Administrative solutions are not efficient without management commitment

Although most companies use various tools to prevent corruption, such tools alone will not eliminate the risk of corruption, concluded Telenor and Transparency International Hungary in their informative survey. Administrative tools in support of ethical business conduct are of no use without strong management commitment. It will be difficult to combat corruption as long as few companies apply stringent sanctions for ethical violations. To improve the situation, managers need to set an example for others.

As the survey[1] revealed, most companies are aware that the risk of corruption can be mitigated by using a code of conduct, checking for conflicts of interest and conducting supplier screenings. Nevertheless, it concluded that corporate compliance programmes alone cannot prevent corruption. This is proved by the fact that such measures are the most widely applied in industries most affected by corruption.

Administrative tools are effective only if the company’s management takes committed action. Sometimes this means that they have to forego part of their profit to remain loyal to their principles. Nevertheless, fairness pays in the long run. This is the only way to improve service quality, employee commitment and business reputation.

“We at Telenor believe that ethical conduct is an investment we owe to our customers, partners and ourselves. This is true even if we know that it makes our road to success more difficult in some economic environments. I tell every new colleague who joins Telenor that I take this very seriously. Those who have a question or issue get full support to eliminate potential ethical risks. But if we detect an ethical violation, we have zero tolerance. For a company to be ethical, it must sanction violations”, said Christopher Laska, CEO of Telenor Hungary.

The joint survey of Telenor and Transparency International Hungary found corporate codes of conduct to be the most common anti-corruption tool. 86% of the interviewed companies have such a document, but only slightly more than half (57%) of respondents provide regular training on ethical conduct for their employees which is a telling figure. Other common tools include checking for employees’ conflicts of interest (73%) and running a corporate hotline (66%). Companies tend to be less stringent in terms of supplier requirements. Although suppliers undergo detailed ethical screening at nearly two out of three companies (61%), less than half of them (46%) consider it essential to have an ethical conduct clause as an integral part of supplier contracts. Only a small percentage of the sample (3.6%) have ever trained their suppliers on ethical conduct.

The size of companies is also a decisive factor in terms of anti-corruption measures. Based on survey results, the larger a company is, the more likely it is to use anti-corruption tools. All companies with a headcount of over 2,500 have a code of conduct, most of them (89%) check for conflicts of interest and two out of three (67%) have an ethical conduct clause included in their supplier contracts.