Business Case on Malawi Business Action Against Corruption

Draft for Discussion Purposes, Subject to Approval by Participating Organizations

Oonagh Fitzgerald64 James Ngombe65

This business case was prepared in collaboration with Daisy Kambalame and Sean de Cleene of the African Institute for Corporate Citizenship of Malawi (AICC), and with the support of Ralph Hamann of the University of South Africa (UNISA) and Birgit Errath of the UN Global Compact. Collective Business Action Against Corruption in Malawi Typing his last revisions to the speech he would be giving to a Llongwe merchants association later in the week, Sean de Cleenes brow furrowed involuntarily. There was nothing he enjoyed more than proudly describing his initiative to potential new partners, yet he was starting to feel troubled by the slow pace of adoption of his beloved Code. He was even starting to lose sleep about managing the delicate relationship with government, and waiting every day for the news that the government would be endorsing the Code. As the new President of the African Institute for Corporate Citizenship in Malawi, some fifteen months ago, Sean had successfully orchestrated the launch of a major initiative to combat corruption in Malawi by building a multi-stakeholder, cross-sectoral partnership with leaders in business, government and civil society. While he understood the initiative needed the approbation of government and engagement of a broad range of stakeholders, Sean had been adamant that at its core this needed to be a collective business initiative, led, motivated and organized by Malawi business. He believed it was critical for the business community to take ownership of the initiative and start exerting peer pressure to broaden the commitment. In her office just down the hall Daisy Kambalame was hurriedly piecing together materials she would need for yet another international meeting about anti-corruption measures. As she worked she found herself comparing ironically the enthusiasm she knew from experience would greet her presentation on the international stage, and the cautious, polite, reaction she would get when she spoke about the same initiative back here in Malawi. Still, she knew it was all a matter of time and persistence. By cultivating the support of key donor groups like SIDA-Norad and international organizations like the United Nations Global Compact she knew she was bolstering the legitimacy of Business Action Against
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B.F.A., LL.B., LL.M., S.J.D., E.M.B.A. (Candidate), Member of Law Society of Upper Canada since 1983. Ph.D., Managing Director, Heinemann Agent, Blantyre. Malawi. case study Malawi

Corruption with her own government and with the big multinationals present in the country. Once these key supporters and a few major local companies were on side, the rest of the Malawi business community could be persuaded to sign on to the Code. Before closing down her computer Daisy typed out a quick email response to the Canadian researcher studying their initiative,
[O]ne of the issues that I have found most challenging but in the end helped in influencing the progress that we have made is the issue of creating partnerships. I think the success of implementing the principles will also be dependent on understanding some of the issues that arise in establishing partnerships. 66

Having overseen and guided the collective drafting of the Business Code of Conduct for Combating Corruption in Malawi, Seans main mission now was to see it embraced by the industry and business sector. He was privately frustrated by the delays in obtaining endorsement of the Code by government authorities, for he longed to see its adoption by the public sector as this would provide tremendous leverage in encouraging the private sector to follow suit. Sean worried that until the government came out firmly in favour of the Code there was a risk it might be sidelined by other political priorities or pressures. With exasperation he wondered how the ambitious action plan articulated at the 2005 Leaders Forum could ever be realized if a key building block like this Code was having such difficulty getting established. Impetus for Reform
Corruption had been overwhelming Malawi in recent years, such that international and foreign donors and businesses were increasingly reluctant to invest in this small southern African country, leaving citizens to face a bleak and impoverished future. 67 All sectors of society had come to the realization that non action in the face of widespread corruption was not an option. Public and private sector and civil society shared a common desire to position and enable Malawi to achieve its Millennium Development Goals by improving the stability, reliability, and transparency of its investment climate. The negative effects of corruption were readily apparent but few were willing to abstain while others continue to reap personal gain from corrupt practices. Multi-stakeholder negotiations seeking to bind all participants to collective action to eliminate corruption seemed to provide a possible means of systematic and concerted attack on the problem (See Appendices I and II). Thus Sean de Cleene and Daisy Kambalame of the AICC set about creating a cross-societal coalition, involving government, private business, civil society, donor agencies and the media, to tackle the corruption problem and implement the 10th Principle of the UN Global Compact in Malawi.68

Daisy Kambalame, the African Institute of Corporate Citizenship (AICC). Corruption was seen as a major impediment to achieving the Millennium Development Goals. Malawi slid from 42nd in 2000 to 97th in 2005 on the Transparency International Corruption Perception Index. 68 United Nations Global Compact Principle 10, Businesses should work against corruption in all its forms, including extortion and bribery. case study Malawi
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2005: Preparing to take Collective Action

In setting out to tackle a systemic, country-wide issue like corruption through consensual negotiation, Sean and Daisy had realized they might face many kinds of difficulty. It would be difficult to reconcile legal formality including specific legal prohibitions, legal rights and litigation positions with the need for cooperation, compliance discussion and informal information exchange to better understand the problem. It would take skill and patience to de-escalate self-righteous, winner-take-all attitudes, combativeness and defensiveness. It would not be easy to reconcile past, current and future business and legal risks when long-entrenched, lax business practices are replaced by strict codes of conduct. It would be challenging to determine how to cooperate with competitors in ethics partnerships without losing competitive position. It would be a challenge to achieve the right balance between procedural perfection and common-sense solutions that can be readily implemented and applied, and it would be critical to ensure that participants were adequately trained to apply the new rules.69 They also anticipated that there might be difficulties in managing political pressures and political opportunities, and in maintaining momentum over the long term. Because major instances of corruption often involve public procurement, it was almost inevitable that the fight against corruption would become politicized.70 With the Presidents anticorruption campaign being implicated in his falling out with his former party, his actions on corruption were already being challenged by his opponents as politically motivated. They knew it would be important to keep moving forward on several fronts, build credibility and overcome whatever setbacks might occur. With so many interests and risks at stake, it was critical to develop an effective multistakeholder negotiation process to break the impasse and create cross-societal coalitions to find solutions that would produce system-wide reform. Such a process would allow shared ownership of the anti-corruption issue so that it would not depend on the fortunes of any one person or any one sector of society but would be sustained by the deeds of many champions across Malawian society. In order to harness commitment to the collective interest it was necessary to overcome or at least re-frame self-interest in maintaining the status quo: Although business managers increasingly recognize that corruption is a serious business challenge, they may not always accept that they have a responsibility and key role in changing practices that have become endemic. The dilemma is to balance doing what is right against putting business operations at a competitive disadvantage. business managers may perceive that promoting a change in accepted local business practices could jeopardise their business interests. It is often relatively easy to get business managers to acknowledge that it would be beneficial to both them and their competitors if corruption were eliminated. What is more difficult is for them to take the first steps to act together in combating corruption, for fear of losing out to each other.71

Corruption is by its very nature a team sport, characterized by inappropriate influences originating from the private sector and undue benefits accruing to members of the public
Susskind and J. Cruikshank, Breaking the Impasse: Consensual Approaches to Resolving Public Disputes (1987. Basic Books) at 35-79. 70 News reports suggest this is a serious problem, with competing allegations that prosecutions against senior opposition party members are politically motivated and that the President and members of his Cabinet should also be the subject of corruption investigation but are protected by the Anti-Corruption Bureau. afrol News / The Chronicle, 21 November 2005; Misanet / IRIN, 9 February 2006; afrol News / IRIN, 26 May 2006. 71 Business Against Corruption: Case Studies and Examples. Implementation of the 10th United Nations Global Compact Principle against Corruption, The Global Compact (April 2006) at page 128. case study Malawi
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sector.72 Although on one level the solution to corruption is as easy as saying no, this is not workable unless people could be assured that others would also say no, and support each other in a collective effort to put an end to corruption. In other words, Sean and Daisy recognized that business men and women might tend to view business as usual as their best alternative to a negotiated agreement (BATNA).73 They might see the status quo as being better and easier than the difficult negotiating and trust-building required for collective action against corruption. Nonetheless, it was also clear to them that collective approaches were well-suited to tackling corruption and improving business standards: 74 In practice, collective action with other companies offers an effective way to create a level playing field on which to compete and increases the impact on local business practices beyond the capacity of any one company. Knowing that other companies in your sector or location are committed to good practice helps to build mutual confidence and the sustainability of changes in behaviour.75 Sean understood that competing businesses shared a common interest in improving their business environment and working together they would have a greater impact in reducing corruption in their business sector. Acting together companies could tackle locally relevant issues, set realisable targets, and more effectively integrate anticorruption policies and codes into their own operations and their supply and distribution chains. Sean was aware that Transparency International, a non-governmental leader in fighting corruption, had been using a coalition-building approach to bring relevant actors together, from government, business, academia and the professions, the media, and the diversity of civil society organizations to combat corruption. Indeed, there is a growing inventory of models and best practices available to enrich implementation of the initial action plan.76 Daisy was familiar with the Nigerian Convention on Business Integrity from here international meetings (See Appendix III). The Nigerian model relied on consensual negotiation processes to combat corruption. It was voluntary, involving pledge-making by public and private sector participants, recognition and modelling of good conduct, and peer pressure through a mutual accountability network. The Convention was a declaration against corrupt business practices; it was not a legal document but represented a moral agreement between consenting parties. Its primary purpose was to encourage the establishment of a minimum standard for business integrity in Nigeria.
Business Against Corruption: Case Studies and Examples. Implementation of the 10th United Nations Global Compact Principle against Corruption, The Global Compact (April 2006), Case Study: Eastern Cape at page 176. 73 R. Fisher and W. Ury, Getting to Yes: Negotiating Agreement Without Giving In (1991, 2d ed. Penguin Books) at 98 et seq., originating the concept of BATNA best available alternative to negotiated agreement.
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Business Against Corruption: Case Studies and Examples. Implementation of the 10th United Nations Global Compact Principle against Corruption, The Global Compact (April 2006), Peter Brew and Jonas Moberg, The power of joining forces The case for collective action in fighting corruption at 133.

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Business Against Corruption: Case Studies and Examples. Implementation of the 10th United Nations Global Compact Principle against Corruption, The Global Compact (April 2006), The Power of Joining Forces at page 128. 76 Business Against Corruption: Case Studies and Examples. Implementation of the 10th United Nations Global Compact Principle against Corruption, The Global Compact (April 2006), Case Story: Integrity Pacts at page 141: Transparency Internationals primary objective is to infuse transparency and accountability into the global value system as generally recognized public norms. The Integrity Pact developed by Transparency International provided a practical model of consensual negotiation. It consists of an agreement between a government department and a company bidding on a public sector procurement contract not to pay, offer, demand or accept bribes of any sort, or collude with competitors to obtain the contract, or while carrying it out. Bidders would be required to disclose all commissions and similar expenses paid by them to anybody in connection with the contract. Breach of the agreement would result in sanctions ranging from loss or denial of contract, forfeiture of the bid or performance bond and liability for damages, to blacklisting for future contracts on the side of the bidders, and criminal or disciplinary action against employees of the Government. (at 134) case study Malawi

Under the rules of the Convention a whistleblower was granted anonymity and could present a complaint to a core group of Convention members who would then approach the company in question asking it to appoint a senior level Ethics Counsellor to work through the issue with them and monitor compliance. It takes time to build confidence amongst groups of business leaders who may initially be sceptical about what can be achieved and concerned at the implications of working with competitors and others outside their normal set of relationships. Focusing on issues that have important current impacts on business and the community and then conducting a series of individual and group meetings to explore the opportunities and barriers to cooperation are essential steps leading to the formalisation of any initiative. These steps take time, but it is time well spent. Having someone who has previously been a business executive to act as a coordinator may give participants the confidence required to ensure that a process gains momentum.77

2005: The Malawi Leaders Forum

The integrative negotiation process was started in earnest when the Sean and Daisy, through the AICCs Africa Corporate Sustainability Forum, facilitated a series of businesssponsored round table discussions in partnership with the Malawi Global Compact. At each event some 20-30 leaders from business, government and civil society discussed issues related to the Global Compact and the role of business in progressing towards achieving the Millennium Development Goals. The first of these round table discussions was held in January 2005 focusing on the newly introduced 10th Principle on Corruption.78 Until then the private sector had not been active in the fight against corruption despite governments publicly declared intention in this respect, but this meeting produced agreement to hold a one-day Leaders Forum on Building Alliances to Eliminate Corruption. The Forum brought together leaders from government, the business sector, civil society, the media and donor organizations, and was wholly funded by private sector organisations. Having private companies fund the Forum was strategically significant because experience suggests that financial contributors are always more likely to remain engaged, take a project seriously and demand practical results.79 Experience also demonstrates that the political will to reduce corruption and to revive honesty and integrity in Government contracting is a sine qua non for success.80 Thus it was auspicious that the President of Malawi, Dr. Bingu Wa Mutharika, opened the event, describing corruption as a major burden to society substantially eroding the economic resources otherwise available for ensuring a countrys sustainable development, and
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Business Against Corruption: Case Studies and Examples. Implementation of the 10th United Nations Global Compact Principle against Corruption, The Global Compact (April 2006), Peter Brew and Jonas Moberg, The power of joining forces The case for collective action in fighting corruption at 132.

78 The second one was held to discuss the role of corporate governance in promoting MDGs the third and fourth round table discussions were on opportunity creation and sustainable development in the agriculture sector and the development of a promotional campaign to this effect. Sponsorship for the round table discussions was received from BP Malawi, Limbe Leaf Tobacco Company, Monsanto, Yara Malawi, Multi Choice and Dulux Limited. From Malawi Leaders Forum on Building Alliances to Eliminate Corruption Final Report 2005. 79 Business Against Corruption: Case Studies and Examples. Implementation of the 10th United Nations Global Compact Principle against Corruption, The Global Compact (April 2006), The power of joining forces The case for collective action in fighting corruption at 132. 80 Business Against Corruption: Case Studies and Examples. Implementation of the 10th United Nations Global Compact Principle against Corruption, The Global Compact (April 2006), Case Story: Integrity Pacts at page 137. case study Malawi

reiterating his commitment to fighting corruption. He commended the private sector for holding the event and for the active participation of a large number of company CEOs, and acknowledged the support of the international donor community in the fight against corruption. Pledging his assistance, the President encouraged participants to work actively with partners from government and broader civil society to build powerful alliances to effectively eliminate corruption in the country. The President thus helped to set the stage for successful negotiation by publicly committing to support a collective effort, and signalling to the nation that a major societal shift was happening. The other keynote speakers were also chosen as strong representatives of their respective constituencies, in anticipation of developing good channels of communication. The Patron of the Malawi Global Compact, Dr Mathews Chikaonda, CEO of Press Corporation, highlighted the current governments leadership and the willingness of business to partner with government on this issue and urged concerted action to combat corruption.81 Mr Banda, Deputy Director of the Anti Corruption Bureau (ACB) and Mr Ishmael Wadi, Director of Public Prosecution, explained the prosecution process and existing rules and systems designed to hold perpetrators of corruption accountable. They emphasized that the private sector could contribute to their efforts by providing information on corrupt practices in government procurement. Mr Roderick Phiri, Chief Executive Officer (CEO) of SDV and a member of Malawi Global Compact Network, urged government and business leaders to form productive alliances and act as strong role models in combating corruption.82 Mr. Fred Mzomwa, Deputy Director of Public Procurement (DPP), described how the 2003 Procurement Act decentralised government procurement to internal procurement committees for greater efficiency, but with the lack of capacity to support the new process, the DPP needed help from the private sector to identify procurement irregularities.83 Minister for Trade and Private Sector Development, Dr Martin Kansichi, spoke of the destructive effects of corruption on property rights, the rule of law and investment, and urged ongoing multi-sectoral cooperation to bring about a comprehensive change in societal attitudes to corruption. Issue identification at the Leaders Forum was wide-ranging, covering a variety of perspectives and identifying many critical needs: training and consciousness-raising for all employees in government and the private sector; public communications campaign with announced time-bound commitments; strengthening professional independence and professional discipline in the legal and judicial field; business to business peer review; joint development of common standards and guidelines for the public and private sector; establishment of an independent body to devise incentives, monitoring systems, and promote best practices; learn from anti-corruption models tried successfully elsewhere; private sector support for the ACB; government to target bureaucratic bottlenecks that engender corrupt practice (See Appendix IV). After discussion of the challenges that currently existed in fighting corruption, participants at the Leaders Forum crafted a framework agreement, a common text to which all provided input, as an initial action plan for progressing towards the elimination of corruption. Their key recommendations were:

81 He urged business to implement systems to mainstream the fight against corruption as a core business issue by incorporating anti-corruption clauses into employment contracts of managers. He recommended setting up of an independent body to develop incentives to back a zero tolerance policy on corruption, particularly as it related to the supply chains of larger companies, state enterprise and government procurement. 82

He argued that businesses needed to agree on a strict code of conduct, supported by internal reporting systems and improved transparency and accountability.

83

In this respect Fred Mzomwa went on to say the establishment of an independent business lead reporting body would be a positive and welcome step forward.
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For an independent taskforce to be established, which would drive the action plan forward. To review existing codes and the adoption or development of a code of conduct for the private sector and state enterprise in Malawi to promote a zero tolerance approach to corruption. The initiating of an independent body that would build value around, or incentivise, a zero tolerance policy on corruption - particularly as it related to the supply chain of larger companies, state enterprise and government procurement. This would include the application of a scorecard or rating model that companies would agree to respect in terms of obtaining or providing goods or services. The Nigerian Convention on Corruption model was highlighted as a potential model to be followed if it was viewed to be appropriate in the Malawian context. A recognition of the need to strengthen corporate governance practices of both private and public sector businesses in Malawi. The development of a system for publicising all major procurement contracts and transparent processes for deciding on successful bids. The formation of a government working group to highlight inefficiencies in the system that create loop holes for engaging in corrupt practices, and devise ways of eliminating such inefficiencies. For government to look to ratify the AU Convention on Corruption For donors to provide greater support for multi-sector alliance building initiatives that aim to eliminate corruption in the country. 84

Consensual negotiation involving the broad range of stakeholders provided a methodology for discovering common interests, harnessing shared commitment, and building and maintaining the required anti-corruption infrastructure. As all parties depended on each other for the successful eradication of corruption they needed to negotiate in a way that maximized the effectiveness of each party: developing the agenda collaboratively to ensure all could prepare adequately, sharing information to achieve a common understanding of the issues, working to achieve practical solutions that all sides could support, creating a web of interconnected commitments to ensure all sides were involved in and accountable for implementation.85 At the same time, it was important to guard against the multi-stakeholder process becoming so large and unwieldy as to be incapable of taking decisive action.86
Final Report of the Malawi Leaders Forum on Building Alliances to Eliminate Corruption (7 June 2005). D. Ertel, Getting Past Yes: Negotiating as if Implementation Mattered (November 2004) Harvard Business Review 60 at 65.
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Business Against Corruption: Case Studies and Examples. Implementation of the 10th United Nations Global Compact Principle against Corruption, The Global Compact (April 2006), Peter Brew and Jonas Moberg, The power of joining forces The case for collective action in fighting corruption at 131: Through the involvement of a wide range of actors, companies, non-governmental organizations and Governments, initiatives such as the United Nations Global Compact can quickly obtain a high degree of legitimacy and authority. Other multistakeholder initiatives, such as the EITI [Extractive Industries Transparency Initiative], have come about because of the campaigning of non-governmental organizations. The Initiative created an important forum for businesses, non-governmental organizations and Governments to come together to discuss issues of joint concern. A potential drawback with multistakeholder initiatives is that they often grow rapidly and consequently may become cumbersome to manage. Also, it may be difficult to turn aspirations into tangible action. As the number of participants increases, the early dynamism and confidence of the original smaller group of participants can be dissipated. On the other hand, business-led initiatives that are focused on solving specific business challenges can often be more results-driven, but they may not satisfy the expectations of other stakeholders. In practice, it is important for business-led initiatives to engage with and seek support from other stakeholders. Governments and multilateral institutions can play an important role by promoting and facilitating initiatives that are essentially voluntary for companies to adopt. Again, the EITI can serve as an example. case study Malawi

The facilitator role played by Sean, aided by Daisy, was particularly helpful in encouraging dialogue between sectors of Malawi society and urging business to commit to immediate and purposeful action towards eliminating corruption. Although they had expected to stay deeply involved in the initiative as it evolved, neither of them had envisioned that they would have to coordinate the ant-corruption initiative for the longterm. In the days following the Leaders Forum, once the initial glow of their success had dimmed, they began to realize they would have little choice but to assume this role for a while longer at least. Who else was there to coordinate and drive refinement of undertakings and implementation of action plan commitments for the foreseeable future?

2006: Reviewing Progress after Fifteen Months

It was clear from the outset of the Malawi Business Action Against Corruption that it would be a long-term project, requiring sustained engagement of the various sectors of Malawian society. Sean and Daisy thus were left with the daunting task of channelling the moment of shared commitment of the Leaders Forum into a long term implementation plan. With little by way of human or financial resources to support the initiative they began by setting up a working group of business, government and NGO representatives to draft a code of business conduct. Twelve months later, the Business Code of Conduct for Combating Corruption in Malawi (See Appendix V) had been drafted, and they were waiting for the endorsement of government, and for businesses to adopt it. The drafting of the Code had been achieved through the work of a multi-stakeholder Steering Committee87 and Task Force.88 The stated purpose of this drafting exercise was to describe a Code of Conduct to be observed by institutions, organisations and companies operating in Malawi in order to ensure that they do not engage in corrupt practices.89 Adoption of the Code was intended to be a strategic decision for an organisation, with specific design and implementation of the Code being influenced by varying needs, particular objectives, the products or services provided, the processes employed and the size and structure of the organisation. 90 It was intended that the Code be used by internal and external parties to assess the organisations performance in combating corruption. By September 2006, the Business Code of Conduct had been completed and was awaiting approval and adoption by the government of Malawi, as well as widespread adoption and implementation by Malawian businesses and other organizations. At that time independent researchers commissioned by the UN Global Compact conducted a survey of members of the Steering Committee and Task Force to gather their views on the progress of the anti-corruption initiative. The survey posed questions about developments in implementing the initiatives goals and action plan, to ascertain

87 The Steering Committee was led by Sean de Cleene of the AICC, and comprised of the AICC - African Corporate Sustainability Forum, the Malawi Anti-Corruption Bureau, Chemicals and Marketing Co Ltd., Malawi Bureau of Standards, Malawi UN Global Compact, Rab Processors Limited, United States Agency for International Development (USAID), and Yara Malawi (PVT) Limited. 88 In addition to the members of the Code Steering Committee, the Malawi Business Action Against Corruption Task Force currently includes Africa Leaf, Illovo Sugar (Malawi) Ltd., Limbe Leaf Tobacco Company Ltd., Malawi Revenue Authority, Malswitch Reserve Bank of Malawi, the Ministry of Trade and Private Sector Development, the Office of the Director of Public Procurement, Multichoice Malawi, Press Corporation Limited, Safetech Malawi, Dimon (Malawi) Ltd., MSC Malawi, Africa on Line, Press Corporation Limited, Press Trust, Chemical and Marketing Malawi, Air Malawi, Mediterranean Shipping Company, Multi Choice, The Society of Accountants in Malawi (SOCAM), and United Nations Development Programme (UNDP). 89 Business Code of Conduct for Combating Corruption in Malawi (August 2006), Foreword, p.3. 90 Business Code of Conduct for Combating Corruption in Malawi (August 2006), Foreword, p.3.

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whether the multi-stakeholder process was bringing about cross-societal progress in fighting corruption. The survey results (See Appendix VI.) and the researchers conclusions and recommendations were sent to Sean and Daisy in late October. The results of the survey had been overwhelmingly positive, confirming that there was a continuing shared commitment in government, the business sector and civil society to work together to eradicate corruption. Respondents seemed to feel that development of the core document, the Business Code of Conduct, had been an appropriate first major project and that it had gone well, although important questions about the Codes future were outstanding. Many thought that progress had been somewhat slow and acknowledged the difficulty in contributing effectively to the initiative while balancing their other work pressures. Respondents recognized that the next big challenge would be in obtaining widespread adoption and implementation of the Code. They had many ideas about how to publicize the Code and ensure buy-in. Responses to some questions indicating lack of knowledge about what other participants were doing suggested that ongoing communication between the various engaged sectors of society business corporations, government agencies, the media, and civil society could be enhanced. Some responses urging greater publicity raised the possibility of expanding the multi-stakeholder negotiation process beyond business, government and civil society leaders to engage a broader swath of Malawian society. This suggested that public consultation would be useful to raise awareness and increase nationwide support for the initiative although care would need to be taken to keep the multi-stakeholder negotiation process manageable and effective. Respondents uncertainty about the infrastructure of the Anti-corruption Initiative and the specifics of its future work plan suggested that this might be a good time for the leaders to regroup and map out the next steps and set up the appropriate structures for the next phases of implementation. This would likely involve considering establishing the independent agency that will promote, and assist in measuring, compliance with the Code. Funding for such an agency would also need to be negotiated. The researchers noted that the Malawi Leaders Forum provided an excellent illustration of the use of a consensual approach in resolving public crisis although it was still early days to judge whether it would achieve its laudable objective of eradicating corruption.91 For an issue of such magnitude and complexity, the commitment to the consensual negotiation process had to be long term. The roundtables, the Leaders Forum, and even the development of an initial action plan were only the beginning, with extensive mutual commitments being forged, long term relationships deepening, and substantial investment in implementation to continue into the foreseeable future. The fact that one year later, the Initiative had successfully crafted a Business Code of Conduct to guide all sectors, and that participants still were deeply committed boded well for the longer term survival of the initiative. The Malawi Leaders Forum had inspired a nation to action;92 its challenge now was not to lose momentum for the great task still ahead. By staying true to the principles of multi-stakeholder negotiation processes, this initiative could nurture ongoing involvement and participation, and continue to broaden the reach and deepen the roots of the anti-corruption movement in Malawi. A final observation by the researchers was that periodic surveying of participants over the long-term of this Initiative might be a useful way to verify that the Initiative continued on track and to facilitate mid-course corrections if needed.
L. Susskind and J. Cruikshank, Breaking the Impasse: Consensual Approaches to Resolving Public Disputes (1987. Basic Books).
92 [W]hat the private sector has done has even motivated civil society to engage on the issue as well. Daisy Kambalame (AICC). case study Malawi 91

The Challenge Ahead

Sean and Daisy were relieved by with the survey results, which they had anticipated with some trepidation. They understood that it was too soon to say with certainty that the anti-corruption initiative was having an enduring impact locally, in civil society, at the firm level, at the professional association level, and within government. Nonetheless, they were heartened to see that participants in the initiative felt that even though much remained to be done, Malawi had never been closer to coming to grips with the challenge of corruption. The UN Global Compact identified three key conditions for successfully combating corruption: High level commitment from the most senior echelons of Government; Investment in the building of corruption prevention infrastructure; Implementation and management of such infrastructure with the aim of affecting ethical culture change.93 Sean and Daisy knew that by creating a broad-based anti-corruption coalition these conditions were beginning to take hold in Malawi. It was gratifying to confirm, that participants felt the initiative was on the right track, and recognized that successful completion of the Code was a key early deliverable for the initiative. True, the survey also raised some difficult questions about enlargement, public involvement and creation of a coordination infrastructure. Sean and Daisy had already sensed that these needed to be addressed. While they were pleased that the Code was gradually becoming known and taking root, they were also acutely aware that much of the action plan remained to be accomplished and that the initiative urgently needed more resources, including a clear structure for coordinating and driving the initiative. The action plan had called for the creation of an independent body that would promote, support and provide peer pressure for a zero tolerance policy on corruption in big business, state enterprise and government procurement. Sean was sure that it was time to establish this independent body, or risk losing significant momentum. The difficulty was to determine how to structure it, fund it and ensure its long term leadership and survival. He knew who the key players were in civil society, the business community, the media, the government, and the legal profession - but wondered if he could get them to commit to such a long term project, and he worried that short term political pressures or business interests might hijack a long term national plan. He wondered what each of his contacts in business, the media, government, the NGO and donor community, would be prepared to contribute to this initiative and what they would do to ensure it would be a success both for their own organization and for Malawi. Sean and Daisy had discussed these questions at length, but they had not reached firm conclusions on how structure might help ensure participants ongoing commitment to the initiative. With positive survey results behind them, however, they now felt confident they would have good support from their partners in finding the right solutions to these issues. Still, he couldnt help feeling some anxiety as he waited for word that the government would endorse the Code. Was it time, he wondered, to call once more on his most powerful allies to advocate for the Codes adoption?

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Business Against Corruption: Case Studies and Examples. Implementation of the 10th United Nations Global Compact Principle against Corruption, The Global Compact (April 2006), Case Study: Eastern Cape at page 177. case study Malawi

Bibliography
L. Susskind and P. Field, Dealing with an Angry Public: the Mutual Gains Approach to Resolving Disputes (1996. The Free Press). L. Susskind and J. Cruikshank, Breaking the Impasse: Consensual Approaches to Resolving Public Disputes (1987. Basic Books). R. Fisher and W. Ury, Getting to Yes: Negotiating Agreement Without Giving In (1991, 2d ed. Penguin Books). R. Lewicki, D. Saunders, B. Barry, J. Minton, Essentials of Negotiation (2001. 2d ed. McGraw Hill Irwin). R. Lewicki et al., Negotiation (4th ed. Chapter 13 Managing Difficult Negotiations: Third Party Approaches 463-498). T. Williams, Negotiation and Conflict Management (2006, Queens University Business School course materials). A.J. Wills, An Introduction to the History of Central Africa: Zambia, Malawi, and Zimbabwe (1985, 4th ed. Oxford University Press). D. Ertel, Getting Past Yes: Negotiating as if Implementation Mattered (November 2004) Harvard Business Review 60. Business Against Corruption: Case Studies and Examples. Implementation of the 10th United Nations Global Compact Principle against Corruption, The Global Compact (April 2006). Guidance Document: Implementation of the 10th principle against Corruption, The Global Compact (December 2004). J. Breeze, Corruption: Sharing What Works, Prince of Wales International Business Leaders Forum (2002).

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Appendix I.

Integrative Multi-Stakeholder Negotiation Defined

Variously called cooperative, collaborative, win-win, mutual gains or problem-solving negotiation, integrative negotiation is well-suited to a problem like corruption where there are many parties across the spectrum of society implicated in its continued practice and needing to make mutually binding pacts to eliminate corrupt practices in the future.94 Unlike distributive negotiation, where each side seeks through the negotiation process to gain for him or herself the largest piece of a fixed pie, in integrative negotiation, each side understands that through negotiation it may be possible for all sides to gain much more than the original pie. Integrative negotiation differs from distributive bargaining because it focuses on commonality not difference, attempts to address needs and interests not positions, it requires a free flow of information and ideas, participants commit to meeting the needs of all involved parties, parties invent options for mutual gain and use objective criteria for measuring implementation of the negotiated agreement.95 Bargaining from positions is ineffective when there are many interested parties and it tends to lead to dysfunctional and unsatisfactory negotiation results. By focusing on interests not values, numerous solutions reveal themselves as possible.96 Lewicki et al. identify the key steps in the integrative negotiation process as being: 1. identify and define the problem jointly, 2. understand the interests and needs that underlie the problem, 3. generate alternative solutions by refocusing questions to reveal win-win options, and 4. carefully evaluate and select from a range of alternatives to produce final agreement in which the needs are integrated.97 Consensual negotiation are characterized by voluntary and face-to-face participation (possibly facilitated),98 with representation specially chosen to build long-term relationships, sharing of the costs of the process as a stake in the process and long term investment, participants setting the ground rules collectively, seeking out mutual gains and voluntarily accepting the resulting action plan.99 Significant procedural and substantive benefits can be derived from consensual negotiation. First, it produces a fair and open process, resulting from broad participation and public accountability. Second, it is efficient, with the full range of issues and perspectives being brought into the discussion and used in finding solutions, leading to collective buy-in for implementation. Third, decisions reached through consensual negotiation are characterized by wisdom
94 R. Lewicki, D. Saunders, B. Barry, J. Minton, Essentials of Negotiation (2001. 2d ed. McGraw Hill Irwin) at 95119. 95 96

R. Lewicki, D. Saunders, B. Barry, J. Minton, Essentials of Negotiation (2001. 2d ed. McGraw Hill Irwin) at 95. Interests are needs, desires, concerns, or fears the things one cares about or wants. They underlie peoples positions the tangible items they say they want. In contrast, values are closely tied to identity and feelings of self-worth such that they are far less amenable to negotiation and compromise: L. Susskind and P. Field, Dealing with an Angry Public: the Mutual Gains Approach to Resolving Disputes (1996. The Free Press) at 154, citing W. Ury, J. Brett and S. Goldberg, Getting Disputes Resolved (Cambridge Mass. 1993).

97 R. Lewicki, D. Saunders, B. Barry, J. Minton, Essentials of Negotiation (2001. 2d ed. McGraw Hill Irwin) at 98113; T. Williams, Negotiation and Conflict Management (2006, Queens University Business School course materials), Session 2 at 5.

Consensual negotiation may be unassisted or assisted by a third party. The latter can involve different approaches e.g., facilitation, mediation and non-binding arbitration. 99 L. Susskind and J. Cruikshank, Breaking the Impasse: Consensual Approaches to Resolving Public Disputes (1987. Basic Books) at 78. case study Malawi

98

and foresight, having benefited from a broad range of insights and experience, and collaborative inquiry to develop shared understanding. Fourth agreements resulting from consensual negotiation are stable, due to the emphasis on feasibility, realistic timetables, reciprocal achievable commitments, flexibility to adjust as new facts or circumstances come to light, and investment in longer term relationships.100 In order to help a complex multi-stakeholder negotiation make the transition from successful deal-making to successful implementation participants should 1. start with the end in mind, 2. help the other parties to prepare for implementation, 3. treat alignment as a shared responsibility because failure affects all parties, 4. send a common message, 5. manage the negotiation like a business process requiring preparation and postnegotiation evaluation.101

Appendix II.

Prince of Wales International Business Leaders Forum, Janet Breeze, Corruption: Sharing What Works (2002) page 10.

100 L. Susskind and J. Cruikshank, Breaking the Impasse: Consensual Approaches to Resolving Public Disputes (1987. Basic Books) at 21-33. 101 D. Ertel, Getting Past Yes: Negotiating as if Implementation Mattered (November 2004) Harvard Business Review 60 at 63.

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Appendix III. Issues identified in the Final Report of the Malawi Leaders Forum on Building Alliances to Eliminate Corruption (7 June 2005)
There is a distinct need to review Malawis broader values and ethics systems to identify the areas where the private sector can have influence. As people spend a lot of their time at work, this provides a clear opportunity for using the workplace to develop strong awareness of the eroding effect of corruption and promote wider societal values that actively fight against corrupt practices throughout society. Ongoing political will to push anti-corruption strategies down through the various government systems is vital It was felt that a comprehensive review of the judicial system would be highly beneficial currently the law society was perceived as having no teeth when it came to de barring or investigating anyone within the system who obviously had been guilty or suspected of corrupt practice There is a need for increased peer review mechanisms both within a given sector and between sectors. The initiating of an independent body to build value around or create an incentive system for a zero tolerance policy on corruption, particularly as it related to the supply chain of larger companies, state enterprise and government procurement. To remain depoliticised this needs to be focussed on defining and monitoring systems that are deemed appropriate in addressing issues of corruption, rather than making assessments on corrupt practice itself. This could include the application of a scorecard or rating model that companies would agree to respect in terms of obtaining or providing goods or services. The Nigerian Convention on Corruption model was highlighted as a potential model if appropriate in the Malawian context. This body could also be used to train and act as a think tank on corruption-related issues. There was a strong call for more ongoing dialogue between private sector, donors and the various government bodies dealing with corruption whether this is through the National Action Group or Forums such as this one. Significant increase: in Institutional capacity building staffing, upskilling, and remuneration of bodies such as the Anti Corruption Bureau (ACB). Development of a common set of standards to regulate the conduct for both public and private business. Government should participate in the setting of these standards to highlight where government measures or legislation on a particular point are already in place. Provision of a benchmark on acceptable behaviour guidelines on what is considered acceptable in terms of dinners/ gifts etc. could be used in employee training in government and private sector. There is need to develop a broad-based education and communication process that the private sector would be able to play a key role in. Possibility of taking forward a campaign-style methodology, where government and business made achievable time bound commitments. The need for government to target inefficiencies in the system that act to encourage corruption. Knowing how long an administrative procedure should take (published standards) and having clear recourse to remedial action when this is not adhered to. It was felt that certain actions should be automatically copied to the ACB, who can look for spikes in the system and suggest remedial actions.
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ACB is seen as working but there was a feeling that the ACB is not necessarily sufficiently empowered to handle all relevant issues as they related to the wider causes of corruption. Is there a mechanism where a coalition of stakeholders could actively provide support to ensure its future sustainability? Stakeholders should also potentially have more input into the governance of ACB. There is a clear need to explore models that are working elsewhere. The Nigerian Convention on Corruption was highlighted as an example, which might serve to inform the establishment of an independent corruption reporting committee for Malawi.

Appendix IV. Nigerian Convention on Business Integrity

Formally launched in Lagos on 2 October 1997, the Convention promotes ethical conduct in business, as well as competence, transparency, accountability, and a commitment to doing what is right, just, and fair. Its member organizations include Integrity; Transparency in Nigeria, a national chapter of Transparency International; and numerous local and multinational businesses. The principle of membership works in a way analogous to the revolving microcredit schemes popular in Africa, called ajo, esusu, etc, in some parts of Nigeria. Under these schemes, members contribute equal amounts on a periodic basis, and the whole pot is given to one member. The rate of default in these schemes is generally accepted to be very low because they operate through a mutual accountability network where sanctions are applied through peer pressure and each member submits to peer review It was agreed in the end that whistle-blowers would have to remain anonymous to the company or persons involved. The process begins by presenting allegations of questionable practices to a core group of signatories. If the whistle-blowers claims are substantiated, the core group then approaches the company in question. Such companies have a responsibility to deal with the issues as well as they can internally and for this purpose they need to appoint an ethics counsellor: The intending signatory must appoint an Ethics Counsellor to counsel with those wishing to resolve ethical dilemmas, and those seeking clarification of ethical values, or core values of the organization. He or she will counsel in confidence with those wishing to report unethical and corrupt practices taking place within their organization and take appropriate action. An Ethics Counsellor must be a member of senior management that enjoys the trust and confidence of both management and employees. He or she must have a good knowledge of organizational processes and the core values of the organization. He or she shall also monitor organization compliance with this Code of Business Integrity. In 2004, the Ministry of the Federal Capital Territory (MFCT), the seat of the federal Government of Nigeria, decided to sign on to the Convention as a pilot for the public sector. Business Against Corruption: Case Studies and Examples. Implementation of the 10th United Nations Global Compact Principle against Corruption, The Global Compact (April 2006), Case Study on the Convention on Business Integrity at 143-144.

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Appendix V. Business Code of Conduct for Combating Corruption in Malawi (August 2006)

INTRODUCTION
The Business Code of Conduct for Combating Corruption in Malawi has been developed by a multisector steering committee that forms part of a wider Malawi Business Action Against Corruption Taskforce. The Code has been developed, through private sector initiative, as a tool to assist organisations to develop effective actions in combating corruption in all its forms. The Code of Conduct draws on various international initiatives, in particular: Business Principles for Countering Bribery, an International and Social Accountability International, initiative of Transparency

Business Action Against Corruption a flagship pan-African governance programme under Business Action for Africa which was set up at the G8 Summit to promote support for Africas development. The BAAC is currently managed in partnership by the AICC African Corporate Sustainability Forum (ACSF), Commonwealth Business Council (CBC) and SADC Southern African Forum Against Corruption (SAFAC), which includes the regions anti-corruption commissions, the Human Rights Trust of Southern African (SAHRIT) and the Nigerian based Convention on Business Integrity. but also includes other initiatives such as: African Union Convention on Corruption. Organization for Economic Cooperation and Development (OECD) Convention on Combating Bribery, International Chamber of Commerce (ICC) Rules of Conduct to Combat Extortion and Bribery, Interpol Global Standards to Combat Corruption, United Nations Convention on Corruption

SCOPE
General This code provides a framework for good business practices and risk management strategies for countering corruption. It is aimed at assisting organisations to:

eliminate corrupt practices; demonstrate their commitment to countering corruption; and make a positive contribution to improving business standards.

Application

Though the code is specifically designed for use in large and small public and private companies, the requirements contained herein are in themselves generic and are intended to be applicable to all organisations, regardless of type, size and product/service provided, that wish to demonstrate their ability to combat corruption.

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DEFINITIONS
Corrupt practices include: bribery, fraud, theft, abuse of position or authority, embezzlement, extortion, influence peddling; facilitation payments

Bribery: promising, offering, giving or soliciting of any benefit in cash or in kind that improperly affects the actions or decisions of any person. Fraud: false representation or concealment of material facts in order to part with something of value Abuse of position or authority: Use of ones vested authority to improperly benefit oneself or an entity or another person Embezzlement: This involves theft of resources by persons entrusted with the authority and control of such resources Extortion: This involves coercing a person or entity to provide a benefit to himself, another person or an entity in exchange for acting (or not acting) in a particular manner. Influence peddling: The practice of using ones influence with persons in authority to obtain favours or preferential treatment for another, usually in return for payment. Facilitation payment: These are small payments made to secure or expedite the performance of a routine or necessary action to which the payer of the facilitation payment has legal or other entitlement. Also called facilitating, speed or grease.

CORRUPT PRACTICES
Corrupt practices include:

Behaviour that involves any of the following: bribery, fraud, theft, misuse of position or authority, embezzlement, extortion, influence peddling or the providing of facilitation payments; The offering, giving, receiving, obtaining or soliciting of any advantage to influence the action of any public officer or any official or any other person in the discharge of the duties of that public officer, official or other person; The offering, giving, acceptance or soliciting of a bribe in any form or the use of other routes or channels for the benefit of an employee or that of the employees family, friends, associates or acquaintances; The abuse of entrusted power for private gain or any conduct or behaviour in relation to persons entrusted with responsibilities which violates their duties and which is aimed at obtaining undue advantage of any kind for themselves or for others; The unauthorized dissemination information for reward or solicitation of confidential or restricted

PRINCIPLES FOR COMBATING CORRUPTION

The enterprise should prohibit corrupt practices in any form whether direct or indirect. The enterprise should commit to the fundamental values of integrity, transparency and accountability.

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The enterprise should aim to create and maintain a trust-based and inclusive internal culture in which corruption is not tolerated. The enterprise shall commit to implementation of a programme to counter corruption.

REQUIREMENTS
Development of a programme for combating corruption An organisation, institution or company should develop a programme reflecting its size, business sector, potential risks and locations of operation, which should, clearly and in reasonable detail, articulate values, policies and procedures to be used to prevent corruption from occurring in all activities under its effective control. The programme should be consistent with all laws relevant to countering corruption in all the jurisdictions in which the organisation or company operates.

Standards of conduct Each organisation, institution or company should be committed to following practices as they relate to corrupt practices, and should put measures in place to prohibit corrupt practices by any employee, agent, or any other person under the employment or authority of the enterprise; make corruption by an employee subject to severe disciplinary measures; establish a system for the recruitment of employees who are of high integrity, and systems for promotion and termination that are not arbitrary but based on fairness, openness, ability and performance; provide adequate safeguards to prevent abuse of powers by those engaged in the anti-corruption system and to minimize unnecessary infringements of individual rights; establish systems for the procurement of goods and services that are based on openness, efficiency, equity and certainty of the rules to be applied and that seek the best value for money; set up and maintain effective mechanisms to oversee and detect failures to meet standards and enforce the high standards of conduct required; train its employees to understand and practice honest, ethical and appropriate behaviour, to avoid conflicts of interest, and to report acts of corruption; require the reporting of all known instances of corruption to the relevant authorities; require public sponsorships; disclosure of all its political or charitable contributions, or

protect employees from repercussions for reporting corruption.

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Specific programme requirements

In developing the programme for countering corruption, an organisation, institution or company should analyse which specific areas pose the greatest risk from corruption. The programme should address the most prevalent forms of corruption relevant to the organisation, institution or company, but to a minimum should cover the following areas: Bribes

The organisation, institution or company should prohibit the offer or acceptance of a bribe in any form or the use of other routes or channels to provide improper benefits to customers, agents, contractors, suppliers or employees of any such party or government officials. The organisation, institution or company should prohibit an employee from arranging or accepting a bribe from customers, agents, contractors, suppliers, or employees of any such party or from government officials, for the employees benefit or that of the employees family, friends, associates or acquaintances.

Political contributions

The organisation, institution or company, its employees or agents should not make direct or indirect contributions to political parties, organisations or individuals engaged in politics, as a way of obtaining advantage in business transactions. The organisation, institution or company should publicly disclose all its political contributions. Charitable contributions and sponsorships The organisation, institution or company should ensure that charitable contributions and sponsorships are not being used as a subterfuge for corruption. The organisation, institution or company should publicly disclose all its charitable contributions or sponsorships.

Facilitation payments

Recognising that facilitation payments are a form of bribery, the organisation, institution or company should work to identify and eliminate them. Facilitation payments are payments made to secure or expedite the performance of a routine or necessary action to which the payer of the facilitation payment has legal or other entitlement.

Gifts, hospitality and expenses

The organisation, institution or company needs to have a publicly available policy on what constitutes appropriate behaviour in relation to gifts hospitality and expenses. This policy should prohibit the offer or receipt of gifts, hospitality or expenses whenever such arrangements could affect the outcome of business transactions and are not reasonable and bona fide expenditures.

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IMPLEMENTATION REQUIREMENTS
The organisation, institution or company should meet the following minimum requirements when implementing the programme: Board and management responsibilities

The Board of Directors or equivalent of the organisation, institution or company should base their policy on this code of conduct and provide leadership, resources and active support for implementation of the programme. The Chief Executive Officer is responsible for ensuring that the Programme is carried out consistently with clear lines of authority. The Board of Directors, Chief Executive Officer and senior management should demonstrate visible and active commitment to the implementation of this code. The Board of Directors or CEO should oversee that all management and if appropriate all staff members should sign an individual contract of agreement to abide by the policy as set out by the company. A structure will be established that provides for regular reporting to senior management and the board on the nature and magnitude of exposure to corrupt practices and an assurance to the board, and its audit committee in particular, that procedures to follow the principles as laid down in this code are in place and being properly applied at all times. Internal reporting of actual corrupt practices should remain transitional subsequent to reporting to the appropriate authority. That the Board and/or its audit committee reviews the mandate and actions undertaken by both the internal and external auditors, with particular reference to issues outlined within this code, and undertake any corrective action deemed necessary to ensure progress towards fully adhering to the principles laid down in the code. Any significant concerns would also be reported to the full board. That each director (both executive and non-executive) submit signed attestations, in a public disclosure statement to the effect they are fully satisfied that all the organisations anti-corrupt practices are being followed, monitored and managed appropriately in accordance with the code and that procedures are in place to achieve this.

Business relationships The enterprise should apply its programme in its dealings with subsidiaries, joint venture partners, agents, contractors and other third parties with whom it has business relationships. Subsidiaries and joint ventures: The organisation, institution or company should conduct due diligence before entering into a joint venture. The organisation, institution or company should ensure that subsidiaries and joint ventures over which it maintains effective control adopt its programme. Where an organisation institution or company does not have effective control it should make known its programme and use its best efforts to monitor that the conduct of such subsidiaries and joint ventures is consistent with the code. Agents: The organisation or company should not channel improper payments through an agent. The organisation institution or company should undertake due diligence before appointing an agent. Compensation paid to agents should be appropriate and justifiable remuneration for legitimate services rendered. The relationship should be documented.
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The agent should contractually agree to comply with the enterprises policy on corrupt practices. The organisation, institution or company should monitor the conduct of its agents and should have a right of termination in the event that they pay bribes. Contractors and suppliers: The organisation institution or company should conduct its procurement practices in a fair and transparent manner. The organisation institution or company should undertake due diligence in evaluating major prospective contractors and suppliers to ensure that they have effective anti-bribery policies. The organisation institution or company should make known its anti-bribery policies to contractors and suppliers. It should monitor the conduct of major contractors and suppliers and should have a right of termination in the event that they pay bribes. The enterprise should avoid dealing with prospective contractors and suppliers known to be paying bribes. Human resources

Recruitment, promotion, training, performance evaluation and recognition should reflect the organisation institution or company commitment to the programme. The organisation institution or company should make it clear that no employee will suffer demotion, penalty, or other adverse consequences for refusing to pay bribes even if it may result in the organisation institution or company losing business.

Training

Managers, employees and agents should receive specific training on the programme, which should include integrity training and principle based training. Where appropriate, contractors and suppliers should receive training on the programme.

Raising concerns and seeking guidance

To be effective, the programme should rely on employees and others to raise concerns and violations as early as possible. To this end, the organisation, institution or company should provide secure and accessible channels through which employees and others should feel able to raise concerns and report violations (whistle-blowing) in confidence and without risk of reprisal. These channels should also be available for employees and others to seek advice or suggest improvements to the programme. To support this process, the organisation institution or company should provide guidance to employees and others with respect to the interpretation of the programme in individual cases.

Communication

The organisation institution or company should establish effective internal and external communication of the programme. The organisation institution or company should, on request, publicly disclose the management systems it employs in countering corruption and bribery. The organisation institution or company should be open to receiving communications from relevant interested parties with respect to the programme. Internal controls and audit

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The organisation, institution or company should maintain accurate books and records, available for inspection, which properly and fairly document all financial transactions. The enterprise should not maintain off-the-books accounts. The enterprise should establish feedback mechanisms and other internal processes supporting the continuous improvement of the programme. The organisation institution or company should subject the internal control systems, in particular the accounting and record keeping practices, to regular audits to provide assurance that they are effective in countering bribery.

Monitoring and review

Management of the enterprise should monitor the programme and periodically review the Programmes suitability, adequacy and effectiveness and implement improvements as appropriate. They should periodically report to the Board of Directors or shareholders, or any such appropriate body, the results of the programme review. The Board of Directors, shareholders, or any such appropriate body should make an independent assessment of the organisation, institution or company regarding the adequacy of the programme and make its recommendations.

CRITERIA FOR COMPLIANCE Organisations wishing to demonstrate their compliance to the requirements of this code shall be voluntarily audited and rated on the level of compliance to this code. Such a rating system is currently being developed in Malawi and ratings will be determined by identifying process, mechanisms and practices within the organisation that enable it to comply with the requirements of the code and ensure that corrupt practices, as far as can be ascertained, are not taking place within the organisation.

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Appendix VI. Consolidated Results of the Survey of Participants Malawi Business Action Against Corruption
In-person interviews were conducted and documented by an independent research team.102 Not all organizations contacted responded, and not all those that did respond answered every question. The following is a consolidation of the responses received, without attribution or weighting of specific comments. The accuracy of the content of statements made by respondents was not verified. The statements are reproduced in summary form here to indicate participants personal impressions of the Initiative. Given the small sample size and nature of the questionnaire, the consolidated results are offered not as statistically significant indicators of opinion in Malawi but as informed impressions of the Anti-corruption Initiative at this particular point in time (October 2006). As such, the consolidated results provide some insights about the current state of the initiative as well as suggestions that may help guide it in the future. Participants were asked to what extent their organization had been involved in the initiative recently undertaken by the business community in the fight against corruption in Malawi. The trend of responses was to cite the Business Leaders Forum and the involvement of most respondents in the Task Force developing the Business Code of Conduct. In addition, two multinational companies cited their own risk management programmes targeting corruption eradication within their companies through anti-fraud policies and anonymous tip-offs. The survey asked participants what input or assistance they had provided. Some respondents who had been involved in the Task Force indicated they had contributed toward the initiative by alerting their staff of the need to be vigilant against corrupt practices. One respondent mentioned contributing to the direction, focus and mobilization of members of the Task Force. Government participants had kept the Task Force up to date on developments within government in the fight against corruption. Additionally, comments were made on the draft Code of Conduct now awaiting adoption by the government. One respondent cited a document which had been sourced from Sweden (Swedish International Development Cooperation Agency) which had proved useful in drafting of the Code of Conduct in reader-friendly language. Participants were asked for their opinion as to what were the major challenges facing the initiative. The challenges cited in response were: the fact that corruption was rampant and entrenched, such that reversal would be an uphill task; lack of punitive measures targeting offenders; the fact that participation is voluntary; integrating all sectors in the Initiative and having the general business sector accept the outcome of the Initiative; having the government endorse the Code of Conduct; and having a Business Conduct rating system accepted and enforced; and meeting the high expectations of Malawian society. They were asked what in their opinion are the strengths and weaknesses of the Initiative. Strengths that were mentioned by respondents were: the Presidents presence at the inaugural Leaders Forum and his governments commitment to the Initiative, coupled with high level support from business leaders; the enthusiasm and cooperation of members of the Task Force was noted by several respondents; that some in the private sector were already championing the cause by setting up anti-corruption systems without waiting for the results of the Task Force Code; and that there was broad support and no negativity towards the Initiative. The weaknesses that respondents identified were the
102 Interviews were conducted by co-author Dr. James Ngombe with the assistance of Vales Machila, Dip Ed, Dip Journalism. case study Malawi

following: lack of expertise in the anti-corruption drive among the members of Task Force; corruption entrenched in the country (one respondent mentioned the best intentions of the Leaders Forum are hampered by continued corruption in high office, poor support from the judiciary, difficulty in prosecuting cases, and delays in amending laws); there are no punitive measures for non compliance; progress towards the adoption of the Code is slow; members of the Task Force are committed to other equally pressing engagements and thus are unable to provide sufficient support and input to the Initiative; and the need for more resources to be able to push the Initiative forward. When asked about the constraints facing the initiative, respondents provided similar answers to the preceding question. An additional constraint that was identified was the lack of drafting expertise for the Code project. Another commented that there was no indication of negativity towards the Initiative. The questionnaire asked how participants hoped to assist in the furtherance of the Initiative. Some respondents answered that they would lead by example, by introducing zero tolerance to corruption in their respective organizations and introducing senior managers to the Initiative. Respondents uniformly expressed willingness and a desire to continue to assist in the implementation stage although some noted there were other constraints on their time. Asked if the Malawi anti-corruption Initiative was something they would recommend to be replicated elsewhere on the globe, respondents were unanimous in saying they would. One multinational business representative said they would push for a similar approach in other countries in which they do business. Participants were asked whether the preliminary action plan developed at the Leaders Forum had been broken down into manageable tasks, and if so, whether there was now a detailed action plan with responsibilities assigned, timeliness, reporting and accountability. Responses varied, with some respondents saying no, others saying yes, or yes but it is taking time because everyone involved is busy. Respondents clearly saw the drafting of the Business Code of Conduct as a key step in implementing the action plan. One respondent suggested that the next course of action could only be determined after the Code had been accepted and adopted by the government. Another suggested that the Code should be launched publicly to encourage companies to sign on. Other respondents commented that the Code has not been given enough publicity; that companies now need to sign onto the Code and implement it in their organizations; and that the Code will need some refinement as adoption and implementation proceed and that publicizing it in the media would be useful to generate informed discussion. The survey asked whether there is a coordinated accountability mechanism to ensure all parties live up to their commitments. Respondents answered that so far the members of the Task Force have remained on course, coordinating well, and demonstrating their ongoing commitment. It was noted that it will take committed leadership to drive the initiative forward. Several respondents observed that individually some organizations have designed and implemented their own anti-corruption programmes as part of risk management. Respondents were asked whether there is a leaders coalition responsible for ensuring that the integrative negotiations continue, and stay on track over the long term. The responses varied with some saying yes, the leaders were chosen at the launch of the Forum, and others saying no or not yet. One respondent questioned if the Task Force was the right vehicle to carry the message and deliver the anti-corruption initiative. Another indicated that the future role of the Task Force had not yet been decided, beyond completing the drafting of the Business Code of Conduct. A government
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respondent noted the crucial role played by the African Institute for Corporate Citizenship in this Initiative. A subject of some discussion at the Leaders Forum was the creation of an independent advisory body. Participants were asked whether such an independent advisory body had been more fully defined and established, and if so, what is the membership and what are its functions. Respondents noted that this idea had not yet been acted upon. The Task Force had been mandated to draw up the Business Code and recommend it for adoption both to the Leaders Forum and the government. Most respondents were of the view this independent body had not yet been established and that the Initiative was still looking at other comparative models and working on designing the way forward. The questionnaire asked whether international organizations, donor organizations and foreign governments are involved effectively to support the anti-corruption effort. One respondent thought that so far, the initiative was free of governments (financial) support and wondered, if government funded the initiative, whether it would lose its independence. Another respondent noted government had provided some financial support for the initiative. Another thought the donor community was a little distant from the initiative and could do more by offering debt relief, to allow government to pay employees adequately and thereby prevent corrupt practices. It was mentioned that USAID, UNDP, SIDA-Norad, and the World Bank are currently assisting the Office of the Director of Public Procurement. Another respondent commented that the donor community was interested in, indeed keen about, the anti-corruption Initiative, and that there was a possibility of obtaining funding from them if the government endorsed the Code of Conduct. Participants were asked what steps are being taken to entrench change, so that the initiative survives changes of leadership in various organizations and sectors. One respondent thought that this was an issue that had not yet been decided. Another respondent felt that not enough had been done within his organization: managers were aware of the anti-corruption initiative, but more could be done to implement anticorruption measures. Some respondents commented that the initiative was only slowly taking root but that corrupt practices were rampant (corruption in family businesses and statutory bodies offering essential services such as water, electricity and telephones was mentioned by one respondent). Respondents also observed that civil society groups are forming to assist in creating awareness and initiate action and that there was hope that practices in government institutions would be improving. The survey asked whether best practices from other contexts such as integrity pacts or business integrity conventions have been adopted, and if so, whether they work well in these contexts. Respondents mentioned that the Code of Conduct was developed with reference to existing codes and best practices from Malawi, Africa and the international community. A government respondent said he was not aware of related developments in the private sector. It was suggested by one respondent that the starting point for combating corruption in business was the need for effective risk management. Respondents cited three examples where local programmes have been developed without waiting for the Code to be launched, and which were going well: SIDA (Swedish International Development Cooperation Agency) Anti-corruption Programme; Unilever Anti-corruption Programme; and Illovo Risk Management (Illovos anonymous tip-off system for employees, customers and suppliers, administered by Deloitte-Touche). The questionnaire noted that one key problem identified at the Leaders Forum was weak capacity in government and asked whether the causes of this problem had been identified. Some respondents considered that the problems had been identified and were being addressed by the various government organs such as the Anti-Corruption Bureau;
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while others thought the problems were still being identified. Some respondents remarked that there were some noticeable efforts but that it would take time to have impact. It was noted that the government has assisted the Initiative up to this point, but could do more, as could the Malawi business sector. One respondent expressed concern that the courts might not be helpful in fighting corruption. This question continued by asking if any of six listed points were causes of lack of capacity in government: lack of adequate training; inadequate salaries; lack of a code of ethics; defects in the reward systems; and lack of independence of public servants. Responses varied considerably, some respondents had difficulty identifying the causes, but each of the listed points was identified by at least one respondent as an underlying problem. A further question asked whether any steps have been taken to address the problems noted above. The answers varied. A government respondent indicated measures were being taken to address identified weaknesses in training, ethics codes and independence of public servants; private sector respondents were less aware of these developments. All respondents thought the programme would need time to work. The survey asked whether the Initiative against Corruption was being effectively publicized, and if so, who was responsible for the production and management of the campaign. The response was negative, with several respondents suggesting that more could be done to publicize the Code in the media, get public attention and engage the public, attract comments and demonstrate transparency. There was also a question as to whether there were anti-corruption train-the-trainer programmes for the work place, and if so, whether these programme were supported by business or other sectors. The response was that they do not exist yet, but that this would likely be part of supporting implementation of the Code. It was also noted that some businesses have shown leadership by adopting and supporting anti-corruption practices in their operations. A further question asked whether there were sanctions against corruption built into contracts, and if so, whether they were enforceable. A respondent commented that in companies that have adopted anti-corruption codes enforcement is through management commitment and good business management practices, and these are working well. There was also a question as to whether the prosecution function was independent and insulated from the possibility of political influence. Some respondents said yes, others said no, with one respondent mentioning the Kadwa case, concerns about the DPP and ACB, and risk of political interference. Finally there was a question as to what steps are being taken to target the next generation through ethics training for teachers so they can teach ethics in schools. Responses suggested that education in support of the anticorruption initiative was a good idea, to be considered seriously. One respondent thought that employees who sign the Business Code of Conduct would be likely to pass it on to the next generation. Another commented that the Business Code needs more publicity.

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