Frame of Reference for Integrity (summary)
The risks of fraud and corruption must never be underestimated: for this reason ENGIE created an Integrity Frame of Reference. Conceived as a positive management tool, it aids the fight against fraud and corruption.
Integrity is one of the four fundamental ethical principles that guides ENGIE and one that must underpin all professional practices and the people involved. Nevertheless, the Group operates in an environment that is increasingly susceptible to the risk of fraud and corruption. The backdrop of the global crisis and competitive pressure in the energy, services and water markets are bringing new pressures to bear, which can be felt in all sectors of business and at every level of responsibility.
In a bid to address this major challenge and within the context of the Group’s Ethics Policy, the ENGIE Executive Committee adopted a Frame of Reference for Integrity in July 2010. The Integrity Frame of Reference provides a modus operandi for implementing the principle of “firmly establishing integrity”, i.e., the program that can be used to combat fraud and corruption, a positive method conceived as a management performance tool.
In line with the ENGIE Group’s Ethics Policy as adopted by the Executive Committee in July 2009, the Integrity Frame of Reference is coordinated, within the General Secretariat, by the Ethics & Compliance Department. This department will draft the relevant core texts, devise priority action plans and the necessary tools for achieving good ethical practices within the Group, and will ensure the follow up of their implementation.
The Integrity Frame of Reference is aimed primarily at managers, who will be responsible for ensuring that the conditions in which it should be applied are met by their teams. On a broader level it also concerns every Group employee, whose individual behavior contributes to the overall expression of integrity promoted by ENGIE.
Part 1: Fraud and corruption, the main threats to integrity
I- Behave with integrity
Integrity is an excellent tool for enhancing performance as well as a sense of pride in being part of a team and for promoting cohesion. However, it can also pose a significant risk if there is a lapse in some part of the Group.
II- Fraud and corruption, a serious matter
Here are four enlightening facts to provide a better understanding of the scope of fraud and corruption:
- The fifth Global Economic Crime Survey conducted by PricewaterhouseCoopers (PWC) is unequivocal: the economic crisis is heightening the risk of fraud.
- Corruption: a global phenomenon in a globalized economy
- Fraud and corruption represent what are often significant and diverse risks for companies: strategy, image and reputation, economy and finance, internal cohesion.
- Jurisprudence emphasizes the sanctions for corruption and fraud.
III- Identify fraud and corruption: knowing the definition, type and characteristics of fraud and corruption is essential for being able to detect and prevent it.
IV- The regulatory landscape presents the two international documents that provide a framework for combatting corruption and their transposition into French law as well as amendments that are moving towards stronger legal constraints, increased criminal and civil liability for business leaders, and tougher sentencing for fraud in general.
- The 1997 OECD Convention on combatting bribery of foreign public officials in international business transactions, ratified by France and transposed into French law in 2000.
- The Council of Europe’s Civil Law and Criminal Law Conventions of 1999 and the UN Convention of 2003.
- The French law of November 13, 2007 on fighting corruption provides for a modification of the French penal system in line with the various international instruments ratified by France.
- American legislation (FCPA, Dodd Frank Act) and UK legislation (Bribery Act).
Part 2: Managing the risk of fraud and corruption in ENGIE
No company can claim faultless integrity in its practices: that is why it is a company’s responsibility to put measures in place to prevent the systemic organization of fraudulent practices. The system proposed for ENGIE has six risk management approaches.
I- Detect areas and particular situations that may be susceptible to fraud and corruption.
Respect for integrity is encouraged by monitoring sensitive areas, especially where local rules and regulations are concerned. We particularly insist on the need to systematically check the framework for using intermediaries, with relevant guidelines being provided for that purpose.
II- Refer to the Group’s existing management procedures as a base using the internal monitoring program, the risk management approach and the audit program.
III- Consult the appropriate experts in order to fine-tune our knowledge of the magnitude of fraud and corruption. The studies and tools provided by think tanks or initiatives of which the Group is a member are important documentary sources that can be supplemented by ad hoc studies.
IV- Deal with cases of fraud and corruption
Dealing with cases requires a good knowledge of the right contacts (managers, ethics officers, etc.), appropriate detection methods, analysis, resolution and reporting, as well as a fair understanding of the penalties that need to be imposed. Two fundamental principles must be observed in order to achieve zero-tolerance, in stages: any instance of fraud uncovered must be dealt with and any proven instance of fraud must be penalized.
V- The appropriate awareness and training are implemented within the Group to enable everyone to have the required skills according to their level of responsibility. Several modules are presented in the Integrity Frame of Reference.
VI- Evaluation benchmarks
Many external stakeholders judge companies on their ability to overcome risks associated with fraud and corruption, including non-financial ratings agencies, certification or anti-corruption organizations.
In order to flag up procedures and good practices in this field, the evaluation criteria used by several organizations are presented as examples in the Integrity Frame of Reference.