In early July, I was part of a panel at an international anti-corruption conference in Ukraine organized by the Kyiv School of Economics and the European Bank for Reconstruction and Development.
The panel I was part of — “Anti-corruption policies through engaging the private sector” — focused on the role of a collective action initiative for private businesses in Ukraine and its impact on the improvement of the business climate and decrease of corruption in the country.
The panel included Ivan Sakal, the CFO of Agrofusion and Chair of the Executive Committee of the Ukrainian Network of Integrity and Compliance (UNIC), a collective-action network of more than 50 companies which together have more than 100,000 employees.
The panel was chaired by Juraj Strasser, the Director of Policy & Ethics at the European Bank for Reconstruction and Development or EBRD, and also included Algirdas Semeta, Business Ombudsman in Ukraine, and Gaiane Karakashian, Head of the Secretariat of UNIC.
UNIC was founded in late 2017 on the idea that business integrity can be developed and cultivated in Ukraine by using self-assessment of compliance and education of companies. In other words, the aim of this anti-corruption collective action is to improve business conduct through gradual improvements of its members’ compliance systems.
Companies with the most advanced compliance regime are able to undergo certification — starting with external assessment, followed by implementation of the proposed improvements and ending by certification of their compliance systems by an independent certifier (similar to and based on the core principles of ISO 37001 certification).
Members of UNIC influence the behavior of their peers, as well as their suppliers and customers and thus positively shape the business climate in Ukraine. Last year’s UNIC Survey confirmed that 56 percent of companies believe that it is possible to do business in Ukraine without involvement in corrupt practices. UNIC helps companies to achieve this.
As noted by Ivan Sakal, the aim of UNIC is to give members who are willing to improve their governance regime access to know-how, which in turn enables them to conduct business in line with best practices. The know-how includes templates of different compliance policies, procedures, including codes of conduct, integrity-related contractual clauses, and other tools that equips them to fight corruption on the supply side. Is it working? In fact Ukraine showed a substantial improvement and moved up several places in the World Bank’s latest Doing Business Survey.
During the panel discussion, I described what UNIC does to assist its members. The basic approach involves a four-step management method — PLAN-DO-CHECK-ACT.
The PLAN element includes a self-assessment of the level of compliance and business integrity of the prospective candidate members (and their subsequent verification by UNIC’s Secretariat).
The DO element involves the members taking specific action to improve their compliance regimes with the support from UNIC, including by providing them with practical tools that help address corruption and other similar risks, including in the contractual arrangements.
CHECK involves bi-annual checks on the progress made by the members and, for companies who committed to undergo certification, this involves certification by an independent expert of their compliance systems.
The certification exercise is preceded by ACTion on the part of the member designed to improve the compliance system across its organisation.
Juraj Strasser spoke about the support which the international community provides for UNIC. The EBRD has been actively working in trying to fight corruption in Ukraine. It was fundamental in setting up the Business Ombudsman Council (BOC), which has been one of the most effective anti-corruption tools in Ukraine. He noted that UNIC was a natural continuation of the BOC project — it is a bottom-up collective action initiative which attracts satisfied “clients” of the BOC, who from their practical experience understand that it is possible to do business without paying bribes.
The EBRD supports UNIC by providing funding from the EBRD Ukraine Stabilisation and Sustainable Growth Multi-Donor Account supported by a number of EBRD members, as well as by providing know-how, through active participation in the work of UNIC’s Ethics Committee.
During the panel discussion, we noted that while UNIC’s current members are solely private companies, there is an important scope for cooperation with state-owned enterprises, many of which require a significant overhaul of their compliance systems and substantial improvements of their corporate culture. The form and scope of any such cooperation will be decided on a case-by-case basis.
We also discussed cooperation with the authorities. Gaiane Karakashian of UNIC said the network needs to deepen its cooperation with policymakers and regulatory authorities, to help them understand the benefits that UNIC, including UNIC certification, could bring to the improvement of the business climate in the country, as well as to ensure that issues that negatively affect members of UNIC are understood and properly addressed by the authorities.
While it is clear that knowledge in itself does not create the compliance culture, it is equally true that lack of such knowledge can reduce and, potentially, destroy this culture. It is therefore important to offer to businesses in Ukraine a platform that helps create such culture and provides support to prevent corruption on the supply side. That’s what UNIC is working to do.
Tetiana Kheruvimova, pictured above, is an investigator at the Business Ombudsman Council. She helped establish the Ukrainian Network of Integrity and Compliance under support of the European Bank for Reconstruction and Development, the Organisation for Economic Co-operation and Development, and the Business Ombudsman Council. She was previously the Senior Associate at KPMG Law Ukraine and headed the Corporate Compliance Practice. She’s a co-editor of Compliance Periscope Blog, the first Ukrainian resource devoted to corporate compliance and ethics.