Earlier in November, GUBERNA and ICC Belgium (the Belgian chapter of the International Chamber of Commerce) hosted a roundtable on the topic “Responsible governance in trade relations: when do business gifts become bribes?”. An excellent opportunity to dig into this important issue for compliance officers, management teams, and boards of directors.
A hot topic
In his introductory presentation, Nicolas Coomans, Research Associate at GUBERNA, reminded several recent cases where company leaders and directors were held accountable by their shareholders for unethical or uncompliant behaviour. In cases of fraud, this can even lead to the legal prosecution of directors. Not surprisingly then, ethical questions & risks were rated as an important priority for boards by 59% of respondents in a recent survey by EY1.
Participants to the roundtable also emphasised the importance of this topic in their respective organisations and were asking the following questions:
- How do we keep compliance “alive” among employees?
- How can we monitor compliance? How can we monitor non-compliant behaviour?
- What needs to be reported to the management and the board of directors?
Business gifts: a complex regulatory framework
Business gifts constitute a concrete example where such questions are at stake. Regarding the latter, Clémence Van Muylder, Attorney at law at Loyens & Loeff provided an overview of the anti-bribery and -corruption laws in Belgium.
She distinguished between two categories of bribery :
- Private bribery, aiming at influencing a person holding a position in a private organisation.
- Public bribery, aiming at influencing a public official.
It is also necessary to make a difference between:
- Active bribery: Act of proposing/offering an advantage in return for the performance of a specific act.
- Passive bribery: Act of soliciting/accepting an advantage in return for performing a specific act.
For all types of bribery, Clémence Van Muylder emphasised the need to put in place compliance programmes & other prevention policies, in order to mitigate litigation risks. Indeed, companies are less likely to be held liable if clear policies & efficient controls are in place. When in a grey zone, she also advised to inform and to consult the Board of Directors.
It’s not because you can that you should”: the importance of an ethical culture
But compliance goes beyond the respect of legal provisions. When something goes wrong, it is something related to the “human factor”. In that line of thinking, Jochen Vankerckhoven, founder of Compliance Explained, made it clear that rules will only be effective if people have the right norms & culture: “People don’t comply with the law, they comply with what they think is the law or acceptable behaviour”. Hence, trainings to employees should not focus on teaching rules and risks, but on creating the right culture and values in the organisation.
Of course, instilling an ethical culture in the organisation is a challenging task, and that is where the role of the company leadership and board of directors becomes important.
The role of the board: leadership & supervision
In his presentation, Nicolas Coomans also identified 3 main roles for boards of directors and leadership teams regarding ethics & compliance.
First, boards should “set the tone at the top” by showing engagement & exemplarity. In other words, they must show leadership, embody the desired culture, and ensure that it is embedded at all levels and in every aspect of the business.
Second, boards should supervise and control the ethical process. This implies that they are not only informed of the actions taken by management in the field of ethics, but that they also have the means to ask the relevant questions. This therefore requires the training of the directors.
Finally, it is recommended to integrate ethical behaviour in the very functioning of the board. This implies for example that board members are selected based on their high ethical standards, that conflicts of interests are dealt with appropriately, and that ethical concerns are considered in board discussions and decisions.
The roundtable was concluded with an exchange of experiences and good practices between the participants.
Key take aways are:
- The importance of identifying “red flags” regarding non-compliant / unethical behaviour.
- Integrating sustainability and ethics in risk management.
- Keeping the topic alive in the organisation by organising regular trainings and spreading information through different communication channels.
- Extending training and information to the company’s external stakeholders (such as suppliers).
- Setting clear policies regarding the proper communication / reporting to the company’s management & board of directors.