BUSINESS ETHICS AND ANTICORRUPTION PRACTICES
IN LITHUANIA: REALITIES AND INITIATIVES
www.transparency.lt
Sergej Muravjov
A national instrument of
TI Lithuania – research of
the perception and
experience of corruption
by Lithuanian residents
and businesspeople
3.45
3.39
3.29
3.10
2.94
2.92
2.63
2.60
3.42
3.40
Emigration from Lithuania
Corruption
Drug abuse
Crime/violence
Small salaries
Environmental problems
Insufficient social support
High prices, inflation
Prostitution
Unemployment
Evaluation of the level of various social importance problems
ResidentsCompany managers
Scale: 1 – not a problem at all, 2 – not a particularly serious problem, 3 – a rather serious problem, 4 – a very serious problem
The importance of corruption, as one of the most serious social problems, is emphasized both by residents and company managers.
Residents consider small salaries and crimes/violence and company view emigration from Lithuania managers as more important problems than corruption.
3.65
3.64
3.57
3.44
3.28
3.23
3.23
3.06
2.98
3.58
Small salaries
Crime/violence
Corruption
Drug abuse
High prices, inflation
Unemployment
Emigration from Lithuania
Insufficient social support
Environmental problems
Prostitution
What does Lithuanian business think of corruption?
70.4 % believe or most likely believe that corruption is an obstacle for business
16.9 % believe that corruption has no influence on business development
Lithuanian Map of Corruption 2001-2005
What do Lithuanian business people think about bribes?
Lithuanian Map of Corruption 2001-2005
Have you given a bribe in the last 5 years? Have you given a bribe in the last 12 months?
Company managers
77%
20%
3%
Have not given Have given N/S
60%
37%
3%
Have not given Have given N/S
Lithuanian Map of Corruption 2001-2005
Have you given a bribe in the last 5 years? Have you given a bribe in the last 12 months?
Frequency of bribe-giving
Would you inform about corruption?
Lithuanian Map of Corruption 2001-2005
WHAT INITIATIVES DO WE HAVE IN LITHUANIA?
“UMBRELLA” CODES OF ETHICS
[ businesses say that they understand the usefulness of codes of ethics to their reputation but make little use of them in practice ]
CSR INITIATIVES
ANTICORRUPTION INITIATIVES
[ there is an increasing number of businesses that express willingness to take part in sectoral transparency initiatives ]
BUSINESS AND SOCIETY ( 21 CENTURY )
84 % [ business people believe that business should seek profit while also contributing to the well-being of the society ]
48 % [ believe that environment protection and global warming issues will have the
greater influence on their company value ]
38 % [ believe that increasing transparency of their company is the most effective single instrument that can improve
the reputation of their company ]
enlightened self-interest
unenlightened self-interest
The McKinsey Quarterly (2007)Source:
The McKinsey Quartely research (2007):
Is CSR important?
More than one-third of the same business people believe that the best way to achieve the same results is:
(1) developing, implementing policies on ethics and other CSR standards
More than one-third business people solve their social and political issues with the help of:
(1) media, (2) lobbying, (3) improving compliance with laws and regulations
HOWEVER
(2) media
(3) increasing transparency about the risks of products and processes
How do Lithuanian business people understand business
ethics and CSR initiatives?
there are no cultural obstacles
there is no resistance on behalf of employees
do not see any economic enticements
lack state support
do not see initiatives that would support socially responsible business
profit-making is essential – no “win-win” view on business activities
payment of taxes
following the law
securing work safety
employee health care
World Bank (2005)
EKT group study (2007)
UNDP regional project (2007)
CONDUCTED STUDIES:
Small and medium enterprises in Lithuania
81% [ Lithuanian SMEs think that businesses play
a very important role in the society ] 53% [ know what CSR is ]
28% [ SMEs carried out CSR related activities ]
“step by step” approach
EKT Group study (2007)
Development stages of responsible business in Lithuania
fromprofit company exists just to fulfill short-term interests of its share-holders
towards philanthropy company passively provides aid when asked
towards relationship with the community strategically weighted actions that accommodate communal insterests
towardsInvestments in the communitystrategic partnerships initiated by the company
towards sustainable business ethical, social responsibility and sustainability principles are integrated into corporate functions, goals and strategy
LT?
ANTICORRUPTION INITIATIVES IN PRIVATE SECTOR
State Technical Vehicle Inspectorate transparency study (2006)
“More Integral Medical Treatment” study (2007)
Transparency in Construction Sector Study (2007-2008)
“Towards Transparent Media” project (2007)
[ TRANSEKSTA, TILS, JTVP ]
[ TILS, Association of Ethical Pharmaceutical Companies, Association of Drug Producers, LR Ministry of Health, Union of Lithuanian Doctors ]
[ TILS, EIKA, REALTUS, YIT KAUSTA ]
[ NORDEN, TILS ]
PARTNERS: SIDA, ECCJ, OECD Watch, TI
Greater integrity in medical treatment (2007)
PHARMA COMPANIES’
Too much money spent on marketing?
Bad example – bad reputation?
Bad reputation will jeopardize future profits?
Lower confidence in pharmaceutical products; regulations will only become stricter?
Cannot pay facilitation payments any longer?
CONCERNS WITH DOCTORS
19% [ doctors believe that those responsible for medical recommendations often favor one particular company ]
23% [ doctors noticed that over the past 12 months at least one drug was unreasonably taken out from the list of state compensated drugs ]
65% [ doctors communicated with pharma company representatives 1-5
times per month over the past 12 months ]
85% [ doctors received inexpensive gifts ]
74% [ respondents received scientific literature]
27% [ communicated 6-25 times per month ]
Greater integrity in medical treatment (2007)
Who are threatened by non-transparent relations between doctors and pharmaceutical company representatives?
65 % [ believe it is the doctors reputation ]
54 % [ believe that it is the pharmaceutical company reputation that suffers ]
55 % [ believe that it is patients wallets that suffer the most ]
35 % [ believe that it is patients health that suffers the most ]
Transparency in Construction Sector (2007-2008)
80 % of businesspeople believe that connections with state officials responsible for territorial planning and constructions are important
60 % of businesspeople think that bribes are effective
32 % businesspeople state that municipal officials are the ones who ask for a bribe most often
Transparency in Construction Sector (2007-2008)
Proposed transparency instruments:
72 % - stricter rules and regulations
70 % - electronic system that manages granting of construction permits
67 % - electronic system that manages territorial planning
66 % - a differentiated payment to speed up administrative procedures
The results of the media integrity project (2007)
91 % [ business people believe or more likely to believe that unfavorable media can destroy personal reputation and
the company ]
To bribe media by advertising a lot or just paying for silence.
To make the problem seem smaller or just show that the a problem is unclear is very small.
To transfer the guilt to the state and the society.
WHAT SHOULD YOU START FROM?
intersectoral dialogue and partnership;
partnership with non-governmental sector;
evaluation of company performance;
consultations with specialists;
creation of new business processes and innovations.
TI BUSINESS PRINCIPLES (2003, 2008)
BUSINESS COMMITS:
to act honestly and transparently,
not to offer bribes directly or indirectly,
not to accept bribes directly or indirectly,
to prepare a program that would allow it to implement TI principles.
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