Luncheon Talk 160 Oct 2008

1. 1
Getting Corruption and Human RightsGetting Corruption and Human Rights
on the CSR Agendaon the CSR Agenda
Presented at the
Sasin Graduate Institute for Business Administration
Chulalongkorn University, Bangkok, Thailand
Robert J. Hanlon
hanlon@cityu.edu.hk
City University of Hong Kong
16 October 2008
What is Corruption?What is Corruption?
Corruption can take many forms that vary in degree from the
minor use of influence to institutionalized bribery. Transparency
International's definition of corruption is "the abuse of entrusted
power for private gain" This can mean not only financial gain butpower for private gain . This can mean not only financial gain but
also non-financial advantages
(Principle 10, United Nations Global Compact).
What is Human Rights?What is Human Rights?
All human beings are born free and equal in dignity and rights.
They are endowed with reason and conscience and should act
towards one another in a spirit of brotherhood
(Article 1, United Nations Declaration on Human Rights).
Common GroundCommon Ground
• Abuse of power
• Dysfunctional law
• Involve state and non-state actors
• Detrimental to societyDetrimental to society
• Legal implications
• Cause of poverty
• Consequence of poverty
Where Does Business Fit?Where Does Business Fit?
Independent Judiciary
Free Media
Five Areas of ConcernFive Areas of Concern
Policing and Security
Good Governance
Anti-Corruption Campaigns

2. 2
Independent JudiciaryIndependent Judiciary
• Fair Trial (accountability)
• Contract disputes (private sector)
• Corruption (fraud/bribery)Corruption (fraud/bribery)
• Protection of assets (property)
• Checks and balances (transparency)
• Arbitrary decisions (security)
• Judges act as lawyers (conflict of interest)
Free MediaFree Media
• Accountability
• Freedom of speech
• Reporting and analysisp g y
• Media intimidation
• Benefits of transparency
• Community engagement
Policing and SecurityPolicing and Security
• Whistleblowers (Protection/Control/Risk)
• Bottom-Line (Corruption)
• Investigation (Public Relations)g ( )
• Protection (Property/Family)
• Police moonlighting as security guards
Good GovernanceGood Governance
• Democracy? (Liberty vs. democracy)
• Corruption (Tax/Fines/Entrepreneurship)
• Dual roles of state officials (Admin/Politician)( )
• Governance (Transparency/Accountability)
• Strategy (Relationship Building/Stability)
AntiAnti--Corruption CampaignsCorruption Campaigns
• False sense of security
• Ease worries and not solve problem
• Generally target low level offenders
• Rapid public implementation
• Legitimacy exercise
• Use military and police
• Generally not independent
CSR and Human Rights:CSR and Human Rights:
A Closer LookA Closer Look

3. 3
CSR and Human RightsCSR and Human Rights
Ethics Helpline
An important innovation in detecting labour violations is a local
helpline number displayed on the Standards for Suppliers poster.
Workers can call this number, which connects them to third-party, p y
service provider with local language support in over 140 languages.
Calls can be made anonymously. Information from these calls is
then communicated to XXXX for investigation by head office.
Investigation findings are communicated by XXXX to the third-
party service provider in the event the worker follows-up about the
case.
(Company A)
CSR and Human RightsCSR and Human Rights
Code of Conduct
The Company may hire government officials or employees to
perform services that have a legitimate business purpose, with the
prior approval of the Principal Manager. For example, an off dutyp pp p g p , y
police officer might provide security.
(Company B)
CSR and Human RightsCSR and Human Rights
Code of Ethics
In some countries it may be customary at times to pay government
employees for performing their required duties. These facilitation
payments, as they are known, are small sums paid to facilitate or
expedite routine non discretionary government actions such asexpedite routine, non-discretionary government actions, such as
obtaining phone service or an ordinary license. In contrast, a bribe
which is never permissible, is giving or offering to give anything of
value to a government official to influence a discretionary decision.
(Company C)
Dysfunctional Law in PracticeDysfunctional Law in Practice
• Time Magazine vs. Soeharto Family in libel suit (Indonesia)
• Cathay Pacific Airlines cancels flights (Sri Lanka)
• Microsoft and IP protection (China)
h b f d l h l• Chambers of Commerce and Wal-Mart (Philippines)
• Pharmaceutical firms and IP (India and Thailand)
• Manulife Financial (Indonesia)
• Freeport and law enforcement (Indonesia)
• Enron and human rights (Indonesia and India)
• Coca-Cola and complicity (Asia wide)
Elite Business School PerceptionsElite Business School Perceptions
• Top 20 business schools as highlighted by the Financial Times
Global MBA Ranking 2008
• Over 2850 surveys disseminated, with 318 responses and another
25 email written responses representing a 12% response rate.
• Targeted business professors, lecturers and teachers publicly listed
on departmental websites working in nine countries on three
continents
Five key QuestionsFive key Questions
1. Do business professors have a deep understanding of human rights?
2. Do professors think human rights in emerging economies are
important to business?
3 D b in pr f r think rr pti n in m r in n mi i3. Do business professors think corruption in emerging economies is
important to business?
4. Do business professors think the United Nations Global Compact
(UNGC) is a useful tool for putting human rights on the business
agenda?
5. Do business professors teach human rights to students?

4. 4
FindingsFindings
Yes No n/a
Do you feel that business students should be
required to register in CSR courses?
57.8% 38.0% 4.2%
Do you incorporate human rights issues in
your courses?
29.6% 63.6% 6.7%
Do you require your students to learn about
corruption in emerging markets?
25.5% 65.7% 8.8%
Do you teach the legal responsibility of 43.2% 54.1% 2.7%
business in any of your classes?
W ould a weak legal system ever deter you
from doing business in an emerging market?
73.1% 13.9% 12.9%
Do you feel that corruption is related to human
rights?
69.8% 19.6% 10.5%
Do you feel that the business community has a
role to play in protecting human rights in
emerging markets?
82.9% 11.5% 5.6%
In your view, is there a business case for
human rights (e.g, one beyond the traditional
moral imperative argument)?
57.2% 18.9% 23.9%
FindingsFindings
V ery S om ew hat N ot V ery W aste of
T im e/Irrelevant
U nk now n
In your view , how im p ortant
is it for stud en ts to stud y
C S R ?
49.4% 36.9% 8.6% 2.9% 2.2%
H ow sim ilar d o you see C S R
as com pared to b usin ess
eth ics?
18.3% 51.6% 19.9% 5.8% 4.5%
H ow im portant d o you feel a
t b l l l t i h
79.7% 16.9% 1.4% n/a 2.0%
stab le legal system is w h en
doin g business in em ergin g
m ark ets?
H ow sign ificant is a
cou ntry's h um an rights
record w hen teach ing
stu dents abou t risk in
em ergin g m arkets?
27.7% 47.8% 11.1% 2.8% 10.7%
H ow successful do you feel
the U N G lob al C om pact h as
been in p rom oting th e
bu siness case for hum an
righ ts?
0.4% 16.4% 30.3% 12.7% 40.2%
FindingsFindings
How would you rate the following CSR issues in terms of importance for business
students to learn?
Very
Important
Somewhat
Important
Moderately
Important
Not Very
Important
Irrelevant
Rating
Average
Environment 50.2% 30.2% 14.7% 3.2% 1.8% 3.24
Corruption 57.6% 25.5% 13.1% 3.4% 0.3% 3.37
Employee Volunteerism 6 2% 25 3% 37 7% 22 8% 8 0% 1 99Employee Volunteerism 6.2% 25.3% 37.7% 22.8% 8.0% 1.99
Philanthropy 7.2% 27.8% 36.4% 19.2% 9.3% 2.04
Corporate Governance 60.8% 27.6% 9.6% 1.7% 0.3% 3.47
Occupational
Health/Safety
39.5% 32.6% 19.2% 7.6% 1.0% 3.02
Human Rights 47.3% 31.8% 13.7% 5.1% 2.1% 3.17
Codes of Conduct 43.2% 28.4% 19.9% 6.8% 1.7% 3.04
Work-Life Balance 24.8% 35.9% 26.9% 6.6% 5.9% 2.67
FindingsFindings
Please highlight as many of the following issues you feel business should worry about
in emerging markets.
1. Bribery
2. Property rights
3. Fraud
4 Abuse of public Office
10.Gift giving
11.Extrajudicial killing
12.Torture
13 Theft4. Abuse of public Office
5. Independent judiciary
6. Good governance
7. Arbitrary arrest
8. Education
9. Political Violence
13.Theft
14.Land grabbing
15.Police
16.Medical treatment
17.Democracy
18.Free Speech
FindingsFindings
How do you perceive corruption and human rights levels in the following countries?
Perception of Corruption and Human Rights in Southeast Asia*
Respondents views
on Corruption
Respondents views
on Human Rights
TI Ranking ** Freedom House
Ranking ***
1. Myanmar 1. Myanmar 1. Myanmar 1. Myanmar
2. Cambodia 2. China 2. Cambodia 2. Laos (tied for 2nd
)
3. Indonesia 3. Cambodia 3. Laos 3. China (tied for 2nd
)
4 Philippines 4 Laos 4 Indonesia 4 Vietnam4. Philippines 4. Laos 4. Indonesia 4. Vietnam
5. China 5. Indonesia 5. Vietnam 5. Cambodia
6. Laos 6. Vietnam 6. Philippines 6. Thailand
7. Vietnam 7. Philippines 7. Thailand 7. Singapore
8. Thailand 8. Malaysia 8. China 8. Malaysia
9. Malaysia 9. Thailand 9. Malaysia 9. Philippines
10. Taiwan 10. Hong Kong 10. South Korea 10. Indonesia
11. South Korea 11. South Korea 11. Taiwan 11. Japan (tied for 10th
)
12. Hong Kong 12. Taiwan 12. Japan 12. Taiwan (tied for 10th
)
13. Japan 13. Singapore 13. Hong Kong 13. South Korea (tied for 10th
)
14. Singapore 14. Japan 14. Singapore 14. Hong Kong (not ranked)
*Rankings are based from highest to lowest levels of perceived corruption/human rights violations
**Transparency International Corruption Perceptions Index 2008
***Freedom House Freedom of the World 2008
FindingsFindings
In 20 words or less, how would you describe human rights?
Definitions of Human Rights*
35.9
30
35
40
4.8
23
18.1
8.5
2
8
0
5
10
15
20
25
Civil Cultural Economic Political Social Universal Unknow n
Types of Human Rights
Percent

5. 5
FindingsFindings
Which sentence are you most likely to agree with?
A company only has a responsibility to obey the laws of
the land within the country it operates.
4.5%
A company should go beyond obeying the laws of the land
in the host country and incorporate similar standards
24.7%
in the host country and incorporate similar standards
that are demanded in its native jurisdiction
A company should obey all local laws while striving to
incorporate international standards.
54.7%
A company should always follow international standards. 13.2%
Unknown 2.8%
FindingsFindings
Which sentence are you most likely to agree with?
Bribery is an acceptable hidden cost of doing business in
emerging markets
2.4%
Bribery is an acceptable hidden cost of doing business in
emerging markets only in certain situations
8.4%
B ib i t bl b i ti i 38 8%Bribery is never an acceptable business practice in
emerging markets but sometimes necessary
38.8%
Bribery is never an acceptable business practice in
emerging markets and must be avoided
47.2%
Unknown 3.1%
FindingsFindings
In your classes, how often do you teach students about corruption in emerging
markets?
20 6
26.4
33.6
30
40
Percentage
15.5
20.6
4
0
10
20
Regularly Sometimes Occasionally Never Unknown
FindingsFindings
How often do you teach students about human rights and business?
24 4
42.9
30
40
50
Percentage
10.6
18.1
24.4
3.9
0
10
20
30
Regularly Sometimes Occasionally Never Unknown
FindingsFindings
Over the next 10 years, do you see human rights becoming more or less relevant
to the business community?
71.4
50
60
70
80
Percentage
2.5
19.9
6.2
0
10
20
30
40
50
More Relevant Less Relevant Unchanged Unknown
SolutionsSolutions
• Institution building
• Social movements
• Business leadership
• Engage civil society
• Dialogue
• Legal Commitments
• Transparency
• Accountability
• Progressive CSR
• Voluntary initiatives
• Community
• Internal reporting
• Code of conduct
• Human rights approach

6. 6
Thank you!Thank you!