Memorandum submitted by BP
1. Corruption is an important issue for
BP and for many other companies with international operations.
It is not in BP's interests to engage in corruption, nor do we
believe it to be in the interest of host countries or our competitors.
2. Sometimes, however, the distinction between
what constitutes corruption and legitimate business incentives
can be difficult to draw for a manager working in different cultures.
Moreover, there can be forces at work which increase the temptation
to indulge in questionable business practices and which, although
counter-productive in the long-term, are mistakenly believed to
bring immediate competitive advantage. The purpose of BP's Ethical
Conduct policy is to ensure this does not happen.
3. In BP, we strive to institutionalise
barriers against corruption via our Business Policies. This is
being achieved by:
insisting upon internal transparency;
urging openness and transparency
from our partners, including governments;
refusing to collaborate in corruption,
even if this will entail local commercial loss and decrease our
4. It is in our commercial interests that
BP should be able to pursue its business interests in an open,
transparent environment; and in a meritocratic society - one in
which ideas and knowledge move freely within a clear system of
law and intellectual property rights. Such a society tends to
be both stable, and flourishing, and consistent with the group-wide
policies which govern all our business operations and activities.
5. An open, law-based, society tends to
be conducive to good corporate governance. Key criteria to having
good governance would be open markets (so that companies are able
to apply skills based on an efficient allocation of resources);
a liberal trade regime; development which benefits communities
rather than government ministers or privileged individuals; equitable
tax rules; and, fair and enforceable environmental regulations.
Good business requires good governance. The problem is that good
corporate governance in the absence of accountable, law-based,
institutions is extremely difficult to achieve.
6. However, the lack of such accountable,
law-based, institutions does not mean that companies can ignore
the requirement for good corporate governance. Just because a
country has a weak rule of law without a proper regulatory climate,
transparency or accountability, it does not excuse foreign investors
from the duty to resist corrupt practices. International companies
which do not pay sufficient attention to the ethical or regulatory
climate of the countries in which they invest are increasing the
risk to their own shareholders.
7. To reduce this risk, BP has developed,
first, our own set of policies to which we operate and, second,
an internal compliance system which checks our performance against
these values. The more that companies can impress upon governments
- through their own behaviour and example - that corruption is
counter-productive, the less widespread it will become. But corruption
is rather like blackmail. In certain circumstances, it can be
difficult to resist. And therefore there has to be in place within
company's policies and standards, which institutionalise opposition
to 'corrupt' practices. There is a need to reduce the temptation
to corrupt by increasing the transparency of governance mechanisms.
8. At BP we believe we can only substantially
reduce the risk to our shareholders by convincing governments
that we have a selfish and mutual interest in improving societies
for the better and in rooting out corruption. This is because
the deeper the corruption, the more negative will be the impact
on growth and development. This in turn widens the gap between
rich and poor, thereby contributing to growing instability in
society. The more unstable a society becomes, the greater the
risk of violence and human rights abuses and then the greater
the dilemma for the international investor.
9. There are a number of strategies BP can
pursue in order to improve the situation in a host country. We
can lead by example - which in practice means refusing to participate
in, or benefit from, any corrupt practices even if this poses
a short-term competitive threat to our operations in a particular
market or country. There are examples (albeit difficult to discuss
publicly) where BP has sacrificed short-term commercial gain through
a refusal to engage in practices outlawed by our Policies statement.
In addition, we can set clear standards for our contractors. We
can try to influence whenever it can be effective. But one important
lesson we have learned is that we get further by not lecturing
10. Bribery is the receiving or offering
of any undue reward by or to any person whatsoever to seek to
influence their behaviour and incline them to act contrary to
the principles of honesty and integrity. It is a form of corruption
and BP will never offer, solicit nor accept a bribe and nor will
we permit third parties acting on our behalf to do so.
11. Facilitating payments are, in some countries,
a normal means of obtaining routine low-level actions and/or approvals.
They can be distinguished from bribes which involve paying or
influencing someone to do something improper or illegal. BP's
preference is not to make facilitating payments, but where they
are essential to ensure business efficiency we tolerate them under
carefully controlled and transparent circumstances.
12. The following extracts from our Ethical
Conduct policy illustrate the expectations which BP has of our
staff - and in turn this policy is intended to protect individual
members of staff from corrupt advances of third parties. They
include such statements as:
"We will pursue our business
with integrity, respecting the different cultures and the dignity
and rights of individuals in all the countries where we operate."
"BP supports the belief that
human rights are universal. They are enshrined in the UN Universal
Declaration of Human Rights (UDHR), which we support."
"In our actions and our dealings
with others, we will:
Promise only what we expect to deliver, make
only commitments we intend to keep, not knowingly mislead others
and not participate in or condone corrupt or unacceptable business
Fulfil our obligations and commitments, treat
people according to merit and contribution, refrain from coercion
and never deliberately do harm to anyone
Act in good faith, use company assets only for
furthering company business and not seek personal gain through
abuse of position in the company"
13. What it is important to appreciate is
that our business policy on ethical conduct forms an important
part of our System of Internal Control. BP published a brochure
entitled "Ethical Conduct policy: Guidelines on Business
Conduct" in November 2000. It states the principles which,
if followed in all our actions and dealings with others, will
ensure that our reputation for acting with integrity is maintained.
The commitment and policy expectations describe the boundaries
for what is and what is not acceptable practice.
14. The updated brochure updates and improves
the guidance available to staff in interpreting the Ethical Conduct
policy. Historically, both BP and Amoco have had a form of ethical
conduct compliance for many years. Today, relevant members of
staff are required to register formally their understanding and
compliance with these requirements in an annual ethical conduct
certification process. The areas covered include BP's relations
with government officials, customers, suppliers and partners;
facilitating payments and political contributions; gifts and entertainment;
and the personal conduct which is expected in areas such as conflicts
15. These are just a few of the topics encompassed
by BP's "Guidelines on Business Conduct" which includes
the important provision that each member of staff should feel
able to speak openly about situations they feel unable to resolve
and to receive the support they need. They also provide an email
address and anonymous 24-hour telephone lines so that any known
or suspected criminal acts, ethical violations, questions or concerns
may be reported."
16. Increased public interest in, and concern
for, ethical issues (especially within Europe and the United States
of America)together with BP's growing spread of business
activitieshas obliged us to state less legalistically and
with greater clarity and transparency BP's attitude and response
to the ethical problems and issues which frequently arise during
the course of our business activities. This development has been
recognised in BP's corporate governance. BP now has a Managing
Director responsible for Group Policies and their Regional applications,
who sits on its Main Board, and who chairs the Ethics and Environment
Assurance Committee. In addition, he has reporting to him a team
of Regional Directors and Country Representatives who are accountable
to him for the assurance that BP's business policies are effectively
applied by the BP businesses operating within their regions, and
that BP's expectations on ethical conduct are met.
17. We recognise that many ethical decisions
are not clear-cut and that these need more than the application
of a simple set of rules in order to achieve resolution. These
decisions require judgement in arriving at the best way forward.
In cases of uncertainty, everyone working for BP is expected to
raise the issues with their management and colleagues to obtain
clarification. However, in deciding whether or where to do business,
we must feel confident that we can implement our policy commitments
in all our operations.
18. The Guidelines are particularly intended
for all employees who are responsible for company assets (cash
and physical), who are responsible for commercial or governmental
relationships, who have staff reporting to them who handle transactions,
and anyone whose behaviour is critical to our reputation. They
(a) A decision model which sets out a process
to help clarify issues and potential consequences.
(b) A fuller exploration of the issues which
most commonly concern BP staff, plus some experience of how best
to deal with them and, in some instances, rules that must be applied.
These issues include Human Rights; Legality; Political Contributions;
Bribery and Corruption; Agents, Advisors, Consultants and Other
Third Parties; Conflicts of Interest; and Gifts and Entertainment.
(c) Steps and tests which a manager might
apply to ensure the policy is in place and working effectively
in his/her organisation. It also covers information on handling
policy breaches, reporting incidents and losses, and the annual
ethics certification process.
(d) Additional information on the UN Universal
Declaration of Human Rights, the US Foreign Corrupt Practices
Act and other important laws, US political contributions, the
use of agents and other third parties, and conflict of interests.
19. Business Unit Leaders are responsible
for ensuring that the Ethical Conduct policy is understood and
put into practice within their Business Units, as part of the
process of ethical conduct certification referred to above. BP's
Regional Presidents and Country Presidents should be consulted
to ensure that the policy is appropriately aligned with local
laws and practices.
20. Wilful or careless breach or neglect
of the policy will be treated as a serious disciplinary matter.
Internal Audit, Group Security, and Legal can assist by providing
expertise to help identify an appropriate way forward. Confidences
will be respected and any fears or concerns will be dealt with
21. A copy of "Finding your way through
the maze - BP's Ethical Conduct policy: guidelines on business
policy" is attached to this submission.
22. Finally, all activities in the BP Group
will be subject to independent review at a frequency determined
by risk. The extent of independent review will be determined by
the internal and external auditors. Unrestricted access to staff
and documents will be provided (subject to legal constraints)
to Internal and External Audit on request.
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