Memorandum submitted by Unilever plc
Unilever welcomes the opportunity to submit
evidence to the Select Committee on International Development
as part of its inquiry into corruption.
Unilever's approach to eradicating corruption,
as far as is humanly possible, from its business dealings and
those of its business partners, is set out below. But the Committee
may find it helpful to bear one important consideration in mind.
Unilever does not typically require government
licenses to operate our businesses, nor are we involved in competing
for large state contracts or major infrastructure projects.
2. UNILEVER THE
The Committee may find it helpful to have sight
of basic facts about Unilever:
the principal areas of our business
are in branded and packaged foods, and home care and personal
among our brands are Blue Band margarine,
Magnum ice-cream, Lipton tea, Omo detergent, Organics shampoo,
and Calvin Klein fragrances;
Unilever is one of the most international
companies in the world with operations in more than 90 countries
and sales in over 60 more;
we employ some 265,000 people from
more than 100 nationalities;
about 50 per cent of our sales are
made in Europe, over 20 per cent in North America, and the remainder
in the rest of the world;
we are a company with Anglo-Dutch
origins and with two parent companies: Unilever NV in Rotterdam
and Unilever plc in London, which operate as a single entity;
strategic leadership is provided
by a seven-person Executive Committee, headed by the Chairmen
of Unilever NV and Unilever plc; and
Unilever is divided into a number
of Business Groups, each headed a President who is accountable
for all operational companies within the Group.
Unilever is therefore a company of great diversity,
both in its products and employees, and in the geographical range
of its operations. It is however important to note that the company's
Code of Business Principles and ethical standards apply to all
employees in whatever country they are working.
Unilever's Code has existed in varying forms
for many years In its current form it dates from 1995, but a revision
of the Code is currently in progress. A full copy of the Code
but the Committee might like to note in particular the following:
Unilever employees are required to comply
with the law and regulations of the countries in which they operate."
Unilever does not give or receive bribes in
order to retain or bestow business or financial advantages. Unilever
employees are directed that any demand for or offer of such a
bribe must be immediately rejected."
It is the responsibility of the Board of Unilever
to ensure that the principles embodied in this Code are communicated
to, understood and observed by all employees. An independent Internal
Audit function supports the Board in monitoring compliance with
The Code also specifies that Unilever will promote
its principles when engaged in joint ventures, and that compliance
with the principles will significantly influence entering into
or continuing with a joint venture.
Introducing a code is of course only part of
the solution to problems of corruption. What matters is how the
Code is communicated, monitored, and how breaches are detected
and dealt with.
The Code itself is issued to all full-time employees
of Unilever as part of their terms and conditions of service.
The basic principle that the Code applies to all employees is
Supporting guidance is available on Unilever's
internal website. We currently plan to bring together and expand
this material in an accessible written form which translates the
basic principles of our business conduct into clear guidelines
We attach great importance to systems which
identify and report on breaches of the Code, whether for bribery
or for other matters. The Code itself makes clear that employees
will not under any circumstances be penalised for reporting suspected
breaches of the Code to senior management or the Board. Moreover,
management is immune from criticism if decisions taken on the
basis of the principles result in a loss of business. Our aim
is to achieve a culture of transparency in which employees are
comfortable with the idea that they take responsibility for applying
the principles to their own behaviour and the actions of colleagues.
There are regular management systems in place
to ensure that breaches of the Code are uncovered and reported
to the appropriate level within the organisation. The company
secretaries are responsible for Unilever's Operating Framework
for Business Groups, which covers Unilever's governance structures
and operations from the boardroom to the supermarket. The operating
framework requires breaches of the Code to be reported by Unilever
companies immediately they are discovered.
In addition, once each year all Business Group
Presidents and Operating Company Chairmen are required to signify
to the corporate centre that their operations have been compliant
with the Code in the previous 12 months. These "positive
assurances" require operating companies to conduct their
own scrutiny of their operations. Subsequently, positive assurances
may be the subject of independent audit carried out by the Internal
Audit function, and deficiencies reported to the Board's Audit
Internal Audit also reports to the Board through
the Audit Committee every six months on the progress of cases
of suspected breach of the Code and the outcome of completed investigations.
Our policy is that any employee who has been
proven to have received or offered bribes is dismissed.
Our commitment to eradicating bribery and corruption
is firm. We do however recognise that in some circumstances facilitating
payments may be necessary. Facilitating payments are small-scale
payments made to local officials in connection with approving
documentation, achieving customs clearance etc. They are distinguishable
from bribery by the fact that they are normally publicly known,
and form part of typical custom and practice in a locality. They
also represent payment for the proper function of the official
concerned, rather than giving Unilever an advantage over its competitors.
Only in these circumstances are facilitating
payments permitted under the approval of the relevant Operating
Company Chairman, and if new payments are required, authorisation
must be given by the appropriate central management.
Unilever recognises that putting our own house
in order is not sufficient. As a multi-national business we have
a responsibility to work with government and civil society to
improve standards of conduct generally.
It is also in our own self-interest to promote
a climate of transparency and probity in countries in which we
operate: otherwise, our high standards may enable rival companies
to profit via corruption at our expense.
We have therefore been proactive in working
with a variety of organisations, especially the International
Chamber of Commerce (ICC) and the OECD in their anti-corruption
We encouraged the ICC to update and
revise its Rules of Conduct on Extortion and Bribery in International
Business Transactions in 1996. Following the revision, there was
extensive follow-up activity aimed at encouraging companies to
take appropriate measures and enhance their effectiveness in fighting
corruption and extortion. These Rules cover both private and public
We have worked closely with the OECD
through its Business and Industry Advisory Committee (BIAC) to
provide input to the preparation of the Convention on Combating
Bribery of Foreign Public Officials. BIAC set up a working party
under the leadership of a senior Unilever executive to ensure
that the business community was fully involved in the preparation
of the Convention. As the Committee will know, the Convention
came into force in 1998, and has been ratified by the UK government.
The OECD Guidelines for Multi-National
Enterprises (which are not binding, but have a significant influence
on the sector) were revised in 2000. Unilever chaired the business
delegation involved in the revision which resulted in the addition
of a chapter on corruption which closely follows the arguments
set out in the ICC Rules and the OECD Convention itself.
There are in addition related programmes of
work involving The World Bank, the IMF, the Organisation of American
States, and the EU, but Unilever is not directly involved in these.
We are however a signatory to the UN Global Compact which contains
a stipulation against corruption, and for which monitoring mechanisms
are under discussion with our support.
The Committee may find it helpful to have our
assessment of the success of these initiatives. In our view, the
programme of work undertaken by the OECD has been the most comprehensive
and effective, but we are concerned about the difficulties involved
in securing a level playing field. This requires much detailed
work within OECD and a strong commitment of the parties to the
Convention to overcome national barriers to effective international
judicial cooperation. BIAC is closely involved and we support
At the same time national business federations
should actively engage themselves in educating their memberships
and explain the consequences of the Convention. This should be
done in close cooperation with their respective governments, as
is for example the case in the Netherlands, alongside national
chapters of ICC as there is a close link with the ICC Rules on
Combating Corruption and Extortion.
Apart from the highly detailed and legal work
in making the Convention really effective, business has emphasized
the need for an effective attack on extortion and the solicitation
of bribes. The preamble to the Convention recognizes this as a
problem but does not include any provisions to deal with it. Although
combating extortion is a highly sensitive political issue, it
constitutes in many cases the other side of the coin in cases
of corruption. Work on this is in progress in consultation with
BIAC but progress is slow, given the problems involved. We would
welcome a more concerted approach to the issue by governments.
Another important element of the OECD Convention
is the issue of facilitating payments. The OECD Convention recognizes
that facilitating payments are not equivalent to bribery. The
same approach is taken in the Council of Europe's Convention against
corruption, which is currently going through a lengthy ratification
process. There is a clear difference of approach between US and
European companies in this area, and Unilever's policy is set
out in the previous section.
Furthermore, the issue of private corruption
merits closer attention. The Council of Europe Convention simply
covers all forms of corruption, the OECD one covers only public
sector corruption while the OECD Guidelines again cover both.
This shows the inconsistencies which can easily develop between
different instruments and blur transparency. The issue of private
corruption in itself is still under-researched - ICC is doing
good work but this progresses slowly, given the legal difficulties.
OECD has the ambition to cover also private corruption but should
do so only in close consultation with business, if the issue would
lend itself to be covered by a convention, which most specialists
There is a risk here of 'code fatigue' as governments,
multinational organisations, and NGOs produce separate initiatives
designed to tackle the same series of problems. For that reason
we would not support the idea of a single over-arching global
code on corruption unless it incorporated and replaced
the best provisions of existing initiatives. Otherwise, there
would simply be an increase in the incoherence which already exists.
Finally, these initiatives are important, but
they are largely led by European and developed world businesses
and organisations. Without programmes which enable capacity building
for governments, civil society, and businesses in the developing
world, there is a risk that genuine progress will not be made,
or that the result will be to the disadvantage of companies that
play by the rules.
6. CEASING TO
We are aware that the Committee has expressed
an interest in our actions in Bulgaria in March 1997 when we closed
our Representative Office and ceased to do business there. We
would be happy to explain this matter in more detail during questions.
It is important to note that we would take action
on these lines very much as a last resort. We do not readily walk
away from obligations that we have to employees, customers, suppliers,
and shareholders. In business terms, it may involve us in abandoning
a market position that will be swiftly taken over by competitors
and which may proved very difficult to recover. But, equally,
if we cannot work according to our own standards and values, then
regrettably we have to leave.
We trust that the foregoing has been helpful
to the Committee in tackling the complex but vital issues of corruption
and bribery. We look forward to answering the Committee's questions
on the subject and to supplying any further information that may
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