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Accounting Forum
journal homepage: www.elsevier.com/locate/accfor

Anti-bribery disclosures: A response to networked


governance
Muhammad Azizul Islam a , Thusitha Dissanayake b , Steven Dellaportas b,∗ ,
Shamima Haque a
a
Queensland University of Technology, School of Accountancy, Gardens Point Campus, QUT, Brisbane 4000, QLD, Australia
b
RMIT University, School of Accounting, GPO 2476, Melbourne, Vic. 3001, Australia

a r t i c l e i n f o a b s t r a c t

Article history: This study examined the posited link between networked governance (the activities of
Received 25 March 2015 NGOs and the media) and the anti-bribery disclosures of two global telecommunication
Received in revised form companies. Based on a joint consideration of legitimacy theory, media agenda setting theory
23 December 2015
and responsive regulation, the findings show that anti-bribery disclosures are positively
Accepted 12 March 2016
associated with the activities of the media and NGO initiatives. The findings also show
Available online xxx
that companies make anti-bribery disclosures to maintain symbolic legitimacy but are less
prominent in effecting a substantive change in their accountability practices.
Keywords:
© 2016 Published by Elsevier Ltd.
Bribe
Responsive regulation
Media
Network governance
NGO

1. Introduction

Corruption in business such as financial misappropriation and kickbacks, is a term that addresses the illegitimate use of
one’s position or authority for personal benefit (for example, see Agbiboa, 2012; Jain, 1998; Misangyi, Weaver, & Els, 2008).
Bribery, as a subset of corruption is similarly defined as a financial or non-financial inducement to conduct business or to gain
an advantage that may not have otherwise occurred (for example, see Sanyal, 2005). Bribery in emerging economies is visible
in public procurement where officers circumvent protocols and assign transactions (e.g. tenders, contracts) to the bribe-
payer in return for a pecuniary benefit (Ntayi, Ngoboka, & Kakooza, 2013). Bribe-paying corporations attribute their actions
to local cultures and conditions claiming that bribery is a necessary cost of business. From the demand-side perspective,
the economic conditions (low socio-economic status), social values and the ethics of the recipient are cited as reasons for
accepting bribes (Baughn, Bodie, Buchanan, & Bixby, 2010). While bribery is commonly practiced to speed up work-in-
progress or expedite the issue of licenses (referred to as ‘facilitating payments’), bribery can also create a monopolistic
market position (Argandona, 2007; Gordon & Miyake, 2001; Shahabuddin, 2002). It is in the latter scenario that corporate
bribery has the potential to create a serious economic, social, political and moral blight by rewarding inefficiency and holding
back the economic and social advance of the local economy (Baughn et al., 2010). As a social issue, bribery has been linked
to a lack of growth, development, and inequality (Apke, 2001; Buscaglia, 1996; ERIS, 2005; Gray & Jarosz, 1995). In political

∗ Corresponding author at: School of Accounting RMIT University, 445 Swanston Street Melbourne VIC 3000 Australia. Tel.: +61 399255766.
E-mail addresses: azizul.islam@qut.edu.au (M.A. Islam), thusitha.dissan@rmit.edu.au (T. Dissanayake), steven.dellaportas@rmit.edu.au (S. Dellaportas),
shamima.haque@qut.edu.au (S. Haque).

http://dx.doi.org/10.1016/j.accfor.2016.03.002
0155-9982/© 2016 Published by Elsevier Ltd.

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terms, bribery erodes the credibility of political leaders and the legitimacy of the state, which in turn discourages foreign
aid because of the concerns that aid money will not be directed to its intended purpose (Agbiboa, 2012).
The effects of corporate bribery on society have mobilised a range of institutions including non-government organisations
(NGOs), trade associations and business organisations to stimulate anti-bribery policy development to check the supply of
bribery through the standards of corporate accountability, transparency and integrity (ERIS, 2005). The media similarly acts
as an intermediary in coordinating and communicating global concerns between corporations and its stakeholders. Together
the actions of NGOs and the media create an informal relationship known as ‘networked governance’ to engender compliance
with self-constituted anti-bribery rules. Commitment to these rules is enhanced when the effects of networked governance
raise community expectations so that corporations take corrective measures to combat bribery and disclose anti-bribery
measures through corporate reporting media. The global telecommunications services industry provided the relevant lens by
which to examine the effects of networked governance. The proliferation of market opportunities arising from the relaxation
of regulatory constraints around the turn of the 21st century has brought with it a number of transgressions associated with
public procurement inducements. The media has been littered with reports of corporate bribery while NGOs worked towards
the development of anti-bribery guidelines (OECD, 2011) and indices to improve corporate accountability (TI, 2009a,b).
The aim of this study is to examine the effects of networked governance, or the actions of media and NGOs, on the nature
and extent of corporate anti-bribery disclosures. The findings from an analysis of media articles, corporate annual reports and
sustainability reports, found that the initiation of NGO activities and increased media attention on bribery was followed by an
increase in the extent of corporate disclosures on anti-bribery activities. In order to better understand the nature of corporate
anti-bribery disclosures, the reporting media of two European-based global telecommunication companies (Alcatel-Lucent
and Siemens AG) were examined. These companies were selected because they were linked to extensive and high profile
bribery activity resulting in convictions among key company personnel and substantial financial penalties to the company.
An investigation of the reporting disclosures of these two companies, using interpretive analysis, found a combination of
substantive (disclosures of fact affecting change) and symbolic (creating the appearance of behaviour) reporting disclosures.
With the re-occurrence of bribery among these companies following previously disclosed preventative measures, suggests
that they were only partially successful in making a substantive change in their accountability practices.
Prior research on corporate bribery is centred on the economic, social and ethical impacts of such behaviour (for example,
see Apke, 2001; Argandona, 2007; George & Birmele, 2000; Hamra, 2000; Mauro, 1995; Rose-Ackerman, 1999; Sanyal,
2005; Shahabuddin, 2002; Sung, 2005). For example, McKinney and Moore (2008) discovered a deterrent effect on business
professionals when codes of ethics contained anti-bribery policies. Despite growing interest from political and economic
scientists, research on how global corporations’ combat bribery beyond a corporate code of conduct and how such measures
are disclosed is limited (Gordon & Miyake, 2001). The paper also brings the study of bribery into the social and environmental
accounting literature which is presently centred on issues and impacts arising in environmentally sensitive industries (e.g.
mining and chemical) (for example, see Cho & Patten, 2007; Deegan & Blomquist, 2006; Deegan, Rankin, & Tobin, 2002).
Furthermore, the specificity of legitimacy theory to explain corporate behaviour that is questioned by some commentators
(Deegan, 2002; Parker, 2005; Tilling & Tilt, 2010), led this research to draw on an analytical framework that combines
legitimacy and media agenda-setting perspectives with responsive regulation theory to understand changes in anti-bribery
practice.
The balance of this paper is structured as follows. The next section outlines the relevant literature and the theoretical
framework that combines specific notions of media-agenda setting theory, legitimacy theory and responsive regulation
theory to explore the potential motivation for corporate anti-bribery disclosures. Section 3 explains the research method
employed in this study that relies on a content analysis of bribery related corporate disclosures and news media articles.
Section 4 provides the results followed by a discussion of the findings in Section 5. Section 6 outlines the concluding remarks.

2. Theoretical framework

2.1. Media-agenda setting and legitimacy theory

Media-agenda setting theory is grounded in the journalism and mass communication literatures and is premised on
understanding how the media shapes public awareness, concern for particular issues and community expectations; and
how these issues end up on corporate agendas (McCombs & Shaw, 1972). Prior research suggests that media coverage
influences public opinion and public policy development (Barnes et al., 2008; Berger, 2001). Similarly, in business, the media
in its variety of forms (business press, web and visual medium) has a marked influence on establishing and influencing the
corporate image (Carroll & McCombs, 2003), agenda (Grafstrom & Windell, 2011) and practices (Mazza & Alvarez, 2000). To
the extent that the media can influence a corporation’s reputation and its public image as a responsible corporate citizen,
the media plays a significant role in the way in which stakeholders interact with corporate activities (Otubanjo & Amujo,
2012). The media-agenda setting effect on corporate agendas is especially strong for issues where the proximity between the
company and its stakeholders is distant and the media serves as a primary source of communication (Aerts & Cormier, 2009).
For example, Ader (1995) investigated pollution-related issues and found that the media-agenda and the public agenda were
positively related. Prior accounting research similarly demonstrates the role of the media in shaping community expectations
and in turn, influencing corporate communications (Brown & Deegan, 1998; Carroll & McCombs, 2003; Deephouse, 2000;
Islam & Deegan, 2010; O’Donovan, 2002). A shift in the position of mass media, particularly when the news is negative, will

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stimulate managers to respond with appropriate disclosure (O’Donovan, 2002). In the present study, the media is considered
an actor of networked governance that is expected to influence corporate disclosure in relation to combating bribery.
Legitimacy theory has emerged as the dominant socio-political theory to understand and provide insight on the moti-
vation for social disclosures. Legitimacy theory posits that in order for companies to continue their business operations,
their values must remain congruent with the value system of the society (Lindblom, 1994). When corporate activities are
inconsistent with community expectations, a legitimacy threat arises. Legitimacy theory provides the theoretical lens to
examine the interaction between companies’ reporting media and its physical and social environment (Owen, 2008). As a
precondition of continuous community and stakeholder support, legitimacy theory provides insight on why organisations
conform to the expectations of the community. When a corporation is publicly linked to a major incident with negative
social or environmental implications, a legitimacy threat arises and corporate executives respond via different communica-
tion strategies to inform the public of the organisation’s legitimacy seeking activities (Deegan, 2002). Empirical evidence in
accounting suggests that organisations facing a threat to their legitimacy via social and environmental incidents will take
corrective actions and make associated disclosures (Deegan & Blomquist, 2006; Islam & Deegan, 2010; O’Donovan, 2002).

2.2. Networked governance and responsive regulation

The notion of networked governance stems from responsive regulation theory proposed by Ayres and Braithwaite (1992)
and further refined by Braithwaite (e.g. 2000b, 2006a, 2006b, 2011). The basic idea of responsive regulation is that regulators
should be responsive to the conduct of those they seek to regulate in deciding whether more or less interventionist response
is needed (Ayres & Braithwaite, 1992). In particular, regulators should be responsive to how effectively corporations are reg-
ulating themselves before deciding whether to escalate intervention. When a deficit in corporate accountability is perceived,
regulatory actors such as the state, NGOs, and media, deepen their focus on corporate activities. This then causes corpora-
tions to become responsive to regulatory intensifications, a response in part to the threat to the corporation’s legitimacy
(Ayres & Braithwaite, 1992; Braithwaite, 2000a, 2000b, 2006a). Responsive regulation suggests that “if you [regulatee] keep
breaking the law, it is going to be cheap for us [regulators such as state, NGOs, media, community, civil actors] to hurt you
because you are going to help us hurt you” (Braithwaite, 2006a, p. 888). Therefore, regulatory intervention escalates if the
regulated actor fails to act responsibly. Movements in regulation then affect organisational practices including reporting
practices (Islam & McPhail, 2011).
In responsive regulation, deficits in accountability are checked by an empowered civic engagement via the combined
actions of NGOs, media, consumers, community or other social actors that Braithwaite (2006a) refers to as ‘networked gov-
ernance’. Networked governance is about how regulatory actors interact to address social issues like bribery. In responsive
regulation, actors work together in a networked governance system where weaker actors enrol the assistance of stronger
actors (NGOs) providing them with a cheap form of social control compared to traditional enforcement (Braithwaite, 2006b).
The transnational realm of responsive regulation is particularly beneficial to national regulators that face difficulty in detec-
ting and deterring errant behaviour when the regulated community is global and where breaching rules is cheap and easily
carried out. This is particularly relevant in developing countries, which have less regulatory capacity than their developed
country counterparts (Grabosky, 2013). International organisations such as Transparency International are well positioned
to play responsive regulatory role because they have global reach, broad mandates, neutrality and legitimacy stemming
from multilateral state membership (Abbott & Snidal, 2013).
This study posits that the relationship between networked governance (combined actions of the media and NGOs), media
agenda setting theory and legitimacy theory work together to reduce the incidence of bribery (see Fig. 1). Corporations con-
nected to acts of bribery set-off a reaction that enables the mobility and resources of the media and NGOs that condemns
corporate transgressions. The interacting effects of these entities create changes in global community perceptions through
media campaigns, NGO guidelines and regulatory interventions creating a legitimacy gap inducing a response from compa-
nies facing a threat to their organisational legitimacy (see Fig. 1). In addressing social issues like bribery, NGOs focus their
attention on the underlying need to improve the standards of corporate accountability and transparency through the devel-
opment of policy and guidelines. In response, corporations commit to the conventions of anti-bribery by adopting voluntary
codes of conduct and reporting such events through its communication media.
The media also has a role in checking the supply of bribery by naming and shaming transgressors when they report
incidents of social contraventions (e.g. bribery). According to Stapenhurst (2000, p. 4) “mere inquiries by reporters about
apparent wrongdoing can elicit pre-emptive responses by authorities eager to protect public image on their institutions
before any allegations have been aired.” NGOs working with the media help advance the needs of vulnerable populations
by transmitting their message to target audiences through the media that aid NGOs and other investigative agencies in
their plight to stem the supply of bribery (Deegan & Islam, 2014). According to Li (2001, p. 14) NGOs are the ‘masterful
manipulators of the media’. The media working together with NGOs become crucial partners in the fight against corruption.
This framework developed in Fig. 1 also considers Ashforth and Gibbs (1990) insight into symbolic and substantive corpo-
rate reporting strategies to secure community support. A substantive strategy is based on modifying employee behavioural
choices and organisational operations to impose change in operational routines and procedures to align company operations
with social expectations (Ashforth & Gibbs, 1990; Suchman, 1995). Substantive strategies in response to legitimacy threats
are characterised in corporate reporting literatures through the implementation and disclosure of guidelines and compli-
ance programmes. A symbolic reporting strategy aims to harness community acceptance in the absence of a corresponding

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Responsive regulation theory


Network Governance Corporate transgressions
(Bribery)
Media

Agenda-setting theory

NGOs
Demand for regulation
(Responsive regulation theory)

Other actors

Changes in global community


perceptions

Threats to

Legitimacy theory
Legitimacy (theory) gap organisational
legitimacy

Corporate communication
strategies

Substantive Symbolic
communication communication
strategies strategies

More Bribery Less


Likely Reduction Likely

Fig. 1. Responsive regulation and networked governance.

modification to the way the company performs. Extant research found that in some cases, disclosures on corporate social
responsibility does not always reflect corporate actions (e.g. Cho, Guidry, Hageman, & Patten, 2012; Cho, Laine, Roberts, &
Rodrigue, 2015; van Staden, Kern, McGuigan, & Wild, 2011). Therefore, in the scenario of “legitimacy defence” (Ashforth &
Gibbs, 1990, p. 181), the use of disclosure can be interpreted from a symbolic view, rather than a substantive view. More-
over, corporate social disclosure may be used to express an organisation’s embrace to adopt “socially acceptable goals while
actually pursuing less acceptable ones” (Ashforth & Gibbs, 1990, p. 180). O’Sullivan and O’Dwyer (2009) similarly highlight
how organisations may espouse socially acceptable goals through its reporting media but lack substance when information
that could undermine its legitimacy is denied, concealed or rationalised by deferring responsibility. Ashforth and Gibbs
(1990) refer to a symbolic legitimation strategy as a ‘double-edged’ legitimation in which the company is deemed to obtain
societal approval whilst allowing the organisation to operate in a ‘business-as-usual manner’. Under a symbolic strategy,
stakeholders’ perceptions of their companies are managed to create a favourable image (Elsbach, 1994; Fiss & Zajac, 2006;
Westphal & Zajac, 1994, 1998; Zott & Huy, 2007).

3. Method

3.1. Data collection and analysis

Corporate communication media advising stakeholders about the company’s economic, environmental and social, and
governance performance rely on two primary documents: annual and sustainability reports. Annual reports in particular
provide information to stakeholders on the financial health of a company including information on bribery when it has
actual or potential financial implications. However, as prior literature suggests, the content of social disclosure in annual
reports is limited, therefore this study also relies on disclosures in sustainability reports to capture the maximum number
of relevant disclosures (Unerman, 1999). The annual and sustainability reports were obtained from the company websites
supplemented with reports collected from the ‘OSIRIS’ database. The degree of importance that executives attach to the issue

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and the perceived threat to legitimacy is reflected in the extent of disclosures. Prior social accounting literature has employed
a variety of approaches to measure corporate disclosures including the number of disclosures (count of words, sentences or
pages), the extent of positivity inherent in the disclosures, or a combination of both (Deegan & Rankin, 1996; Haque & Deegan,
2009; Patten, 1992; Unerman, 1999). This study follows previous research by capturing the extent of corporate disclosures
through the number of sentences then assessing the extent of positivity using interpretive analysis. Consistent with Brown
and Deegan (1998), the content of disclosure is deemed negative when the information about the company or industry is
considered detrimental to the reporting entity, society and stakeholders (financial loss or other negative consequences arising
from bribery). The content of disclosure is deemed positive when the information is considered beneficial to stakeholders
(anti-bribery activities or other bribery reduction strategies). Consistent with the theoretical proposition provided in this
study, it is predicted that greater community concern for issues pertaining to bribery resulting from increase in networked
governance intensification, should be matched by greater corporate disclosures on combating bribery.
Globally, a number of NGOs including the Organisation for Economic Cooperation and Development (OECD), United
Nations (UN), Transparency International (TI), and World Bank (WB), continue to be active in developing and implementing
various anti-bribery policies and guidelines. The anti-bribery guidelines developed by these NGOs were used to develop
an anti-bribery disclosure categorisation index to classify and measure corporate disclosure practices (see Appendix 1).
The index developed from NGO guidelines were categorised based on five themes with a total of 44 sub-categorisations.
The general themes include: (1) Accounting for Combating Bribery; (2) Board and Senior Management Responsibility; (3)
Building Human Resource to Combat Bribe; (4) Responsible Business Relation; and (5) External Verification and Assurance.
This study relies on this categorisation scheme to collate and analyse data extracted from annual reports and stand-alone
sustainability reports on combating bribery.

3.2. Sample selection

This paper examines the corporate reporting media in the telecommunications sector. This sector was selected as it is
widely acknowledged as a distressed industry in relation to incidents of bribery (ERIS, 2005). For example, the telecom-
munication sector in India is considered to be the second most corrupt sector in the Indian economy (KPMG, 2011). The
magnitude of bribery in the telecommunications sector is explained in part by the increased level of public licensing in
emerging economies resulting from a relaxation of regulatory constraints allowing multiple service providers to participate
in previously closed markets (ERIS, 2005). In 1990, only three countries worldwide (Japan, UK, & US) allowed competition
in telecommunications; in 2005, there were more than 48 countries with two or more providers offering telecommunica-
tion services (ITU, 2008). The opening up of new markets created lucrative economic opportunities for telecommunication
companies, however, it also created a high number of bribery incidents (Argandona, 2001, 2007; Elliott, 1997; ITU, 2008;
Jain, 1998; Rose-Ackerman, 1999).
While bribery is likely to be a problem involving a number of organisations within the telecommunications sector,
the analysis undertaken in this paper is limited to the reporting media of two European-based global telecommunication
companies (French-based Alcatel-Lucent; and German-based Siemens AG). These two companies were selected because
of the amount of media attention attributed to bribery related incidents with these companies. Media reports of bribery
were collected from the Dow Jones FACTIVA database during the study period (January 1995–December 2010) using key
words search criteria that included “bribery”, “corruption”, “court case” “bribe”, “foreign official” “developing country”,
“prosecution”, to filter the number of media articles in the relevant period. A score of ‘1’ was allocated to a media article if it
addressed a bribery related concern in the telecommunication industry resulting in a total of 2283 media articles. The study
period (1995–2010) reflects significant events pertaining to public procurement in telecommunication services industry and
NGO activity during the 1990s. Market deregulation, the spread of telecommunication services, extensive and high-profile
bribery and the emergence of the anti-bribery movement all occurred in this period. NGO activity became prominent in the
1990s with the release of the: International Chamber of Commerce Rules of Conduct to Combat Extortion and Bribery in
International Business Transactions in 1996, revised in 2005; OECD Anti-Bribery Convention in 1997; the TI Bribe Payers
Index in 1999, the TI Business Principles for Countering Bribery 2003.
The data reported in Table 1 shows that a total of 451 media articles are attributable to the two companies examined
in this study (Alcatel-Lucent and Siemens AG), representing the major proportion of media attention on bribery related
matters in the telecommunication sector. Displaying the highest amount of media attention among the companies shown
in the FACTIVA database, the two companies combined represent almost 20% of media attention towards bribery in the
telecommunication industry placing them in the U.S. FCPA’s list of Top-10 recipients for financial penalties connected to
these incidents. The next three companies (not reported in this study) received a combined total of 1.92% of negative media
attention making the two companies under examination appropriate targets for investigation.

4. Findings

4.1. Bribe related disclosures

The data reported in Table 2 displays the amount of disclosures measured by the number of sentences reported in the
annual reports and sustainability reports during the relevant period, in total number of sentences, and for each of the five

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Table 1
Media articles relating to bribe incidents in Telecommunication Industry.

Year Industry total Alcatel-Lucent Siemens AG Two companies (total)

Number % of Ind total Number % of Ind total Number % of Ind total

1995 1 0 0% 0 0% 0 0%
1996 1 0 0% 0 0% 0 0%
1997 1 0 0% 0 0% 0 0%
1998 1 0 0% 0 0% 0 0%
1999 1 0 0% 0 0% 0 0%
2000 1 0 0% 0 0% 0 0%
2001 1 0 0% 0 0% 0 0%
2002 1 0 0% 0 0% 0 0%
2003 2 0 0% 0 0% 0 0%
2004 69 14 20.3% 0 0% 14 20.3%
2005 67 4 6.0% 0 0% 4 6.0%
2006 169 17 10.0% 23 13.6% 40 23.7%
2007 239 48 20% 52 21.7% 100 41.8%
2008 344 9 2.6% 22 6.4% 31 9.0%
2009 416 22 5.3% 14 3.4% 36 8.7%
2010 969 199 20.5% 27 2.8% 226 23.3%

Total 2283 313 13.7% 138 6.0% 451 19.7%

categories. For Alcatel-Lucent, disclosures in annual reports on combating bribery were first reported in 2001 with six
sentences increasing progressively to 147 sentences in 2010. An examination of the categories under the bribery disclosure
index found that the majority of disclosures relate to Category 1 ‘Accounting for Combating Bribe’ consisting of 361 sentences,
or 74.7% of total disclosures. Corporate disclosures on combating bribery under the remaining Categories fluctuated with
no apparent trend. Siemens AG displayed a similar pattern in its annual reports commencing in 2006 with 34 sentences
increasing sharply in 2010 with 180 sentences. Like Alcatel-Lucent, the majority of disclosures (304 sentences or 47.6%) were
reported under Category 1 ‘Accounting for Combating Bribe’. Similar to annual reports, sustainability report disclosures for
both companies commenced in 2002 with the majority of disclosures (99 sentences or 39.7% for Alcatel-Lucent and 179
sentences or 49.9% for Siemens AG) reported under Category 2 ‘Board & Senior Management Responsibilities’.
Overall, both companies appear committed to reporting larger amounts of information on combating bribery in the
latter years of the relevant period. The majority of disclosures relate to Category 1 in which companies report prohibitions,
offending behaviour, accounting related disclosures and remedial actions. The smallest amount of disclosures were reported
under Category 5 suggesting that companies were less active in seeking external verification of bribery reduction strategies.
The reported disclosures in sustainability reports were dominated by Category 2 information suggesting that companies
report accounting related anti-bribery in annual reports while management’s response or responsibilities to such issues
were disclosed in sustainability reports. Further analysis of positive and negative sentences (see final column of Table 2)
shows that the information disclosed in both annual and sustainability reports is predominantly positive suggesting that
companies feel a need to legitimise the existence of their operations by increasing the amount of disclosure of ‘positive’ or
‘good’ information.
Statistical analysis using Spearman Rank order correlations was undertaken to investigate the relationship between
media and corporate disclosures across the 16 years for each company and for each of the five reporting categories. The
results reported in Table 3 show that 19 of the 20 correlations for both annual reports and sustainability reports in both
companies were found to be statistically significant. The findings suggest that company reporting behaviour on bribery-
related activities correlate directly with the level of media attention on this issue. The positive correlations are consistent
with the broader legitimation strategy that sees an increase in anti-bribery disclosures to counter the damaging effects of
negative media attention in an attempt to maintain the company’s legitimacy. Similar results were found in industry based
correlation tests, where the correlations between negative media attention and anti-bribery disclosures were all positive.
This finding supports the view that all corporations within the industry respond to the potentially negative consequences
of a damaged reputation even when a single corporation within an industry violates the social norm.
The present study was developed on two levels of agenda-influence: the first level concerns how bribery is presented in
corporate media and what attributes are attached to them; and the second level is how the media and NGOs give attention
to the issue of bribery. Against this background, it is argued that by presenting and framing bribery in a particular way,
networked governance has the potential to influence a corporation’s attitudes to bribery. The association between NGO
activity and corporate response relies on interpretive analysis to link the corporate response with major NGO initiatives. An
examination of the reported disclosures in relation to NGO activities, a core component of networked governance, appears to
be intrinsically linked with anti-bribery disclosures (see Table 4). The promulgation of a major NGO initiative is followed by
an anti-bribery disclosure. The early work of the ICC, OECD and TI in the late 1990s was followed in 2001 with disclosures by
Alcatel-Lucent (see Table 2). The extent of disclosures escalated and became more visible in the 2000s where the activities of
NGOs also escalated. Most notably in 2007, 2008 and 2010, corporate disclosures followed the conventions and publication
of indices in the fight against corruption by the UN in 2005, World Bank in 2007, the OECD in 2009 and TI in 2010. The

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Table 2
Corporate disclosures on combating bribery (number of sentences reported): Alcatel-Lucent and Siemens AG.

Year Category 1 Category 2 Category 3 Category 4 Category 5 Total

Alcatel Siemens Alcatel Siemens Alcatel Siemens Alcatel Siemens Alcatel Siemens Alcatel Siemens

AR SR AR SR AR SR AR SR AR SR AR SR AR SR AR SR AR SR AR SR AR SR AR SR

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M.A. Islam et al. / Accounting Forum xxx (2016) xxx–xxx
1995 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
1996 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
1997 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
1998 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
1999 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
2000 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
2001 2 0 0 0 2 0 0 0 2 0 0 0 0 0 0 0 0 0 0 0 6 0 0 0
2002 2 2 0 0 6 0 0 3 2 5 0 0 0 5 0 0 0 0 0 0 10 12 0 3
2003 2 2 0 0 5 0 0 7 3 0 0 0 5 1 0 0 0 0 0 0 15 3 0 7
2004 5 14 0 0 7 5 0 0 4 3 0 0 3 4 0 0 0 0 0 0 19 (1) 26 0 0
2005 0 3 0 0 1 4 0 0 0 10 0 0 0 2 0 0 0 0 0 0 1 19 0 0
2006 33 1 13 0 5 14 11 0 3 1 5 0 6 2 2 0 0 0 0 0 47 (8) 18 31 (3) 0
2007 41 9 68 14 4 6 28 18 3 6 21 14 6 2 16 3 0 0 7 1 54 (7) 23 140 (8) 50 (2)
2008 52 8 72 35 4 14 26 64 4 0 22 19 5 2 17 28 0 0 8 5 65 (10) 24 145 (7) 151
2009 109 9 75 9 5 23 36 43 4 6 24 6 5 4 8 10 8 0 8 2 131 (12) 42 151 (9) 70
2010 115 16 76 17 7 33 59 44 3 23 24 8 2 6 6 6 8 4 7 3 135 (12) 82 (2) 172 (8) 78

Total 361 64 304 75 46 99 160 179 28 54 96 47 32 28 49 47 16 4 30 11 483 249 639 359

Category 1: Accounting for combating bribe.


Category 2: Board and senior management responsibilities.
Category 3: Building human resources to combat bribe.
Category 4: Responsible business relation.
Category 5: External verification and assurance.
AR: annual report.
SR: sustainability report.
(): negative disclosure sentences.

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Table 3
Correlation between average media articles and average disclosure for Alcatel and Siemens.

Category Media attention towards individual companies Media attention towards the industry

Alcatel Siemens Alcatel Siemens AG

AR SR AR SR AR SR AR SR

Category 1 +.821 +.856 +.948 +.832 +.872 +.891 +.79 +.78


p = .007* p = .000* p = .000* p = .000* p = .000* p = .000* p = .000* p = .000*
Category 2 +.649 +.969 +.961 +.678 +.695 +.963 +.875 +.719
p = .007* p = .000* p = .000* p = .004* p = .003* p = .000* p = .000* p = .002*
Category 3 +.711 +.781 +.942 +.836 +.808 +.677 +.878 +.780
p = .002* p = .000* p = .000* p = .000* p = .000* p = .004* p = .000* p = .000*
Category 4 +.753 +.753 +.952 +.799 +.822 +.764 +.844 +.797
p = .001* p = .001* p = .000* p = .000* p = .000* p = .001* p = .000* p = .000*
Category 5 +.587 +.463 +.801 p = .813 +.613 +.449 +.794 +.801
p = .017* p = .071 p = .000* p = .000* p = .012* p = .081 p = .000 p = .000*
*
p value of 0.05 or less is deemed to represent a significant finding.
AR: annual report.
SR: sustainability report.

Table 4
NGOs in anti-bribery activities.

1996 International Chamber of Commerce: Rules of Conduct to Combat Extortion and Bribery in International Business Transactions
1997 OECD: Anti-Bribery Convention and recommendations
1999 TI: Bribery Payers’ Index (BPI) introduced to evaluate the supply side of corruption
2000 OECD: Anti-Briber Convention recommendations on export credit and credit guarantee
OECD: The Stability Pact Anti-Corruption Initiative (SPAI) launched
UN: Tenth Principle of the United Nations Global Compact launched
2001 TRACE International: Anti-bribery compliance programme and Anti-bribery risk assessments 2001
TI: Introduced the “Corruption Fighters’ Tool Kit”-civil society experiences and emerging strategies developed further in 2002 and
2004
2003 UN: the General Assembly adopted the UN designated 9 December as International Anti-Corruption day
TI: Six steps implementation process, business principles for countering bribery, developed in 2009 with greater emphasis on public
reporting of anti-bribery and in recommending that external verification and assurance of their (business) anti-bribery programme
2005 UN: Convention against Corruption
2007 World Bank: new Governance and Anti-Corruption strategy
2009 OECD: recommendation for combating bribery of foreign public officials in international business transactions
2010 TI: Annual Corruption Perception Index (CPI) launched measuring the perceived level of public sector corruption in 178 countries
TI: Global Corruption Barometer (GCB) launched to assess public attitudes towards, and experience of corruption in countries around
the world

2009 OECD Anti-Bribery Convention in particular established legally binding standards to criminalise bribery of foreign
public officials in international business transactions. Consistent with legitimacy theory, the findings suggest that the level
of corporate reporting and activities to combat bribery respond to the growing intensity in NGO activities.

4.2. Symbolic or substantive disclosure strategies

The extent to which corporate reporting is a palliative response to fend off external criticism (symbolic disclosure) or
a function of effecting change (substantive disclosure) is a matter of some contention. Threats to legitimacy explain why
companies report positive news and avoid disclosing negative news. However, disclosing positive information without a
corresponding change to company protocols or member behaviour is arguably a symbolic legitimation strategy. An outline of
the major bribery incidents relating to Alcatel-Lucent and Siemens AG are reported in Table 5.1 Four specific cases of bribery
(two with Alcatel-Lucent and two with Siemens AG) were identified and examined to understand how these incidents
have been disclosed by the respective companies within their reporting media. In the case of Alcatel-Lucent, two separate
bribery incidents were examined (Costa Rica and Taiwan). The allegation of bribery in Costa Rica was seen as the company’s
most devastating incident of bribery. Company officials of Alcatel Latin America, pleaded guilty in the U.S. district court of
violations against the FCPA and were sentenced to 30 months imprisonment and three years of supervised release (Alcatel-
Lucent, Annual Report 2008). The former president of Costa Rica who accepted bribes from Alcatel-Lucent was sentenced
to five years in prison. Alcatel-Lucent responded to the Costa Rican incident in its reporting media by acknowledging the
bribe but denying harm to the Costa Rican people, without disclosing information on the case facts or how the company has
changed its systems or behaviour. These findings, and more general anti-bribery information disclosed by Alcatel-Lucent,
suggest that the disclosure strategy in this incident is symbolic rather than substantive.

1
The data in Table 5 has obtained and verified from a variety of sources that includes the media, the company’s own documents and NGO documents.

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Table 5
Examples of bribe related incidents in relation to 5 major telecommunication companies and their responses within their reporting media.

Company Bribe related incident News media highlights Whether and how company disclosed bribe related incident (Is
disclosure substantive or symbolic)?

Alcatel-Lucent Taiwanese officials “Taiwan Arrests 3 In In 2004 annual report Alcatel acknowledge this incident and
charged with being Alcatel Railway Deal mention: “Upon learning of these allegations, Alcatel
bribed to assist Bribery Scandal” Dow immediately commenced and is continuing an investigation
Alcatel-Lucent win Jones International into this matter. Alcatel terminated the former country senior
contract (2004) News. June 26, 2004 officer of Alcatel Taisel . . .. Based on the amount of revenue
received from these contracts, Alcatel does not believe a loss of
business in Taiwan would have a material adverse effect on
Alcatel as whole” (p. 102).
A top executive for the “Former exec of In 2006 annual report, Alcatel acknowledged concern bribery
Latin American Alcatel’s Latin allegation but defended by the following manner: “On August
business of the American business 31, 2006, the Costa Rican Attorney General’s Office filed an
Alcatel-Lucent faces charged with bribing amended complaint seeking compensation in the amount of
U.S. corruption charges Costa Rican officials”, $17.8 million for pecuniary damage caused generally to the
for allegedly bribing Associated Press (AP), Costa Rican people. Such amount is claimed on “provisional
Costa Rican officials Dec 6, 2006. and prudential basis”, and it may therefore be modified in the
with millions of dollars future. The amount of damages sought by the lawsuit filed by
to win lucrative ICE has not yet been specified. Alcatel-Lucent intends to
contracts (2006). defend these actions vigorously and deny any liability or
wrongdoing with respect to these litigations”. (Alcatel-lucent
annual report, 2006, pp.104–106).

Siemens AG A top executive from “Siemens boss paid No disclosures on Nigeria’s case within 2006 annual report. In
German Siemens who bribes to late Nigerian 2007 annual report, Siemens addressed this incident and
was arrested this dictator: report”, mentioned that the Munich district court imposed a fine of
month (November, Agence France Presse D 201 million on Siemens for committed bribery of foreign
2006) channelled (AFP), Nov 24, 2006 public officials in Russia, Nigeria and Libya in 77 cases during
between 75 and 100 the period from 2001 to 2004 (Siemens Annual report, 2007, p.
million euros a year to 279). However, there was no disclosure on this issue within
Nigeria in order to Siemens 2001–2004 annual reports.
secure contracts
Siemens was charged “US seizes money in In 2009–2012 Annual Reports, Siemens addressed this issue. In
for bribing Bangladeshi Bangladesh bribery September 2009, the Anti-Corruption Commission of
public officials to case” Associated Press Bangladesh (ACC) filed criminal charges against two current
secure its contracts Newswires, Jan 10, and one former employee of Siemens Bangladesh. Siemens
2009. Bangladesh filed a motion to dismiss the charges in October
2009. The court stayed its proceedings in November 2009.
However, in 2008, Siemens S.A. (Argentina), Siemens
Bangladesh Ltd. and Siemens S.A. (Venezuela) pleaded guilty in
federal court in Washington, D.C., to criminal charges of
knowingly circumventing and failing to maintain adequate
internal controls and failing to comply with the books and
records provisions of the U.S. Foreign Corrupt Practices Act
(FCPA). In connection with the settlements and other legal
proceedings in Germany, Siemens paid a total of D 1.2 billion to
authorities in the U.S. and Germany in fiscal 2008 and fiscal
2009.

Siemens AG was linked to two bribery incidents (Nigeria and Bangladesh). The incident in Nigeria occurred between 2001
and 2004 but the company was silent in its disclosures during this period, as was the media. The company first reported
this incident in 2007 following the outcome of the court case in 2006 in which a German court imposed a fine of D 201 m.
This response followed TI’s reply to the incident when it ended its relationship with Siemens AG after linking Siemens AG
with this fraud incident (The New York Times 2006). In 2007, Siemens AG reported the details of the bribery (an indication
of substantive disclosure) informing its stakeholders of the case and its various preventative measures. As of 2008, there
were a significant number of ongoing investigations into allegations of public corruption and bribery. According to the
sentencing remarks of the Munich district court, Siemens AG was linked to 77 cases of bribing public officials from 2001 to
2004 in Russia, Nigeria and Libya (Siemens AG, Annual Report 2008). Siemens AG announced that it would accrue a provision
of approximately D 1 billion in the fiscal year 2008 in connection with ongoing discussions with regulators (Siemens AG,
Annual Report 2008).
In general, the anti-bribery information was addressed in the annual reports and sustainability reports of the two com-
panies in response to media reports or NGO initiatives. Specific details relating to individual bribery incidents were initially
suppressed or small in number. The lack of specificity relating to the incidents in the companies’ reporting media suggests
that the companies adopted a symbolic legitimation strategy. Presumably, the symbolic disclosure strategy adopted by these
firms represented an attempt to deflect attention away from the negative connotations associated with particular incidents
and to focus attention on general anti-bribery activities. The problem with a symbolic legitimation strategy is the potentiality
of bribery reoccurring because of the absence to effect behavioural or attitudinal change among members of the corporation.

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This is evidenced by Alcatel-Lucent’s allegation of a second bribery scandal in Costa Rican two years after the incident in
Taiwan.
A substantive legitimation strategy became evident when both companies reported the nomination of a Chief Com-
pliance Officer along with the launch of a help desk and an international training programme to enhance employee
awareness on bribery-related issues. Siemens AG also responded to the Bangladesh bribery by announcing pre-
ventative measures that included a detailed anti-bribery code developed in collaboration with NGOs. Interestingly,
Siemens AG and Alcatel-Lucent provided substantive disclosures only when they were found culpable in a court
of law and a penalised financially. Both companies maintained a low profile in its communication media until that point.
Overall, the conclusions drawn from the data contained in Table 5 suggest that companies adopt a mixture of symbolic and
substantive legitimation strategies. The corporations responded initially with symbolic claims followed by a substantive
legitimation strategy subsequent to the outcome of legal proceedings that resulted in significant pecuniary fines. This begs
the question as to whether a company would have adopted a similar legitimation strategy if culpability was not established
in a court of law.

5. The influence of networked governance

The essence of responsive regulation is its networking capacity to gather numerous entities and allow them to inter-
regulate (Braithwaite, 2006a, 2011). A number of private and public organisations have contributed to developing consensus
on prohibited behaviours in relation to bribery. Particularly noteworthy are the activities of TI and the OECD’s Work-
ing Group on Bribery that have been integrated into company policy development (see Table 4). For example, a total of
38 countries agreed to put in place measures to prevent, detect and investigate bribery with the adoption of the OECD
recommendations against corruption (OECD, 2011). Despite an impressive global anti-bribery movement, the problem of
bribery remains. As Pacini, Swingen and Rogers (2002) argue, no one expects that any set of rules will eliminate efforts
to seek or accept bribes; this would require a fundamental change in human nature. There is however, an expectation
that a uniform set of rules could significantly curtail corrupt behaviours, as long as those rules are both enforceable and
enforced. Responsive regulation calls for a global collaboration between NGOs as agencies of bribery control, host countries
and business communities. The results of the present study suggest that networked governance is effective in connecting
regulatory actors however; the effects on altering corporate behaviour were only partially successful. The discussion that
follows seeks to explain the limited effect of networked governance through the lens of two key actors: NGOs and national
regulators.
A key aspect of responsive regulation is the voluntary nature of compliance with the principles and guideline developed
by NGOs, however, once adopted, it is left to the goodwill and promise of corporations to commit to them. The problem
here is that corporations may underestimate, or give too little thought to what is needed to comply. Furthermore, the
risks the regulator is concerned with will not always be the same as the risks corporations are focused on. Despite the
inroads of corporate social responsibility, corporations are ultimately concerned with ensuring their survival, growth and
financial returns to shareholders (Black & Baldwin, 2010). Networked governance creates a regulatory mechanism that
disciplines global companies socially by relying on soft inducements to gain voluntary cooperation, promote self-regulation,
and steer global corporations in desired directions. Abbott and Snidal (2013) contend that NGOs have two principal avenues
of regulating corporate behaviour. The first is to withdraw the benefits from membership such as the use of logos, as was
the case with Siemens AG and TI. However, this form of regulation is only available if the NGOs provide significant benefits
in the first place. The second is to move from positive to negative reputational sanctions. While the media has a role to
play in assisting NGOs to disseminate information on transgressors, presently this avenue remains underdeveloped. Most
NGOs have no mechanisms for reputational sanctioning other than publicly naming and shaming the errant organisation
and withdrawing membership where appropriate. Current evidence suggests that many NGOs resist publicising company
failings (Abbott & Snidal, 2013).
Another key weakness in responsive regulation initiatives is the lack of jurisdictional enforcement mechanisms. In many
developing economies where enforcement is weak, the regulatory cooperation associated with networked governance is
likely to fail when business goals are at odds with the public interest (Braithwaite, 2006b). Enforcement is further weakened
when activities are spread across different regulators, responsive regulation also becomes weak because the message flow-
ing between regulators and regulatees is confused or subject to interference (Black & Baldwin, 2010). Furthermore, while the
voluntary nature of regulatory cooperation represents a major strength of responsive regulation because it engages busi-
nesses in the purported cause; it is also its major weakness. The most important targets are the companies that are least likely
to participate or fully engage with the broader roles of NGOs to protect the public interest (Abbott & Snidal, 2013). These
issues are further complicated by the lack of uniformity in enforcement patterns across different cultures. Cultural mores in
each country provide differing views about the legitimacy of bribery as market behaviour (demand-side of bribery). This is
particularly true where competing cultures not only treat bribery as commercially acceptable, but also offer tax incentives
to encourage the behaviour. For example, tax law in several European countries, until recently, permitted tax deductions for
bribe payments made in foreign jurisdictions to obtain business (Milliet-Einbinder, 2008). The otherwise simplistic notion
that illegal behaviour is always unethical becomes more complex in a world where cultures maintain different baseline
ethical norms and notions of illegality (Calderon, Alvarez-Arce, & Mayoral, 2009).

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6. Conclusion

This study examined the relationship between the level of disclosures on combating bribery of two major European
telecommunication companies (Alcatel-Lucent and Siemens AG) and the joint actions of the media and IGOs directed towards
the bribe-related activities. The analysis in the present study indicates that corporate disclosures on bribery related matters
were prolific in the latter part of the 2000s and companies report positive news centred on Category 1 and Category 2
issues. Statistical analysis of the relationship between media attention and anti-bribery corporate disclosures found that
the disclosures were significantly associated with the media attention. The trend in these disclosures also coincided with
the expectations of leading NGOs who promoted their anti-bribery agendas and guidelines. The results are consistent with
the prediction of a positive association arising from the relevant socio-political theories that witnessed an increase in the
level of corporate anti-bribery disclosures corresponding with the joint actions of media and NGO initiatives. Regarding
legitimation strategies, evidence of symbolic and substantive disclosures was present but a substantive disclosure strategy
became apparent only when companies faced a significant financial penalty awarded by a court for bribery offences. Unlike
existing evidence suggesting that companies do not make substantive disclosures in relation to ‘bad news’ (Deegan et al.,
2002), the findings in this study imply that substantive legitimation are present depending on the circumstances of the
event.
Research regarding bribery is dominated by economic perspectives that from the demand side of bribery (bribe-taker)
reflects rational self-interested behaviour by persons using their discretion to direct allocations to themselves or others
in return for favourable treatment. The supply side of bribery (bribe-giver) reflects efficiency pressures, organisational
behaviour, and societal culture (Misangyi et al., 2008). An economically oriented approach suggests that bribery can be
minimised by fostering one or more of the disciplinary effects of government regulatory structures requiring accountability
and transparency and enforcement of punitive structures that make corruption illegal. The new generation of anticorruption
efforts built on networked governance involves both private and public actors, which, being not mutually exclusive, work
together to harmonise law, social and national interests (Calderon et al., 2009). The view taken in this study under a joint
consideration of responsive regulation theory, media agenda setting theory and legitimacy theory, suggests that networked
governance creates regulatory pressures that generate demand for greater accountability by global companies in relation to
corporate bribery. In regulatory collaboration, companies are targeted to promote self-regulation in different ways including
the media by sending targeted signals and through the soft inducement strategies of NGOs. The collaboration or networking
of key regulatory actors is expected to make them more powerful and more productive in reducing undesirable behaviour
than working individually. However, the evidence in this study suggests that the stemming of corporate transgressions was
only partially successful. The reoccurrence of bribery following the implementation of anti-bribery strategies suggests that
the temptation induced by the lucrative benefits of winning new business outweighed the pressures arising networked
regulation. It appears that it is only when companies are threatened with economic or performance is eroded through
punitive measures will they more likely respond.
The extent of corporate disclosures on combating bribery were associated with the combination of media attention and
the influence of NGOs that has not been fully considered or explored in prior research. Effective networked governance
in the form of external pressures has implications on the level of corporate transparency in relation to the elimination of
bribery. However, the association between the external pressures arising from NGO activities and management viewpoints
on networked governance at this current time is under-investigated and should be enhanced with further research. Further
research could examine the relationship between the media and NGO strategies as well as the effect of responsive regulation
on corporate behaviours in a variety of contexts utilising different methodologies and a larger sample.

Acknowledgements

This paper has benefited from the insightful comments offered by participants of the CSEAR Australasian Conference
held in December 2011 at the University of Tasmania University and at the 2nd National Forensic Accounting Teaching and
Research Symposium, February 2012, University of Wollongong.

Appendix 1. Disclosure categories on combating corporate bribery

1. Accounting for combating bribery


1. The company prohibits all forms of bribery whether they take place directly or through third parties.
2. The company prohibits its employees from soliciting, arranging or accepting bribes intended for the employee’s benefit
or that of the employee’s family, friends, associates or acquaintances.
3. The company, its employees or agent make clear commitments that they do not have direct or indirect contribution
to the political parties, organisations or individuals engaged in politics, as a way of obtaining advantages in business
transaction.
4. The company discloses all its political contribution.
5. The company ensures that charitable contribution and sponsorship are not used as a subterfuge for bribery.
6. The company publicly discloses all its charitable contribution and sponsorship.

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7. The company does not make facilitation payments and take initiative to identify and eliminate them.
8. The company prohibits the offer or receipt of gifts, hospitality or expenses whenever they could affect or be perceived
to affect the outcome of business transactions and are not reasonable and bona fide.
9. The company establishes and maintains an effective system of internal control to counter bribery, comprising financial
and organisational checks and balances over the enterprise’s accounting and record keeping practices and other
business process related to the programme.
10. The company maintains available for inspection accurate books and records that properly and fairly document all
financial transaction.
11. The company does not maintain off-the-books accounts. The company adopt financial and tax accounting and auditing
practices that prevent the establishment of “off the books” or secret accounts or the creation of documents which do
not properly and fairly record the transactions to which they relate.
12. The company subjects the internal control systems, in particular the accounting and record keeping practices, to
regular review and audit to provide assurance on their design, implementation and effectiveness.
13. Disclose number of violations.
14. Report number of dismissals of employee.
2. Board and senior management responsibilities
15. The board of Directors or equivalent body should commit to an anti-bribery policy and programme based on the
business principles and provides leadership, resources and active support for management’s implementation of the
programme.
16. The Chief Executive Officer is responsible for ensuring that the programme is carried out consistently with clear lines
of authority.
17. The board of Directors or equivalent body, Chief Executive Officer and senior management should demonstrate visible
and active commitment to the implementation of the enterprise’s programme.
18. The company makes compliance with the programme mandatory for directors and applies appropriate sanctions for
violations of its programme.
19. The company establishes feedback mechanisms and other internal processes supporting the continuous improvement
of the programme.
20. Senior management of the company monitors the programme and periodically reviews the program’s suitability,
adequacy and effectiveness, and implements improvements as appropriate.
21. Senior management should periodically report the results of the programme review to the Audit Committee, Board
or equivalent body.
22. Management offers dialogue with the NGO’s and public so as to promote its awareness of and co-operation with the
fight against bribery and extortion.
23. The audit committee, the board or equivalent body should make an independent assessment of the adequacy of the
programme and disclose its finding in the enterprise’s annual report to shareholders.
24. Management participation in any industry groups against corruption or bribery.
3. Building human resources to combat bribery
25. Human resources practices including recruitment, promotion, training, performance evaluation, remuneration and
recognition should reflect the companies’ commitment to the programme.
26. The human resources policies and practices relevant to the programme are developed and undertaken in consultation
with employees, trade union or other employee representative bodies as appropriate.
27. The company makes it clear that no employee will suffer demotion, penalty or other adverse consequences for refusing
to pay bribes even if such refusal may result in the enterprise losing business.
28. The company makes compliance with the programme mandatory for employees and applies appropriate sanction for
violations of its programme.
29. Directors, managers, employees and agents should receive appropriate training on the programme.
30. Where appropriate, contractors and suppliers should receive training on the programme.
31. Reports percentage of employees trained in organisation’s anti-corruption policies and procedures.
4. Responsible business relation
32. The company monitors the programmes and performance of joint ventures and consortia; in the case of policies and
practices that are inconsistent with its own programme, the enterprises should take appropriate action. This can
include: requiring corrections of deficiencies in the implementation of the programme; application of sanctions; or
termination of its participation in the joint venture or consortium.
33. Where the company is unable to ensure that a joint venture or consortium has a programme consistent with its own;
it should have a plan to exit from the arrangement if bribery occurs or is reasonably thought to have occurred.
34. The company ensures that remuneration of agents is appropriate and for legitimate services only. Where relevant, a
list of agents employed in connection with transactions with public bodies and state-owned enterprises should be
kept and made available to competent authorities.
35. The company contractually requires its agents and other intermediaries to keep proper books and records available
for inspections by the enterprise, auditors or investigating authorities.

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36. The company monitors the conduct of its agents and other intermediaries and should have a right of termination in
the event that they bribes or act in a manner inconsistent with the enterprise’s programme.
37. The company conducts its procurement practices in a fair and transparent manner.
38. The company avoids dealing with contractors and suppliers known or reasonably suspected to be paying bribes. It
should undertake due diligence, as appropriate, in evaluating prospective contractors and suppliers to ensure that
they have effective anti bribery programme.
39. The company makes known its anti-bribery policies to contractors and suppliers.
40. The company monitors significant contractors and suppliers as part of its regular review of relationships with them
and have a right to termination in the event that they pay bribes or act in a manner inconsistent with the enterprise’s
programme.
41. Reports number of contracts terminated.
5. External verification and assurance
42. The board or equivalent body should consider whether to commission external verification or assurance of anti bribery
policies and system to provide enhance internal and external assurance of the programme’s effectiveness.
43. Where such external verification or assurance is conducted, the board or equivalent body should consider publicly
disclosing that an external review has taken place, together with the related verification or assurance opinion.
44. Assurance statement explicitly covers programme reporting.

Disclosure Index developed from, but not limited to:

1. OECD (2008), OECD Guidelines for Multinational Enterprises-Section VI: Combating Bribery, OECD.
2. Transparency International (2009), the business principles for Countering Bribery-multi-stakeholder initiative led by
Transparency International.
3. The U.S. enacted the Foreign Corrupted Practice Act 1977 (FCPA).
4. The 2008 UNCTAD publication Guidance on corporate responsibility indicators.
5. UN convention Against Corruption (UNCAC).
6. Industry related group such as the anti-money laundering Wolfsberg group of leading banks, the Oil and Gas producers,
“Publish What You Pay” initiatives.

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