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What is Collective Action?

Collective Action – building alliances against corruption

In the face of the widespread and deep-rooted corruption problem that affects society in general, governments, their procuring entities and the private sector in equal measure, it seems highly unlikely that individual activities alone will be sufficient to bring about significant ethical changes and improve the transparency of business processes.

 

This is precisely where Collective Action methods become important: Collective Action enables corruption to be fought collectively, with various interest groups, working together and building an alliance against corruption so that the problem can be approached and resolved from multiple angles.

The advantages of Collective Action:

  • Collective Action describes various methods of combating corruption. It is a matter of acting collectively and forming alliances against corruption. Collective Action calls for cooperation on the part of participants from the worlds of politics, business and society at large.
  • The ultimate goal is thereby to create fair and equitable market conditions, that is a "Level Playing Field", for all marketplace participants and to eliminate the temptation of corruption for all those concerned.
  • Collective Action helps to set up the conditions for fair competition within a corrupt environment.
  • Collective Action promotes innovation, as the bidder is selected solely on the basis of price, quality and capacity to innovate.
  • Observance of anti-trust law when collaborating with other companies must be ensured by a neutral monitor (e.g. in the form of a non-governmental organization).
  • Collective Action can, if necessary, cover gaps in legislation or replace or augment inadequate local law.

Project-specific methods – Integrity Pacts

At Siemens, the Collective Action methods encompass project-specific, sector-wide and long-term initiatives.

Integrity Pacts ensure that the award of orders in the case of public-sector contracts is free from corruption. They were developed by the non-governmental organization “Transparency International”, and are intended to guarantee transparency in the order-awarding process and to rule out bribery in the awarding of public-sector contracts.


Following an invitation to tender from a public-sector customer, the bidding companies sign legally binding contracts, and commit themselves to behave with integrity from the start of the tender process until the end of the project. If the contract is breached, sanctions are imposed which can be as severe as the exclusion of the company from further invitations to tender. An independent monitor supervises the contract-awarding process and observance of the Integrity Pact.

The Integrity Pact ensures that the bidder is selected on the basis of fair criteria, and serves all the stakeholders as a means of protecting the integrity of the project.

Sector-wide codes of conduct

Companies from the same sector get together and draw up a code of ethics or code of conduct. These can take various forms, ranging from principles-based provisions to legally binding agreements. In the latter case, companies that violate the anti-corruption code are penalized with sanctions. However the principles-based codes also have a high degree of effectiveness, as the public commitment to anti-corruption and transparency exerts increased pressure on the participating companies not to breach the agreement. This type of Collective Action is particularly suitable in oligopolistic markets. The uncompromising support of senior management within the companies concerned is critical to the success of the initiative. In order to avoid breaches of anti-trust law, it is vital to enlist the services of an external, independent monitor.

Long-term initiatives

Long-term initiatives are particularly effective in states rated as being prone to corruption, as they pave the way to the establishment of an anti-corruption culture. Collaboration between government, commercial companies and society in the fight against corruption contributes to the raising of awareness among politicians and the general public. The acknowledgment that bribery and corrupt behavior damage the entire economy of a state brings long-term benefits for all stakeholders. Long-term initiatives set out the fundamental conditions that will enable project-specific Integrity Pacts and industry-specific Compliance Pacts to come to fruition and achieve general acceptance. Their success contributes towards a world free of corruption and helps to direct the investment of many millions of dollars and other resources towards their intended destination.

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