inception. However, these principles were not documented but were followed as an article of faith by successive leadership of the company; in other words these were unwritten laws. These principles were articulated and documented for the �rst time in 1998 in the form of the Tata Code of Conduct. This article focuses on the different policies and programs developed to curtail corruption and create an appropriate anti-corruption and anti- bribery environment across the company. Anti-Corruption and Anti-Bribery Program: Enlightening Practices in Tata Steel Introduction Established in 1907, Tata Steel is one of the top ten global steel companies with an annual crude steel capacity of over 28 million tonnes per annum (MTPA) with an annual turnover of around US$ 22.8 billion (FY2010). It is now one of the world’s most geographically-diversi�ed steel producers, with operations in 26 countries and a commercial presence in over 50 countries employing over 80,000 people across �ve continents. The Tata Group is one of the �rst groups in India to have developed a written code of conduct that was adopted by all the group companies. The Tata Code of Conduct which was formulated in1998 emerged after a lot of deliberations and interactions at the senior management levels of the different companies in the Tata Group. The TCoC was essentially India centric in application and re�ected the Core Values of the Company which focused on the creation and sustenance of ethical culture in the organisation. Tata Steel adopted the TCoC in the same year that it was declared and all officers employed at Tata Steel were asked to sign the Code of Conduct compliance statement. The business values held by the company(knownasCompanyValues)werealsoidenti�edatthesametime; these included integrity, respect for individual, credibility, trusteeship and excellence; all of which emerged from employee suggestions. The values and TCoC are available on the website as well as intranet of the company. However, the structure of the group changed by 2008 with the company developing a global presence and it was felt that Code of Conduct needed to re�ect this change and focus on globally important issues
  56. 56. 52  ANTI-CORRUPTION AND ANTI-BRIBERY PROGRAM: ENLIGHTENING PRACTICES IN TATA STEEL like personal accountability for implementing the Code, anti-corruption measures, ensuring diversity and equality within the workplace as well as safeguarding human rights and prevention of violation of the same in the workplace. This led to a revision of the Code in the year 2008 and the new Code was released by the Chairman on 1st October 2008. Provisions in the new Code that relate to compliance and anti- corrruption practices While the Company has always followed a policy of zero tolerance for unethical conduct, the revised Code provided an increased focus on issues related to bribery and corruption whilst creating an appropriate anti- bribery and anti-corruption culture. Speci�c sub clauses were added to the 2008 Code on anti-bribery and anti- corruption measures. These measures were inducted and re-emphasised in the following clauses: • Clause 2 relates to �nancial reporting and records. It made a de�nite statement that“no employee shall make, authorise, abet or collude in any improper payment, unlawful commission or bribing”. • Clause5focusesongiftsanddonations:“TheCompanyshallcooperate with Government authorities in efforts to eliminate all forms of bribery, fraud and corruption”. • Clause 6 covers interactions with Government agencies: “A Tata Company and its employees shall not, unless mandated under applicable laws, offer or give any company funds or property as donation to any government agency or its representative, directly or throughintermediaries,inordertoobtainanyfavourableperformance of official duties. A Tata company shall comply with government procurement regulations and shall be transparent in all its dealings
  57. 57. ANTI-CORRUPTION AND ANTI-BRIBERY PROGRAM: ENLIGHTENING PRACTICES IN TATA STEEL  53 with government agencies.” This clause focuses on issues related to corruption and bribery in connection with Government agencies and articulates the commitment of the company to prevent such occurrences. • Clause 13 deals with third party representation: Constantly increasing services and activities offered by the company entail engagements with third parties. The inclusion of this clause ensures that third party agreements are also brought within the ambit of the Code. Moreover, thisclausemakesitmandatorythatthirdpartybehaviourbeconsistent with the values and Code of Conduct of the Company. This clause implies that the company has zero tolerance towards unethical and corrupt behaviours exhibited by any third party. • Clause17focusesonethicalconduct:Theoriginalclausewasmodi�ed to bring in the element of transparency and integrity. It also serves to demonstrate high moral and ethical standards of the employees, both actual and perceived. Further, this clause ensures that employees do not indulge in bribery and corrupt activities. • Clause 20 relates to con�ict of interests: This clause makes obligatory for employees to report con�ict of interest situations. • Clause 25 centres around reporting concerns: This clause includes stipulations on the implementation of Whistle Blower mechanism for employees as well as for vendors and partners. It also provides advice for the engagement of third parties for whistle blower to ensure the independence of the reporting management system. Implementation of anti-corruption measures The company has taken the actions detailed in the subsequent paragraphs to implement the above anti-corruption measures.
  58. 58. 54  ANTI-CORRUPTION AND ANTI-BRIBERY PROGRAM: ENLIGHTENING PRACTICES IN TATA STEEL • Different Business Units of the company were subject to risk analysis to identify their risks related to corruption. The following measures were taken as steps to mitigate risks related to corruption and bribery: – Allofficersre-certi�edtheircomplianceoftheTataCodeofConduct 2008 – A Memorandum of Understanding (MoU) was signed with Tata Workers Union and FAMD (Ferro Alloys & Minerals Division) Employees Union wherein the unions reaffirm their commitment to comply with the Code. This ensured that all unionised employees reiterated their commitment to anti-corruption and ethical compliance. • The company organizes a‘Celebration of Ethics Month’with dedicated ethical themes to engage employees and other stakeholders in anti- corruption and code compliance measures. • A departmental ethics coordinatoris nominated by the respective HOD to implement the code all across the organisation and involve local management in the business ethics implementation. Further, the criteria for selection of the Departmental Ethics Coordinators was developed and circulated to all the business leaders. • A Gift Policy was developed and publicised. Moreover, a system for declaration of gifts received, if above the value permitted, was developed. • The processes detailed in the con�ict of interest declaration statement were re-evaluated and it was decided that a new system of intranet based COI (Con�ict of Interest) declaration would be developed and implemented in the year 2011-12. It was also decided that the new system would have clear cut de�nitions of relatives, family members explainedandspeci�cquestionswillbedevelopedwhereintherecould
  59. 59. ANTI-CORRUPTION AND ANTI-BRIBERY PROGRAM: ENLIGHTENING PRACTICES IN TATA STEEL  55 be issue of Con�ict of Interest. For this purpose, global benchmarking practices will be examined and adopted suitably. • A third party whistle blowing line was developed.The whistle blowing system was evaluated and it was decided that a third party whistle blower policy was required to foster con�dence among the stake holders and ensure them of con�dentiality. This policy has been implemented from 1st July 2011. As stated above, all officers across the company have signed the Code of Conduct compliance statement making them accountable for complying with the anti-corruption measures. All newly appointed employees undergo a training programme that orients them on theTata Code of Conduct compliance. During the training programme, emphasis is laid on the clauses that relate to anti-corruption stipulations. The induction training programme also contains a capsule on Vigilance, which is conducted by the Vigilance Department. As part of this programme, the various misconducts in the area of vendor management and other corruption prone areas are discussed in detail. The aim of this training programmes is to orient the trainees and make them aware of the types of corrupt activities that may go on in the organisation whilst suggesting strategies that would enable them to catch the culprit. Action taken in response to incidence of corruption Tata Steel has a vigilance cell at the corporate level which reports to Principal Executive Officer (PEO) of Tata Steel. It is headed by an experienced executive and the team comprises around 10 officers. On receipt of a speci�c concern from any stakeholder or from any executive, Compliance to Code of Conduct is a condition to service for all newly appointed employees at all levels, inclusive of officer and non-officer categories; appropriate stipulations are made in the appointment letters.
  60. 60. 56  ANTI-CORRUPTION AND ANTI-BRIBERY PROGRAM: ENLIGHTENING PRACTICES IN TATA STEEL the cell conducts a thorough investigation on the matter and submits their �ndings to the PEO. Based on the �ndings, further action, as deemed �t, is taken in consultation with the concerned agencies. The group also conducts training programmes for employees to make them understand the various forms of misconduct that can take place in the organisation and decide the proactive actions that need to be taken by them. Since the company has zero tolerance towards corruption and unethical activities, all such reported cases are investigated thoroughly by the Vigilance Department and based on the �ndings of the enquiry further disciplinary measures are taken against the violators, both employees as well as the vendor.
  61. 61. Anti-Corruption Practices at Infosys Ltd.
  62. 62. ANTI-CORRUPTION PRACTICES AT INFOSYS LTD.  59 Abstract This article provides an overview of the anti-corruption practices followed by Infosys Limited (“Infosys”) to ensure good governance. Infosys believes that good performance and good governance are cornerstones of success and efforts are made to ensure that these are part of business practices across the board. The Infosys Code of Conduct and Ethics and the Values Training Program enable the organization to ensure that all employees assimilate corporate and business values and practice it in their daily work-life. Anti-Corruption Practices at Infosys Ltd. Introduction Infosys Limited (NASDAQ: INFY) was started in 1981 by seven visionaries with US$ 250.Today, the company is a global leader in the next generation of IT and Consulting with revenues of over US$ 6.99 Billion. Their offerings span business and technology consulting, application services, systems integration, product engineering, custom software development, maintenance, testing, independent validation services, IT infrastructure services and business process outsourcing. Infosys operates globally from 77 cities, 32 countries with over 150,000 employees representing 89 nationalities. Infosys became a member of the Global Compact Network (GCN) in 2007. The Infosys credo can be summed up in the following statement by Mr. N. R. Narayana Murthy, Chairman Emeritus, Infosys Limited: “Communicate your vision, not just by articulation, but by living it.” Thecompany’svisiontobea‘respectable’corporationhasclearlywithstood the vicissitudes of global business environments over the decades. Setting the‘tone’with role-model leadership right from the top and across various levels in the organization, Infosys is supported by an effective governance framework, strong risk management practices and associated processes. Infosys has won a number of awards for Corporate Governance till date. Some of them are: • Ranked No. 1 in all 4 categories – Best Investor Relations website, Best Online Annual Report, Best Financial Disclosure and Best Corporate Governance Practices at the 2011 IR Global Rankings in India.
  63. 63. 60  ANTI-CORRUPTION PRACTICES AT INFOSYS LTD. • Ranked among the best in investor relations in the APAC region in 2010. • ‘Best investor relations by an APAC company in the U.S. market’at the IR Magazine U.S. Awards in 2008. • Ranked India’s‘Most Admired Company’inTheWall Street Journal Asia 2010 • RecognizedinInstitutionalInvestormagazine’s2011All-AsiaExecutive Team Rankings • Recognized as India’s best company for corporate governance: Asia money in 2005. • Awarded the Platinum Award in The Asset Corporate 2010 Awards. Please refer to our website www.infosys.com for more information on awards. Effective Corporate Governance Processes at Infosys ThekeydimensionsofdeployingeffectivecorporategovernanceatInfosys Limited include: 1. A Strong Leadership and an Independent Board The current policy is to have an appropriate mix of executive and independent directors to maintain the independence of the board and to separate its functions of governance and management. Currently the board consists of 15 members, six of whom are executive or full time directors while the remaining nine are independent directors. The Board periodically evaluates the need for change in its composition and size. All committees of the Board consist of only independent directors. The composition of the Board is carefully planned to ensure the presence of diverse perspectives that facilitate debate and dialogue on issues important to the corporation. In addition, the roles of the Chairman of the
  64. 64. ANTI-CORRUPTION PRACTICES AT INFOSYS LTD.  61 Board and the CEO are separated to ensure that the Board always retains the right focus in keeping with the belief that: “Good governance cannot be imposed by legislations. It must come from within. Hence the Board, at the apex of the company’s corporate governance structure, is the key.” 2. Transparency, fairness and accountability Infosys has always followed the highest levels of disclosure to all its stakeholders. The old adage, ‘When in doubt, disclose,’ is a management practice at Infosys. The company has also integrated strong processes into their supply chains to ensure the percolation of these processes into the businesses of their partners. In addition to ensuring compliance with the laws of the land wherever they operate, Infosys also has a very strong Code of Conduct and Ethics. Some of Infosys’ best practices in this space include benchmarking corporate governance and this is done through Standard & Poor’s, ICRA and CRISIL. Infosys is the �rst company in India to be awarded the highest Corporate Governance Rating (CGR) by ICRA. Infosys also furnishes updates in extensible Business Reporting Language (XBRL) format to the US Securities and Exchange Commission. Further, their �nancial statements are disclosed in accordance with the Indian GAAP, IFRS and US GAAP requirements. 3. Enterprise Risk Management Enterprise Risk Management (ERM) at Infosys encompasses practices relating to identi�cation, assessment, monitoring and mitigation of various risks to key business objectives. ERM at Infosys seeks to both minimize adverse impact of risks on their key business objectives and to enable the company leverage market opportunities effectively. The corporate scorecard enunciates key business objectives through a set of
  65. 65. 62  ANTI-CORRUPTION PRACTICES AT INFOSYS LTD. speci�c goals to be achieved in the short term and strategic goals aimed at achieving their aspirations in the medium term. Business objectives at Infosys typically include goals relating to dimensions such as Financial, Client & Market, Operational excellence and Talent & Leadership. There are linkages between risks and key business objectives. Several risks can impact the achievement of a business objective. Similarly, one risk can impact the achievement of several business objectives. Further, risk management practices at Infosys seek to sustain and enhance long term competitive advantage of the company. Risk management is integral to the Infosys business model, described as ‘Predictable, Sustainable, Pro�table and De-risked’(PSPD) model. Their core values and ethics provide the platform for their risk management practices. 4. Enhancing the ethical judgment of employees Ensuring that the principles of good governance are translated into action by employees on a daily basis is critical in building an ethical organization. ThespeedatwhichInfosyshasbeengrowinggloballymakesthisadaunting task. A strong and well articulated Code of Conduct and Ethics (which also delineates Anti-Bribery provisions) and a Values Training Program (detailed in the subsequent section) have been put in place to achieve good governance.This coupled with multiple redressal mechanisms which include a grievance redressal body and a whistleblower policy, constitute a robust eco system for good governance practice. The Code of Conduct and Ethics is intended to establish and clarify standardsforbehaviourintheorganization.TheCodepromoteshonestand ethical conduct, and a safe and secure workplace free from discrimination. It articulates compliance with applicable laws of the land, and principles such as promoting free and fair competition and the handling of apparent
  66. 66. ANTI-CORRUPTION PRACTICES AT INFOSYS LTD.  63 or actual con�icts of interest. The Code of Conduct also includes provisions relating to anti-corruption, anti-bribery and lays down stringent norms for the protection of con�dentiality of Infosys information. Demonstrating Infosys’s commitment to the business ecosystem, the Code of Conduct and Ethics also sets out their responsibilities towards their suppliers and customers. Infosys recognizes the rights of their employees and provides forums, support groups and policies to hear and address their concerns and resolve issues or con�icts in a fair and transparent manner. The Code of Conduct together with a robust grievance redressal process including a whistleblower policy forms the bedrock of the organization’s governance mechanism. The whistleblower complaint mechanism was adopted by Infosys as part of the guidelines set out under the US laws including the Sarbanes Oxley Act of 2002 (SOX). The whistleblower mechanism is meant to address concerns relating to (i) questionable accounting, accounting controls, auditing matters, or reporting of fraudulent �nancial information to our shareholders,governmentorthe�nancialmarkets;or(ii)gravemisconduct, i.e., conduct which results in a violation of law by the Company or in a substantial mismanagement of Company resources which if proven, would constitute a criminal offence or reasonable grounds for dismissal of the person engaging in such conduct; or (iii) conduct which is otherwise in violation of any law. This law is applicable to Infosys as a Foreign Private Issuer listed on the NASDAQ.The framework was decided keeping in mind therequirementsthatwerespeltoutintheSarbanesOxleyAct.Infosysused the best practices being advocated for SOX compliance and developed this policy based on feedback from their legal counsels.The framework for the whistleblower mechanism emerged after a discussions and meetings with the external counsels, Board committees-the audit committee in particular as it is the oversight committee under the SOX for whistleblower
  67. 67. 64  ANTI-CORRUPTION PRACTICES AT INFOSYS LTD. complaints. It took about three to �ve months to implement this across the organization. People involved in the design and development of this framework included Infosys lawyers, internal compliance teams, auditors, senior management and Board of Directors. TheprovisionsoftheInfosysCodeofConductandEthicsarecommunicated to employees across the globe through training and awareness programs, both online and instructor-led, using multiple learning media including leader talks, contests, blogs, portals, and a popular ‘Do you know’ series that ensures updated information at regular intervals. The internal communications team at Infosys periodically sends out communication mails to employees familiarizing them with the provisions of the Code of Conduct document. These mails also illustrate aspects of the Code of Conduct through relevant examples. It is mandatory for every new employee to attend sessions on the ‘Infosys Values’ as part of the induction process and then sign her/his acceptance of the code of conduct. Every employee is then expected to put these values into practice on a daily basis through his career with Infosys. The Infosys Values Program Keeping in mind the various business risks associated with ethical non- compliance, the Infosys Values Program seeks to: • Reinforce the practice of Infosys values among employees, • Enable a uniform understanding and application of the Infosys Values, • Create a climate of discussion, debate and engagement regarding Infosys values and their practice, The Infosys Values Program aims to: Create awareness amongst employees on the Infosys values; Establish for a to translate the espoused values from a pulpit of preaching to actual practice through employee engagement, debate and discussion; and Develop enablers by way of training, development and other collaterals.
  68. 68. ANTI-CORRUPTION PRACTICES AT INFOSYS LTD.  65 • Develop enablers in terms of training, pre-reads, self-learning modules, • Create a cycle of feedback and analysis to equip the new hires (experienced personnel as well as fresh graduates newly employed by the company) with an understanding of the Infosys values. The InfosysValues Program has three different aspects to it, each targeting a different group: • Employees (Current) • Leaders • New hires Inthelastoneyear(2011-12),theInfosysValuesProgramhasStrengthened its training and marketing collaterals (posters, portal, mailers) – Completed a survey of senior leadership (Tier Leaders Survey) – Engaged employees in various events (Photograph Contest, NRN & I contest, Poster Contest, Story Contest) to spread the message of Values – Rolled out debate and discussion forums (Discussion Board, Sparsh (Infosys Intranet), InfyTV) – Created a CLIFE (Customer Value, Leadership by example, Integrity, Fairness and Excellence) Booklet – Completed a dipstick survey for senior leadership (Tier Leader Survey) – Strengthened Training and Marketing collaterals (posters, portal, mailers) and – Made values adherence aspirational through the introduction of a Values Champions category in the highest award in the company, viz., Awards for Excellence. “CLIFE helps me drive towards customer advocacy. I have learnt that you can achieve that in two ways, viz., by delivering beyond expectations and by delivering beyond expectations consistently in every transaction.” – Haragopal M.
  69. 69. 66  ANTI-CORRUPTION PRACTICES AT INFOSYS LTD. Details of projects initiated under the CLIFE program are given below: A. Tier Leaders Values Survey: The purpose of this survey was to poll senior leaders within the organization on their personal values vis-à-vis organizational values. The survey aimed to strengthen the correlation of personal and organizational values and also discuss potential gaps, if any, with a view to bridge them. In-depth tele- interviews were conducted by trained HR interviewers with forty �ve Tier Leaders across the organization.The structured interview focused on the following areas: a) Alignment between personal and professional values; b) Exploration of values-con�ict; and c) Evolutionofvalues,bene�tsofvalues-adherenceandreinforcement of values. The results of this survey indicated that CLIFE is indeed an enabler which drives alignment between personal and organizational values and offers a framework that employees can refer to when faced with a dilemma. The survey also pointed out some challenges in continuous communication of values throughout an ever growing employee pool across geographies. While some things could be measured, a lot of values data de�ed measurement. The penal route was one used to drive ethical behavior. The survey led to many initiatives that helped the organization: a) Drive values awareness in order to minimize instances of transgression/breach of values; b) Plan the creation of a values awareness index for employees; and c) Strengthen tracking of values training compliance across Development Centres.