Siemens integrity initiative takes flight

Fighting corruption is at the core of the Aquino administration’s much publicized mantra of getting the Philippines back on the “daang matuwid” (straight path).

This governance promise has drawn praise from the business community—renewing and boosting local and foreign investor confidence levels soon after President Aquino made the declaration during his inauguration last year.

“We’re very excited now to be working with the present administration because our advocacy, in terms of clean business, falls in line or is in the same tune with the present government platform of eradicating corruption,” notes Jorel Nuyda, senior vice president and energy sector head for Siemens Inc. Philippines.

In an exclusive interview with Inquirer’s Business Monday, Nuyda explains that integrity is a “core” in the way Siemens, across all units worldwide, conducts its business and in dealing with customers, stakeholders, clients and even competitors.

So crucial is integrity to the global operations of the Germany-based Siemens AG that the global powerhouse for electronics and electrical engineering even has a 600-strong Compliance Organization, dedicated solely to ensuring all deals, activities and purchases by any of its units worldwide were all above board.

Compliance program

Geraldine M. Francisco, head of communications for Siemens Philippines, explains that Siemens has earlier instituted the Compliance Program, which was initially meant to detect, respond and prevent fraudulent activities and clear out its own ranks.

This program has since been recognized by the World Bank and the Asian Development Bank as effective in ensuring the highest ethical standards in conducting businesses.

“(The program) includes series of checks, controls and systems that involved the whole organization globally. All of us have to undergo compliance training because whatever we do, whenever we join a bidding process or purchase, and even all purchases has to strictly adhere to this compliance program,” Ms. Francisco explains.

Lose one than get a shady one

“There are a lot of traffic lights, so to speak, before we can proceed with a project or deal … We’d rather lose a project than go through one that can turn out to be shady. After employing the compliance program, the business even [flourished], gaining the trust even more of our customers,” Nuyda adds.

Francisco explains that the move to have a Compliance Organization stemmed from a previous incident in which some units of Siemens AG were reported to have been involved in bribery and corruption scandals in 2004. The Compliance Program was meant to be a “cleansing process” for the whole organization.

Following a World Bank investigation and the company’s acknowledgment of past misconduct in its global business, the two parties agreed in July 2009 on a comprehensive settlement, a part of which was for Siemens to help fund initiatives that can ward off corruption.

$100-million budget

In December 2009, Siemens then announced that some $100 million would be distributed over the next 15 years to nonprofit organizations worldwide that promote business integrity and fight corruption.

By the end of last year, Siemens began disbursing an initial tranche of $40 million to more than 30 initiatives from over 20 countries that have been selected. Around 300 nonprofit organizations from 66 countries had applied for funding during the first round.

Among the projects to be supported by this initial tranche included a clarion call for collective action from two Philippine-based organizations—the Makati Business Club (MBC) and the European Chamber of Commerce in the Philippines (ECCP).

Project: SHINE

Dubbed “Project: SHINE” (Strengthening High-level commitment for Integrity initiatives and Nurturing collective action of Enterprises advocating for fair market conditions), the joint undertaking was targeted to increase transparency and integrity in business transactions to create a more sustainable business environment in support of national development in the Philippines.

According to Siemens, the objectives of Project: SHINE include the standardization of business practices and codes of conducts and the creation of integrity pacts among participating companies.

“MBC and ECCP’s Project: SHINE … is in line with Siemens’ commitment to clean business. The project also supports the new administration’s drive to eliminate corruption so we can foresee effective synergies and cooperation along the way. Siemens is glad to be an enabler in all this through our partnership with the World Bank,” says Jacky Chan, president and CEO for Siemens Philippines.

In a previous statement released by Siemens, MBC chairman Ramon del Rosario was quoted as saying that this project helps the group “fulfill its mandate of engaging the business sector in the task of nation building. A level playing field is good for business because it brings in much-needed investments to stimulate growth.”

In the same statement, ECCP CEO Henry Schumacher also noted that the Philippines “has bled from the ill-effects of corruption for ages. The time is ripe for the business community to demand and practice change. It will certainly not happen overnight but Project: SHINE’s four-year plan is a significant step towards the ambitious objective of eliminating corruption in this country by effecting cultural change.”

“Corruption steals from the poor, and it can only be tackled on a joint basis. The projects of the Siemens Integrity Initiative will help strengthen the will to combat corruption worldwide and improve conditions for everyone,” adds Leonard McCarthy, integrity vice president for the World Bank Group.