NATCOM has had a Code of Business Practices for many years; the most recent version dates from 1995, with some revisions since then. The code articulates the company’s values and vision and gives employees general directions for making ethical decisions on behalf of the company. The code uses deliberately simple language to make the corporation’s policies and values easy to translate and to be understood by employees around the world.
On corruption issues, the code notes:
Our policies account for the social and economic goals of each country where we do business. We abide by the national and local laws of the coun- tries in which we operate.
The code clearly articulates the company’s position on bribery and cor- ruption:
It is never acceptable to give, ask for, or take any form of bribe or induce- ment. This policy applies to every one of our employees in every country where we have operations around the world, even where bribery is consid- ered customary and/or necessary to conduct business.
The code provides guidelines for dealing with such problems as offer- ing or receiving gifts and entertainment (see box CS.11).
In preparing the code, the corporation sought feedback from employ- ees. More than 1,100 employees made comments on a draft version through the intranet. According to the director of the Office of Security and Auditing, the breadth of the reaction conveyed the extent of employee interest in and support for the ethics program. The company also conducted focus groups on the draft code in several EAP countries, in regional languages where necessary.
Implementation System
Noteworthy features of NATCOM’s implementation programs include communications and training, and employee certification.
Communications and Training
All NATCOM employees received a copy of the code on its release, and every new employee receives one during orientation. When the company revises the code, it provides new versions to all employees. The code is
Box CS.11. Excerpt from NATCOM’s Code of Business Practices:
Gift and Entertainment Policy
NATCOM’s gift and entertainment policy is fixed and does not vary with such factors as the holiday seasons or special events. Forms of gifts and entertainment include—but are not limited to—meals and beverages, travel and lodging, tickets for sports or cultural events, cash, services, and merchandise.
NATCOM considers gifts and entertainment as business courtesies that can help us to build positive business relations. In some cultures, giving gifts and entertaining are an important part of conducting busi- ness. Gifts and entertainment can pose problems when they interfere or are believed to interfere with the business decisions we make and the business actions we take.
In light of this, NATCOM employees may only offer promotional items (pens, calendars, etc.) to customers or prospective customers.
Entertaining clients should be restricted to modest and infrequent business meals or modest and infrequent sports or cultural entertain- ment. It should be noted that we may only offer our customers such tickets when we ourselves will accompany the customer.
This document cannot cover every instance that may arise with regard to appropriate forms of gifts and entertainment. Hence, if you are unsure about whether a gift or form of entertainment would be acceptable, you may wish to ask yourself:
• Is it of moderate value?
• Would I be comfortable giving or receiving this gift in front of my family or colleagues?
• Does giving this gift violate the law or the customer’s own code of business practices?
Finally, remember that an authorized employee must approve all gifts and entertainment in advance and that the expenses incurred through giving gifts or entertaining must be accounted for accurately and appropriately.
issued in regional languages and in several language variations (for example, complex versus simple characters in Chinese) for all of the EAP countries in which NATCOM has operations. The code document is avail- able on the NATCOM intranet site, where employees can download the text in any of the languages into which it has been translated.
To support the introduction of the code, a companywide training pro- gram in business ethics was developed by the Office of Security and Auditing with the help of the consultant on international business ethics.
All employees at every level attend half-day training workshops on busi- ness ethics, which contain a strong anticorruption component. Country managers deliver the business ethics training to employees around spe- cific functional areas so that employees with similar needs and concerns can benefit from group instruction and discussion. The training has been made as interactive as possible and includes case study and scenario exer- cises that are tailored to regional needs and the concerns of participants.
The training curriculum for all new employees and new managers includes an anticorruption and business ethics component.
Certification by Employees
NATCOM employees must sign an annual disclosure statement indicat- ing that they have received and read the code.
Reporting and Warning Procedures
Employees who have questions on ethics issues or who wish to report unethical behavior have several channels open to them. They can talk to their managers, contact the Office of Security and Auditing directly, call the help line, or contact regional ethics officers.
Help Line
The Office of Security and Auditing created a help line through which employees can articulate their concerns to the company 24 hours a day, seven days a week, in their own languages. As a telecommunications company, NATCOM was able to ensure that employees, no matter where located, would be able to contact the help line without technical difficulty.
An external security organization manages the help line on behalf of the company, documenting all the calls it receives from employees and trans- mitting this information directly to the Office of Security and Auditing.
NATCOM’s director of security and auditing explained that many employees in the EAP region have a culturally based apprehension about reporting violations—a sentiment that the company has also encountered
in Western Europe. “When it came time to introduce the help-line resource to our folks in Asia/Pacific, we wanted to make certain that it was communicated as a way to seek guidance and support from the com- pany, not as a means of reporting violations.” Both in the Code of Busi- ness Practices and in the training program materials, the descriptions of the help line were drafted so as to make it acceptable to employees in the EAP region.
The help line receives about 2,000 calls a year from around the world.
The proportion of calls from EAP employees is in line with the shares for the corporation’s other regions, suggesting that the help line has become a viable resource in EAP. In 2000 the chief concerns of EAP callers were conflict of interest (45 percent of calls), gifts and entertainment (20 per- cent), and bribery or facilitation payments (15 percent).
Regional Ethics Contact Persons
A network of regional business ethics contact persons was set up to offer employees an alternative channel for advice and reporting to ensure that employees know they can speak with someone in operations and can articulate their concerns in their own languages. These contact persons are NATCOM employees who, in addition to their routine responsibili- ties, are charged with being a source of guidance on business ethics issues.
They each receive an initial two-day training course and refresher courses every two years from the Office of Security and Auditing. In EAP there are currently four such contact persons spread throughout the region, each of whom has done the job ever since the ethics program came into effect.
Most often, they divide their time between ethics-related matters and employee relations, environmental concerns, and health and safety issues.
The director of security and auditing observes, “Issues have been brought to the forefront because of the existence of our safety valve [the help line and the network of ethics contact persons] and we are now in a much better position to address employees’ concerns.” The corporation has used the reporting channels as a way not only of becoming aware of and reacting to problems or potential problems but also of taking a more proactive stance.
EAP Governance Committee
NATCOM has created a Governance Committee in the EAP region made up of representatives from the Financial Audit Department, the Office of Security and Auditing, the Legal Department, and the Sales and Market- ing Division. The committee reviews any payment that may give the appearance of exceeding a facilitation payment. If an agent has questions
about a payment that he or she has been asked to make on behalf of the company, the committee meets to review the case and determine whether the payment is acceptable.
Bidding Reviews
The director of security and auditing explained that auditing require- ments do not specify that facilitation payments be recorded separately from the complete cost of a project or service fee. But to understand bet- ter how funds get allocated to facilitation payments and bribes, and how they may erode its profit margins, NATCOM tightened its review of the bidding process, focusing its attention on the costs at each phase.
The new reviews have revealed that increased costs are associated with third-party agents and representatives. As a result, NATCOM has tight- ened its policy on hiring agents and representatives; all agents and repre- sentatives must now sign an agreement that they have read and will adhere to NATCOM’s Code of Business Practices.
Long-Term versus Short-Term Benefits
NATCOM believes that it has lost business in East Asia and Pacific as a con- sequence of taking an uncompromising position against engaging in any form of bribery. For example, one prospective client was an EAP govern- ment that was well known for its high level of corruption. The company ten- dered a contract bid and was intent on respecting its policies by not resorting to bribes to influence the decisionmaking process. Local executives strongly suspected that the reason NATCOM lost the contract to a competitor was because of its strong position against bribing public officials.
When the corrupt government fell, NATCOM was able to secure the new government as a client. In fact, the new government refused to do business with any of the companies that had worked for the old regime.
Over the long term, NATCOM was able to establish business relations with this government while remaining true to its values and standards.
Implementation Issues
As calls to NATCOM’s help line show, judgments about the appropriate means of entertaining prospective clients, especially government clients, can be problematic (see box CS.12). EAP governments may provide extremely limited funds to their officials for business-related travel, and some government officials have even arrived at NATCOM facilities with- out any funds whatsoever. The director of security and auditing explains,