Integrity Management

1
Integrity Management

• Ensuring Organizational
• Compliance

2
Health and Safety

• Exits
• Facilities
• First aid
• Biological breaks

3
Segment Outline

• Objective- Tools to support management
  responsibility for the behavior of others
  applicable in private or public sectors
• Evolution of the tools
• References
• Key components
• Development of the plan
• What next?

4
Modus Operandi

• Maximizing your benefits
• Short presentation
• QA period
• Development of personal plan
• Exercises
• Personal commitment
• Discussion
• Rules of Engagement
• Respect
• Participation
• The 1 probability

5
Use of course materials

• FIDIC grants to the attending participants the
  right of personal use, or use for instructional
  purposes, of any or all of the materials
  presented in this course subject to the
  requirement to identify FIDIC as the source of
  the materials.
• The materials may be reproduced without further
  license for the above purpose
• Ownership of these materials is retained by FIDIC
• Participants intending to use the materials for
  public training are encouraged to contact FIDIC
  to arrange for updated materials www.fidic.org

6
A brief history.

• FIDIC is
• 1990s focus on corruption
• OECD work driven by 1st world agenda
• 1997 OECD Convention
• FIDIC 1998 focus on integrity develop BIMS
• Training guide in 2002
• Model representatives agreement
• GPIMS in draft 2008

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Currently.

• MDB Activities
• Punishment vs. prevention
• Cross debarring
• Red flags development
• Companies enrolled
• Trial of GPIMS
• Users group
• OECD submission
• Companies selectively blackballing clients

8
The three sides of corruption

• The demand side
• The supply side
• The condoning side
• Real progress requires-
• Unanimity in the construction industry
• Integrity demands and behavior modification from
  clients
• Financial acuity from the lender

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Scope of Integrity

• Bribery payment made to unduly influence
• Extortion threats made to unduly influence
• Fraud misrepresentation
• Collusion cooperation amongst competitors to
  unduly influence

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Key Principles

• Integrity must be managed
• Leadership at the highest levels
• Inclusion of all staff
• Process systematic approach
• Documentation continuous
• Review and Improvement auditing, examination
  and reporting of results, systems improvement
• Relation to quality control procedures

11
IM System Development
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Exercise One

• Development of Code of Conduct
• Integrity Defined

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Code of Conduct

• In order for all members of an organization to
  understand the behavior that is expected of them,
  and more importantly the limits of that behavior,
  a code of conduct must be established and agreed
  at the highest level. This is the first step in
  developing a business integrity management system
  whether for a private or public organization.
  Typically, such codes are structured in terms of
  the stakeholders of the organization and reflect
  its values.

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Exercise

• Use the following structure for a code of conduct
  to be developed by each group
• Social responsibility
• Responsibility to the organization
• Responsibility towards clients
• Responsibility to staff
• Responsibility to the industry

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Conflicts with legal dept

• Tendency towards puffery in wording of codes of
  conduct
• Does code of conduct imply a higher standard of
  practice?
• Statements in code of conduct need to be clear
  and unambiguous.
• Codes of conduct will evolve over time ie
  whistleblower provisions

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IM System Development
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Appointment of leader/team

• Direct report at highest level
• Can include outsiders
• Influence required for success
• Message of significance
• Support for difficult decisions
• Ability to survive honesty
• Initial focus on design

18
Policy statement

• The concept, approach and objectives of a firm
  with respect to business integrity as formally
  defined and expressed by management
• Objectives
• Approach
• Roles and responsibilities
• Reviewing/Documentation
• Reporting
• Updating
• Significance
• Board level approval

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IM System Development
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IM System requirements

• Influences on form of integrity system
• Geographic location (TI Corruption Index)
• Structure
• Geographic branch
• Organizational functional departments
• Scope of activities of organization
• Legal and cultural environment
• Alliances/relations to other entities

21
Review of Current status of IM

• Current practices
• Reputation of organization
• Existing IM systems
• Financial controls/audits
• Potential to update
• Existence of QA system

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Communications Issues

• Honesty
• Clarity
• Issues
• Guidance
• Dialogue
• Repetition
• Consistency
• Credibility

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IM System Development
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Detailed IM Policy Document

• Fleshes out the policy document
• Translates behavior expectations into common
  practice
• Requires discussion/involvement of all staff
  first steps in staff engagement
• Anchors the concept in the mind of every staff
  member
• Linkage with Core Values of Organization

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Detailed IM Policy contd

• Individual behavior on discovering malfeasance
• Coverage of key subject areas
• - social responsibility
• - compliance with laws
• - impartiality
• - confidential information
• - conflict of interest
• - misleading accounting practices
• - giving/receiving gifts
• - responsible use of property
• - application to third parties

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IM System Development
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Components of an IM System Toolkit

• Three kinds of system approaches
• Forensic auditing (catching after the event)
• Red flags
• Avoidance through organization (delegating
  responsibility and authority pre-identification
  of the perpetrator)
• Personal performance review component
• Standardized procedures (prevention by system)
• Integrity procedure audits
• Integrity management practices should be
  described for every key process in the
  organizations operation

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Systems review

• Examine current practices of organization to
  identify every key process
• For each process
• Determine how the wrongdoing would show up in the
  records of the organization
• Identify additional records that could be used to
  make the wrongdoing more apparent
• Identify steps to be taken in the auditing
  process to detect wrongdoing
• Identifying persons responsible for integrity in
  operations
• Identify systematic actions to be taken to avoid
  wrongdoing

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(No Transcript)
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IM Systmes Development
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Critical Projects vs All Projects

• IM systems cost to implement
• Balance required
• Selection of higher risk activities/projects
• Routine random selection of others
• Characteristics of a high risk project
• Location
• Size
• Client characteristics other factors?

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Exercise Two

• Conflict of Interest
• Integrity by Avoidance

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Conflict of Interest

• One of the most common dangers to integrity
  in the construction business is the existence of
  situations which threaten the objective and
  unbiased behavior of the parties towards one
  another and often compromise the confidentiality
  of information held by one or more of the
  parties. In your groups list the types of
  conflict of interest that may be encountered in
  your type of organization and devise methods to
  counter such situations.

34
Integrity control methods

• Identified procedures to be followed to minimize
  risk of infractions paper trail
• Typically identifies
• Applicability and responsibility
• Reference authority
• Precursor activities
• Actions to be taken
• Monitoring
• Documentation
• Example Integrity Control Document

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Exercise Three

• Prequalification
• Integrity by Design

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Example - Prequalification

• Circumstances of applicability
• Responsibility
• Reference authority
• Leading steps
• Process description
• Documentation
• Monitoring
• Reporting

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IM Systems Development
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Implementation Tools

• Code of Conduct
• Business Integrity Policy
• Definition of roles responsibilities and
  authority (the team)
• Business integrity procedures for the main
  processes
• Accounting structure
• Enforcement measures
• Declaration in the annual report

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Training

• The Board
• The IM team
• Project managers
• The staff
• The auditors (internal)
• External auditors

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Review and revision

• Senior review on a regular schedule
• Regular updating to accommodate changes in
  organization
• Updating from lessons learned
• Careful version control so only current processes
  are used by organization staff

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The final word.

• Straightforward approach incorporating
• Logic
• Continuous improvement
• Ethical considerations
• Warning this may be revolutionary
• Leads to questions of
• Where we should be
• Who we should deal with
• What kind of work we should do
• Also leads to
• A safer and better environment for everyone
• Happier staff
• A more sustainable organization