PCCI can fight graft at the grass roots

The CEOs of the top corporations in the country have pledged to renounce any form of bribery and to conduct their business ethically according to a new “Unified Code of Conduct.” It seems the “Integrity Initiative” – the anti-corruption campaign launched by the Makati Business Club, Management Association of the Philippines, European Chamber of Commerce, American Chamber of Commerce, and the Hills Program on Governance of the Asian Institute of Management – has electrified big business. The core idea is that corruption cannot flourish unless business allows it.

Petty corruption. To fully succeed, however, the culture of integrity should permeate not just the big leaguers, but the entire business community as well. Fortunately, the AIM Hills Program on Governance has published recently a credible report on how to combat corruption in micro, small and medium enterprises.

“Micro” enterprises have assets of less than P3 million and employ less than 10 workers. “Small” enterprises have assets of P3 million to P15 million and 11 to 99 employees, while “medium” enterprises have assets of P15 million to P100 million and 100 to 199 employees.

In a past column, Ciel Habito advised separating the micros from the small and medium enterprises; however, for the anti-corruption study, the AIM lumped them together simply as “SMEs.” Altogether, SMEs (including the micros) constitute 99.6 percent of all businesses, employ 63.2 percent of the labor force, and account for 35.7 percent of total sales in our country.

Victims of petty graft. SMEs are often the favorite victims of petty grafters. How frequently we hear of sari-sari storeowners complain of having to bribe city and municipal functionaries to get their permits to operate, or for carinderias to obtain health clearances for their workers, or for itinerant importers to “tip” customs officers to release their shipments.

Routinely, businessmen are visited with huge tax assessments that could be whittled down if the reductions are shared between what is officially receipted and what is not. Fire department inspectors require SMEs to secure fire extinguishers from a recommended list of “approved” suppliers whose products had been “pre-cleared.” Too often, delivery van drivers freely park on the sidewalks, or beat red lights or, worse, “counter-flow” on the opposite lanes, after handing a few pesos to police officers.

It seems all these “facilitations” have become so commonplace that they are regarded normal components of doing business in the country. Unfortunately, they engender a permissiveness that no longer outrages. Worse, they are accepted – wrongly and regrettably – as parts of a culture of corruption that no longer shocks the senses. And this acceptance makes corruption flourish and multiply ever more.

Fighting petty graft. The AIM study presents commonsensical suggestions on how to fight corruption and to uphold ethical conduct. Some of these are:

1. Make it a policy to prohibit bribery in any form. This should be communicated to all employees, agents, clients, customers and business partners. It must be enforced strictly and without exceptions.

2. Implement a policy on gifts and entertainment. Giving or accepting gifts or entertainment is unethical and counter-productive when used to influence decisions, or to gain an unfair advantage. Some companies prohibit gifts of any kind, except promotional items of nominal value such as coffee mugs, key chains or note pads. Others specify the maximum value of gifts and entertainment which,  in any event, are to be logged in a central register.

3. Require that conflicts of interest be disclosed. Such conflict occurs when an employee’s personal interest clashes with his or her official duties and responsibilities. A standard form for the disclosure of a conflict of interest is suggested in the AIM book.

4. Create a Code of Conduct as a guide on acceptable behavior. It should reflect the values and principles of the company and provide courses of action in tricky or difficult circumstances. Give incentives for adhering to the code, and penalties for violating it.

5. Train all officers and employees on the anti-corruption program and code of conduct, from the moment they are hired and periodically thereafter during their employment.

6. Develop systems and control processes that ensure transparency and accountability of all transactions. Maintain accurate books and records of all transactions, with no “off-the-book” deals. Official receipts should always be issued to customers and asked from suppliers. The systems should provide channels for reporting and penalizing corrupt and unethical conduct.

7.  Declare correct taxes and pay them on time. Bribery demands can be resisted when taxes are properly declared and paid. Communicate that the company does not tolerate bribes, like “My company has a very strict policy against bribes, and I would lose my job if I violate it.” Or “I am prepared to go through whatever procedures are necessary to obtain the license or permit I am applying for.” Or “It is against my religion to pay bribes.”

The Philippine Chamber of Commerce and Industry (PCCI) is the champion of SMEs. With these suggestions as a start, I challenge PCCI to match the big leaguers and launch an anti-corruption drive among the grass-roots enterprises. How about it PCCI?

For copies of the book “Anti-Corruption Manual for SMEs,” contact Angela Garcia, executive director, Hills Program on Governance at the AIM in Makati.

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