Preventing Corruption in Development Cooperation Checklist for Self- Evaluation

Transcription

1 Preventing Corruption in Development Cooperation Checklist for Self- Evaluation

2 Table of Contents Introduction 3 Purpose of the Checklist 4 Content, Structure and Limits of the Checklist 5 Format 6 Checklist 7 Governance 8 Human Resources 12 Finance and Accounting 16 Projects 20 Relations with Suppliers and Business Partners 22 Collaboration with Partner Organisations 26 Evaluation/Self-Evaluation 31

3 The idea of this checklist is based on the «Checklist for Self-Audits to Prevent Corporate Corruption» by Transparency International Germany, reg. Assoc., (ISBN: ) Rights of use: This work or its content may be copied, distributed and publically made available. The following conditions apply: Identification of the holder of rights Transparency International Germany, reg. assoc., no commercial application, no modifications, editing or changes. The previous conditions can be waived only on express consent of the rights holder.

4 Introduction 3 Corruption is the abuse of entrusted power for private gain. Various forms of corruption are covered by this definition including the payment of bribes and the misappropriation of funds, but also more subtle approaches such as nepotism. Corrupt practices have severe consequences for the work of nongovernmental organisations (NGOs) in development cooperation: funds can be leaked, project costs can increase and those in need may see very little of funds donated specifically for their benefit. Apart from anything else, corruption is illegal and can have legal consequences for an NGO. Furthermore, it can tarnish an organisation s reputation. Corruption should not, and cannot, simply be accepted as an inevitable fact. Suitable prophylactic measures can lead to its effective prevention. This checklist developed by Transparency International Switzerland (TI Switzerland) and Bread for all (BFA) will help NGOs recognize the risks of corruption within their structures. It also provides advice regarding how an organisation should prevent corruption. The basic idea is based on an existing «Checklist for Self-Audits to Prevent Corporate Corruption» developed by TI Germany. The format and content have been revised and adapted to the needs of non-governmental organisations. The checklist is an appendix to the Guidelines for NGOs, which has been created by TI Switzerland and BFA. Both documents provide NGOs with guidelines for the planning, development and implementation of an anti-corruption programme. Accepting responsibility and challenging corruption in development cooperation is ultimately the decision of each organisation.

5 4 Purpose of the Checklist The aim of the checklist is to identify areas that are particularly at risk and to detect points of weakness in the Internal Controlling System. It is principally meant as an instrument to locate risk zones prone to corruption in an organisation and can be used as a first step by organisations wishing to develop their own anti-corruption programme.

6 Content, Structure and Limits of the Checklist 5 The checklist contains a selection of areas that are susceptible to corruption. The list of the subject areas is therefore not complete. Due to various factors such as size, working focus and funding, each organisation must decide which areas are particularly relevant with regard to preventing corruption, and whether it needs to evaluate additional areas. The checklist should provide the basis for the development of a tailor-made anti-corruption programme. An individually designed programme has the advantage that it can be adapted to the needs of the organisation. It creates a transparent, legally-binding working environment that facilitates the detection of irregularities and encourages the lasting success of the organisation s work. In addition, an anti-corruption programme offers behaviour guidelines to those working for the organisation, which can be applied in difficult situations. However, even a carefully designed and tailor-made anticorruption programme cannot guarantee that corruption does not occur in isolated cases. Such a programme can only aim to reduce the risk of corruption to a minimum and contribute to detecting cases of corruption in time so that the resulting damage is minimized.

7 6 Format The checklist covers six subject areas: Governance, Human Resources, Finance and Accounting, Projects, Relations with Suppliers and Business Partners and Collaboration with Partner Organisations. For each subject area, a number of statements regarding measures against corruption are listed. As mentioned above, these measures should be adapted by the NGO using the checklist, and extended if required. The answers should demonstrate the extent to which an organisation agrees with the statements and whether or not the statements are appropriate. It is important therefore that an honest evaluation reflecting the current working situation of the NGO is provided.

8 Checklist

9 8 Governance 1) In your organisation there are written Operating Procedures and Codes of Conduct to fight corruption which all members of staff and partners are familiar with. 2) You do not allow the offering, providing, accepting or demanding of bribery payments in any form. Direct or indirect «facilitation payments» in the form of cash payments, non-cash payments or service benefits to public officers (e.g. staff at approving authorities) or staff of companies are banned. The conditions under which exceptions are possible are clearly defined. 3) There is an Internal Controlling System (ICS) implemented in your organisation. 4) Neutral examining bodies (e.g. external auditors, internal auditors, other organisations within a «peer review») check your organisation regularly. 5) There is an official position in your organisation (e.g. corruption officer, internal auditor) which is responsible for measures against corruption.

10 strongly partly disagree not agree agree appropriate 9

11 10 6) Your organisation has a reporting system (e.g. whistle-blower hotline, reporting point) where your staff, as well as staff from partner organisations, can communicate anonymous reports of suspicion regarding corruption, without fear of reprisals. 7) Cases of corruption are evaluated and controlling measures to minimize future risks are developed and implemented accordingly. 8) All criminally relevant cases that are detected are forwarded where possible to the law enforcement bodies responsible. 9) You ensure that important decisions (e.g. selection of project beneficiaries) are met according to clear and understandable criteria. Decisions based on preferences regarding ethnicity, family, etc are explicitly banned. 10) Guaranteeing and providing credit to staff or partner organisations as well as from partner organisations to their staff are managed according to clear guidelines and are subject to approval.

12 strongly partly diagree not agree agree appropriate 11

13 12 Human Resources 1) You have informed all your staff about the currently valid Operating Procedures and Codes of Conduct, you have committed them in writing or in their working contracts to adhere to them and have established sanctions in cases of non-compliance. 2) Each member of staff can at any time and without negative consequences refer to these procedures and guidelines, even if this leads to conflicts with superiors. 3) You regularly carry out training for staff in internal and external guidelines and regulations. 4) Competing interests and conflicts of interests must be disclosed. Secondary employment or external, remunerated services (e.g. publications, mandates) of staff are subject to approval. This is checked periodically. 5) Staff may not at any time partake in decisions where their personal or private interests and those of the organisation could be conflicting.

15 14 6) You have clear, standardized rules for the permission and acceptance of presents, hospitality and other invitations for all members of staff at home and abroad. 7) You use clearly defined, transparent criteria and procedures in recruitment, staffing and promotion. 8) When appointing new staff, existing management staff (Executive Director, Head of Department) and staff in key positions are subjected to an integrity check (collection of references, criminal record check, etc.)

16 strongy partly disagree not agree agree appropriate 15

17 16 Finance and Accounts 1) Payment transactions, in particular those for presents, hospitality, cash purchases, commission, as well as for consultancy and audit services, are disclosed and subject to additional controls with regard to content. 2) Regular controls ensure that all members of staff involved with money transactions proceed according to the valid procedures of correct accounting. 3) All organisational units at home and abroad use the same standard and clear accounts code, and the accounts of every subsidiary are integrated into the general accounting system. 4) You use the «four-eye-principle» (or alternative controls) for important decisions (e.g. commissioning of assignments, handling of payments, recruitment) 5) Your organisation is aware of effective control and monitoring procedures (such as job rotation) in sensitive areas such as payment release.

19 18 6) Staff travel expenses are regularly checked (not just formally but also regarding content) by third parties (e.g. finance department, internal audit) and not just by the superior. 7) Your organisation has recorded guidelines in writing as to how to deal with donations. These guidelines stipulate in particular how to prevent the work of the organisation being influenced by large donors.

21 20 Projects 1) Within the framework of a contextual analysis, the nature and frequency of corruption in a (potential) project country will be considered appropriately. 2) The project beneficiaries are appropriately informed about the features of projects and the extent of assistance. 3) Regarding time constraints for the spending of funds, project staff receive enough scope thus preventing them from having to spend money under pressure, ignoring irregularities or risks (the NGO is not compelled to spend all its remaining funds before a deadline).

23 22 Relations with Suppliers and Business Partners 1) You commission work / purchase orders according to clear, explicit and transparent criteria. 2) You do not allow the partial return flow of a contractual payment («kickback») and the use of other ways or channels for illegal services to suppliers and other business partners and their staff. 3) Managerial staff and other members of staff are not permitted to accept financial commitments for the organisation if they are not explicitly entitled to do so. 4) When commissioning purchase orders, you ensure that there is competition among suppliers. A call for tenders and a certain quantity of suppliers who tender a bid at the same time is required for orders exceeding a particular value. 5) Prior to the commissioning of an order, sufficient information about the locally accepted prices and wages are obtained (e.g. from other organisations).

25 24 6) You control the necessity and the appropriateness of subsequent orders (in particular so-called «supplements»). 7) You carry out regular checks of contracts in all areas, also retrospectively (contract management). 8) Contracts with suppliers and other business partners contain an anti-corruption clause which also determines possible sanctions (e.g. termination of collaboration). 9) You check that services and fees of external consultants, agents and/or experts are reasonable and according to the purpose.

27 26 Collaboration with Partner Organisations 1) Prior to signing a contract with a partner organisation you carry out a «due diligence» check of competence and integrity, you define the service to be provided in a written contract in a clear and explicit way and commit to a payment which is appropriate for the legitimate service provided. 2) Contracts with partner organisations contain an anti-corruption clause which also determines possible sanctions (e.g. termination of collaboration). 3) The partners of your organisation send you annual financial reports. These reports are also verified by an independent auditor when they exceed a specific annual amount. 4) Your partner organisations have an Internal Controlling System (ICS) if they exceed a specific annual budget. 5) Your partner organisations use the «four-eye-principle» (or alternative controls) in important decisions (e.g. commissioning of orders, payment procedures, recruitment).

29 28 6) You know the other financing sources of your partner organisations and know how these are used in order to be able to detect a possible double financing of your project. 7) You commit partner organisations to clear, standardized rules regarding the permission and acceptance of presents, hospitality and other invitations for all members of staff. 8) You ensure that important decisions in your partner organisations (e.g. recruitment, selection of project beneficiaries) are taken according to clear and understandable criteria and that your partners expressly ban decisions taken due to preferences regarding ethnicity, family etc. 9) You commit partner organisations to ban the partial return flow of a contractual payment («kickback») and the use of other ways and channels for illegal services to suppliers or their staff. 10) Regular training for partner organisations regarding internal and external guidelines and regulations is carried out.

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32 Evaluation / Self- Evaluation 31 Should you disagree with two or more statements or if you partly agree with more than half of the statements in one section, then there is an increased risk of corruption in that particular area. In this situation we recommend outside help for anti-corruption measures. Should you partly agree with or disagree with less than two individual statements concerning your organisation in one section, you should pay particular attention to these areas and discuss within your organisation how improvements to fight and prevent corruption in the area affected can be achieved. Help from outside can also help here depending on the situation. If you would like an analysis or a basic discussion on the subject of fighting and preventing corruption, or have further questions, feel free to contact Transparency International Switzerland directly: Tel: from 09:00 12:00 info@transparency.ch

33 Transparency International Switzerland Schanzeneckstrasse 25 P.O. Box Bern Tel Fax Bread for all Monbijoustrasse 29 P.O. Box Bern Tel Fax

34 Corrupt practices have severe consequences for the work of non-governmental organisations (NGOs) in development cooperation: funds can be leaked, project costs can increase and those in need may see very little of the funds donated specifically for their benefit. Corruption should not, and cannot, simply be accepted as an inevitable fact. Suitable measures can lead to its effective prevention. This Checklist for Self-Evaluation will help NGOs to recognize the risks of corruption within their structures and to implement necessary measures to prevent it. The aim of the checklist is to identify areas that are particularly prone to corruption. It can be used as a first step by organisations wishing to develop their own anti-corruption programme.