Companies should clean up their acts to fend off corruption risks

Transparency International’s 2017 Corruption Perception Index ranks Myanmar at 130 out of 180 countries, showing that we have a long way to go in both corporate governance and uprooting graft.

Nevertheless, over the last two years, Myanmar has advanced from a low base. The new Companies Laws (2017) and Rules (2018) revised the legislative framework, while the Myanmar Institute of Directors was also established with the support of the International Finance Corporation. The Directorate of Investment and Company Administration’s (DICA) move to digitalise applications and registrations for companies was well received, as it helps reduce the risk of bribery between bureaucrats and applicants.

Myanmar also adopted the 4th Amendment to the 2013 Anti-Corruption Law. The amendment enlarges the duties of the Anti-Corruption Commission (ACC) and includes a new power to issue a notification giving guidance to companies on establishing their own systems to prevent corruption and to take investigative action on their own initiative, instead of acting only on complaints.

Despite the progress, the lack of criminal liability for offering bribes and lack of regulations on political donations are two key hurdles Myanmar needs to cross in its efforts to curb corruption.

One area of corruption in Myanmar which has rarely been discussed is by employees working in procurement, such as computer systems and office rental. Big businesses and NGOs who are worried about their staff defrauding them by padding invoices and colluding with suppliers can, in fact, resolve the issue on their own. Sorting out their governance of procurement decisions and their internal audit is something companies can tackle without the need for intervention from the government. Improving those aspects will also strengthen their ability to address corruption in their dealings with the authorities.

The point about firms getting their act together on corporate governance is directly related to the need for businesses to have whistleblower-protection mechanisms internally. According to the October 19 Notification issued by the ACC under the Anti-Corruption Law, companies need to “establish trustworthy reporting mechanisms to report suspected corrupt behaviours.”

The keyword is “trustworthy”. Few companies in the country have that in place, and employees in general are discouraged from reporting since no one will act on a complaint. Reporting mechanisms need to earn the trust of staff members.

The current legal framework does not include whistleblower protection regarding complaints made to the ACC though. Hence, the Anti-Corruption Law has to be amended to cover such provisions, as having zero protection will deter people from coming forward.

Meanwhile, there are other areas where the authorities assume responsibility. Companies can rightly blame the system and the government when it comes to the “tea money culture” as well as questionable tender processes. For example, during the first stage of a bid evaluation, bids which don’t meet specifications are allowed to go through. Then, at the second stage, when decisions are made about the price, the cheaper, sub-standard offers win.

One area where the authorities took the wrong step is the anti-corruption code of ethics announcement for businesses issued by DICA in August. Investors are concerned by the continuing confusion presented by the announcement, which raises more questions than it answers. Many ministries do not seem to be fully aware of the announcement and have sent out documents which contradicted the announcement. The ACC, DICA and other relevant departments should clarify the confusion and take time to consult stakeholders.

SOURCE: MYANMAR TIMES

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