FMM & TI-M Integrity Conference: Making Business Sense from Integrity

FMM and TIM conference

10 November, 2011

The Conference was held at the Wisma Institute, Kuala Lumpur. This was jointly organised with Federation of Malaysian Manufacturers (FMM). This Conference follows from the ìPledge to Fight Corruption by the Business Communityî co-authored by TI-M and signed by the six main chambers of commerce and industry in the country on 9 December 2010. The Conference is aimed at raising the business communityís awareness on the value and importance of an anti-corruption programme to their business, and encourages companies to initiate an anti-corruption programme with tools provided by TI-M. The audience received updates on the latest international anti-bribery legislation and its impact on business and got the personal accounts from Malaysian businessmen of the rewards in implementing integrity systems in their respective companies. The companies that shared their experience were Thumbprints United Sdn Bhd (TUSB), Top Glove Sdn Bhd (TGSB) and Nestle (Malaysia). Companies that sent their staff to the Conference were Alcatel Lucent (M) Sdn bhd, Karambunai Corp Bhd, Kumpulan Semesta Sdn Bhd (KSSB), Perbadanan Kemajuan Negeri Selangor (PKNS), Perwira Niaga Malaysia (PERNAMA), Sunway Berhad, Top Glove Sdn Bhd, Yokohama batteries Sdn Bhd and others.

What the Speakers Said …
– Datoí Sri Hj Abu Kassim Mohamed (Chief Commissioner of Malaysian Anti-Corruption Commission (MACC)) participated in an open dialogue in the Conference. Datoí Sri explained about the handling of reports lodged with MACC. All cases, according to Datoí Sri would be investigated and MACC would be required to explain the actions (to further or not to further the case) to an independent committee overseeing all the reports. Datoí Sri also conducted a minor survey in the Conference and found that most audience had not been asked to give or gave bribe, yet perceived corruption level in the country as high. Datuk Paul Low, President of TI-M explained that petty corruption in the country had improved markedly, but grand corruption, i.e. state capture is still pervasive and it formed the public perception.

– Mr Alan Kirupakaran (Executive Director of TI-M) gave a presentation entitled ìImpact of Corruption on the Business Sectorî. He pointed out that rampant monetisation of politics and state capture as the two major reasons of increasing level of corruption in the country. However, Alan also noted that the playing field is changing now as governments and regulators across the world are setting higher standard of governance and corporate sustainability, i.e. the adoption of the new extra-territorial UK Bribery Act 2010 and the requirement of integrity pact by Malaysian government among others. Two examples, Siemens and Alcatel, were given by Alan that showed the tremendous financial impact to companies that failed to mitigate corrupt practices: Siemens were fined US$1.6 billion while Alcatel paid US$137 million settlement.

– Dr Mark Lovatt (Corporate Governance Consultant of TI-M) presented TI-Mís Corporate Integrity System (CIS) in the Conference. The System is a four-stage process based on the methodology developed by TIís experience working with major multinational companies. The System begins with companies making a public pledge for not involving in any corrupt practices. Then the company could work with TI-M to conduct a self-assessment test to test the strength of their corporate integrity systems and identify areas for improvement. Action plans would be devised and then implemented with the help and advice from TI-M. The final stage would be maintaining, auditing and improving the system periodically. Benefits of implementing CIS are:

o Improved access to the MNC supply chain
o Funds channelled to products & services: genuine improved competitiveness
o Enhanced control of your business
o Risk mitigation: legal AND brand
o Enhanced attractiveness to investors, especially international banks
o Heightened morale; improved staff retention
o Demonstration of CSR values

– Mr Tam Wah Fiong (Managing Director of TUSB) shared his experience of working with TI-M to implement CIS in his company. Tam recalled his past experience as a businessman who suffered a lot giving out money to get things done quickly. He cited his personal belief and religious faith as the reasons that forced him to change the ìoldî way of doing business. He tried to put in place a system in his company but it was not in a formal structure. Later on, Tam learnt that TI-M is promoting the CIS and started to engage with TI-M. TUSB was pleased to work with TI-M as a pioneer company implementing a CIS in the country. Tam testified that the implementation of CIS and brought about many benefits to his company, such as new business opportunities, international recognition, improved products quality and reduced cost and also personal peace.

– Mr K. M. Lee (Managing Director of TGSB) shared with the audience Top Gloveís self-initiated anti-corruption measures which were started back in end of 1990sí. Lee highlighted several main initiatives that TGSB is currently using, such as the establishment of a Top Glove Prevention and Anti-Corruption Committee (TGPAC) to maintain the system and seek for continuous improvement. Apart from that, TGSB employees were asked to wear the badge prominently, and it was even extended to include visitors to the factory/office. The badge was displayed at the gate, emphasised a lot in the meetings, given out as souvenirs and displayed on companies vans. Lee also shared his experience in rejecting a business deal with a European company which requested TGSB to indulge in corrupt practices (packing lesser gloves to cheat end users). Few years later, surprisingly, the same customer came back to TGSB and requested to conduct a clean business deal without even mentioning the old request.

– Mr Mohamed Shah Hashim (Executive Director ñ Legal and Secretarial of Nestle (Malaysia) Berhad) gave a presentation of Nestleís own integrity system. Whistleblowing is a crucial element in Nestleís system according to Mohamed. A good whistleblowing system must get support from the top management to create a strong culture of accountability, integrity and compliance. On the other hand, protection to whistleblowers, whether internally or externally, is equally crucial for a successful whistleblowing system. Nestle is hiring an external body to manage its whistleblowing reports and the identity of the complainants would be covered completely. Complainants can always request for information and progress on the reports that they had lodged with the external body. Mohamed also pointed out three ìmust havesî for a successful whistleblowing system: (1) all reports must be investigated, (2) all investigations must be translated into actions, and (3) all reports must be genuine.

– Mr Anthony Kevin Morais (Deputy Director ñ Legal and Prosecution Division of MACC) gave a detailed presentation on some of the key concepts and tenets of the Malaysian Anti-Corruption Commission Act 2009. These concepts are ìoffence and penaltiesî, ìbribery of foreign officialsî, ìgratificationî, ìoffence of accepting and giving gratificationî and ìprotection of informers and informationî. Anthony also shared his experience in handling prosecution cases in the Commission. He cited that difficulty in gathering concrete evidence and the inconsistency of key witnessesí testimonies as the two main challenges while prosecuting. However, he believed that with the new Whistleblower Protection Act 2010, it would help MACC to collect more concrete evidence to press on with its cases.

Comments from Participants
– Datuk Abdul Wahab Khalil (General Manager of PERNAMA) pointed out that the definition of ìcorruptionî is a Western construct. It might be applicable in the West but not in the East as gift-giving is a normal culture in the East. Dr Mark replied that gift-giving is a mechanism to build a strong customer relation, but the amount of the gift should not be too high that it could create a sense of obligation for the recipient to repay something in favour.

– Ms Chang commended TUSBís transformation and insistence on doing ëcleaní business for more than a decade and asked about the key roles and functions of a Compliance Officer (CO). She noted that the top management is playing an integral role, as demonstrated by Mr Tam, in changing the companyís culture.

– Another participant asked Mr Tam what had happened to the customers whom TUSB refused to do business after being asked to indulge in corrupt practices. Tam replied that the company, a TV station had since gone bankrupt. Meanwhile, other companies had seen their market shares plummeted as they were mismanaged by bad staff.

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