Illegal Logging, Corruption and Business

Presented by

Ken Rosenbaum

Sylvan Environmental Consultants

On behalf of the Forest Integrity Network

What is the Forest Integrity Network?

FIN is an informal network of professionals concerned about corruption.

FIN emerged from a 2000 conference on forest sector corruption at Harvard.

FIN’s focus is unique. FIN is now a project of Transparency

International.

Recent FIN Activities FIN produced a paper on tools for civil society

to fight forest-sector corruption. FIN reviewed a pilot project to source wood

fiber responsibly from Russia. FIN is turning its attention to approaches for

responsible businesses. FIN will be hosting a panel on business issues

at the IACC in Guatemala in November

Why are we talking about corruption?

Corruption is the Enabler and Accomplice of Illegal Logging

Corruption has been the Inconvenient Elephant that no one wants to mention:

A Miniature Case Study: with apologies to …

The Home Depot has a strong environmental policy

In particular …

The Home Depot has traced the origin of every wood product on its shelves.

The Home Depot will not accept imports of rare species such as Intsia bijua (Merbau) unless the supplier provides the export permit.

So how did this happen?

It’s really no surprise.

The forest sector has a poor reputation for honest operation in much of the developing world.

The good people in Indonesia are working hard to build honest governance, but they may not have succeeded yet.

In these conditions you can trust the paperwork.

What’s at risk for your business?

Shame: Bad Press Fines and Jail (Foreign Corrupt Practices

Act, Lacey Act in US) Unequal Competition and Closed

Markets: When your adversaries play a dirty game

Forest Businesses are coming to recognize the problem

Weinberg’s Pickle Principle

When you add a cucumber to brine, the cucumber generally gets more pickled than the brine gets cucumbered.

A small system that tries to change a big system through

long and continued contact …

… is morelikely to get changed

itself

This holds true for:

The small CSR office trying to change a large business organization

The arm of a business functioning in the economic and social milieu of a different culture

The small certification system exposed to business practices in a large society

Not everything in brine gets pickled

There are ways to counter the pickle principle

They require organization and management

Enter the Business Principles

The Business Principles for Countering Bribery

Started 2000 International steering committee Broad based membership Consultation and three field tests Released late 2002; rollout from 2003

Business Members BP plc

General Electric

HSBC

ISIS Assets Management

Norsk Hydro ASA

Organización Corona

Pfizer

PricewaterhouseCoopers Rio Tinto plc SAP SGS Société Générale de

Surveillance S.A. Shell International Sika AG Tata Sons ltd

What are theBusiness Principles?

Anti-bribery framework for business promoting: Good business practices Risk management

For use by companies of all sizes

Basic Elements Parallel Environmental Management

Adopt high-level policy against corruption Make resisting corruption everyone’s

responsibility Communicate this to employees Set up internal controls & audits Etc.

Six step implementation plan

StepStep11 22 33 44 55 66

ActionAction Decide to adopt an ABP

Decide to adopt an ABP

Plan imple-

mentation

Plan imple-

mentation

Imple-ment

Imple-ment

Develop ABP

tailored to the

business

Develop ABP

tailored to the

business

MonitorMonitor Evaluate

Evaluate

Primary responsibility

Primary responsibility

Ethics officer/Internal and external auditors

Appointed senior manager/line managers/HR depts/business partners

Appointed senior manager/HR dept

Appointed senior manager/Project Team

Owner of company/Board/CEO

Owner of company/Board/CEO/Audit Committee

Time spanTime span One monthOne month Continuous

Continuous

One yearOne yearThree to six months

Three to six months

At least annually

At least annually

Three to six months

Three to six months

Contact Information

FIN:Andrea Figari fin@transparency.org

Programme Manager, FIN Transparency International

Alt Moabit 9610556 Berlin, Germany

+49-30-3438 20655 +49-30-3470-3912

www.transparency.org/fin

Business Principles:

At TI-UK: Peter Wilkinson

At TI-USA: Susan Côté-Freeman