Conflict Management & Dispute Resolution report

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MACE 66061

Week 5

Professionalism, Ethics, Bribery, Corruption and Money Laundering

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Professionalism, Ethics, Bribery, Corruption and Money Laundering

• Explore Professionalism and ethics

– APM Code

– Engineering Codes

• Describe UK legislation

– Bribery

– Corruption

– Money Laundering

• Project Managers Professionalism, Ethics, Bribery, Corruption and Money Laundering

• Corruption by country – Transparency International

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Professionalism and Ethics

• What is Professionalism?

• What is Ethics?

• Why do professional institutions have codes of ethics? APM’s ethical values

integrity, respect and empathy.

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What makes a PM a professional

• Is it training? Is it payment? Is it intangible?

• Is it easier to say what’s unprofessional

• Is it that they follow a code of ethics?

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What is Professionalism?

– 1. the conduct, aims, or qualities that characterize or mark a profession or a professional person

– 2 : the following of a profession for gain or livelihood

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Ethics in project management

• All professional bodies like APM have a code of conduct to set standards to guide members and raise the level of trust and confidence of the public in the profession.

• APM requires high ethical standards, just as it requires high professional standards. Ethics, and ethical behaviour, is a key part of professionalism and therefore vital to APM’s chartered journey.

• High standards of ethical behaviour in the profession benefits everyone – the status of the profession itself is enhanced;

• the quality of the delivery of projects is raised;

• society benefits because project managers have completed their work to a high standard, not just on schedule or within budget, but with ethical responsibility.

• APM’s ethical values

– integrity, respect and empathy.

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What is Ethics?

– Ethics is : • Its really difficult to say

• SIMPLY: An institution’s moral code

• A system of accepted beliefs that control behaviour

• The study of what is morally right or not

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APM examples

• Examples

• Would you:

– give an honest quote, even if that means losing out to the competition (who may not be so honest)?

– stand up to a client if you felt they were asking you to do something unethical?

– consider how a project will impact on the wider community.

– https://www.apm.org.uk/resources/find-a- resource/ethics-in-project-management/

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Why do professional institutions have codes of ethics?

• Why do professional institutions have codes of ethics?

– SIMPLY PUT if you employ a chartered PM then you know she has to follow the institutions Code of Ethics/Code of conduct/Ethical values

APM’s ethical values act with honesty, integrity and probity. may-18-code-of-professional-conduct.pdf (apm.org.uk)

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Code of Ethics/Code of Conduct

• Conduct unbefitting/unbecoming

• Integrity

• Honesty

• Ethics is a cornerstone of a profession and separate professions/chartered orgs from non professions/chartered

• USA PE

• Look at APM, RICS, IMechE, ICE

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PMs and corruption • Why are PMs at the forefront of bribery and

corruption? – Public Works

– Many Contracts

– Pre Contract • [Bidding]

– Post Contract • Receiving tenders

• Managing Contracts particularly interim payments

• Operating Facilities

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Why consider corruption, bribery and professional ethics at all?

• The United Nations estimated amount of money laundered globally in one year is 2 - 5% of global GDP, or $800 billion - $2 trillion in current US dollars. https://www.unodc.org/unodc/en/money- laundering/globalization.html

• Engineering Projects and contracts are often identified as vehicles for corruption; be it bribery or money laundering. In 2017 British engineering giant Rolls- Royce apologised will pay £671m to settle corruption cases with UK and US authorities. https://www.bbc.co.uk/news/business-38644114

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Bribery & corruption in the UK

• The main legislation in the UK governing bribery & corruption is Bribery Act, 2010 which came into force on 1 July 2011. ... The act defines criminal offence of bribing another person, public official, being bribed & liability of commercial organisations to prevent offence of bribery

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Bribery Act 2010 Offences of bribing another person

• A person (“P”) is guilty of an offence if either of the following cases applies.

• (2)Case 1 is where—

– (a)P offers, promises or gives a financial or other advantage to another person, and

– (b)P intends the advantage—

• (i)to induce a person to perform improperly a relevant function or activity, or

• (ii)to reward a person for the improper performance of such a function or activity.

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Bribery Act 2010 Offences of bribing another person

• A person (“P”) is guilty of an offence if either of the following cases applies.

• Case 2 is where—

– (a)P offers, promises or gives a financial or other advantage to another person, and

– (b)P knows or believes that the acceptance of the advantage would itself constitute the improper performance of a relevant function or activity.

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Bribery Act 2010

• Bribery of foreign public officials – A person (“P”) who bribes a foreign public official (“F”) is

guilty of an offence if P's intention is to influence F in F's capacity as a foreign public official.

• Failure of commercial organisations to prevent bribery – relevant commercial organisation (“C”) is guilty of an

offence under this section if a person (“A”) associated with C bribes another person intending—

– (a)to obtain or retain business for C, or

– (b)to obtain or retain an advantage in the conduct of business for C.

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Bribery prosecutions and consequences

• Rolls-Royce apologised in court after settling bribery case

• Settlement of £671m means engineering giant will avoid being prosecuted by anti-corruption investigators in UK, US or Brazil [India, Thailand et al]

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Bribes or baksheesh

• At Graduation ceremony: – A student gives Peter Fenn a tea set and some tea [his region produces the

best tea in China]

• Bribe or not?

– A student gives Peter Fenn a £50 pound note to buy some tea

• Bribe or not?

– A student gives Peter Fenn a first class Air ticket to his country to come and help his government implement the famous Peter Fenn Mediation Scheme.

– Bribe or not?

» Does it matter if all these are before graduation, or 5 years later?

• A supplier invites a PM to box at Twickenham, gives a bottle of whiskey for Xmas, takes to Paris for the weekend – Bribe or not?

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Corruption

• the abuse of entrusted power for private gain, Transparency International definition of corruption

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Corruption by Country

• https://www.transparency.org/cpi2018

• Most Corrupt?

• Least Corrupt?

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Corruption by Country

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Money laundering

• Money laundering is the process of making large amounts of money generated by a criminal activity, appear to have come from a legitimate source.

• The money from the criminal activity is considered dirty, and the process "launders" it to make it look clean

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Money Laundering is a crime

• The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017

• Proceeds of Crime 2002

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Unexplained Wealth Orders UWO

• UK particularly London becoming a safe haven for corrupt individuals and their assets.

• UWOs – an investigative tool to help law enforcement act on corrupt assets. – Transparency International has been pushing for since 2014.

• UWO requires the respondent to explain how he lawfully acquired his assets. If he fails to respond or gives an inadequate response then this extra information can be used in a separate civil recovery process (an existing measure under the Proceeds of Crime Act) if law enforcement has gathered sufficient evidence.

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UWO example

• Person [Politician]has misappropriated millions of pounds from the health budget into his own pocket. To hide the proceeds of this crime, he decides to buy a multi-million pound property in London.

• The UWO requires the respondent to explain how he lawfully acquired his assets. If he fails to respond or gives an inadequate response then this extra information can be used in a separate civil recovery process

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Same question

• Why do PMs need to be concerned with bribery and corruption, Why are PMs at the forefront of money laundering? – Public Works and Capital Projects – Many Contracts – Pre Contract

• [Bidding]

– Post Contract • Receiving tenders • Managing Contracts • Operating Facilities

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Why is England so strict on Ethics, Money Laundering, Bribery and corruption etc?

• Reputation takes many years to build seconds to destroy

• UK plc makes a great deal of money from reputation

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Discussion threads

1. Week 4 1. What factors might affect collaboration/cooperation on Projects 2. If Conflicts are inevitable explain the dabbahwala. Maximum 100 words

2. Week 5 3. Your client wants advice, the client says a lot of cash via Crypto currency lies within

the client’s firm and seeks to use it for upfront payments on projects i.e. before the work is done. The client refuses to tell you any more and says “that’s our business, just arrange it”. Do you:

1. i. Refuse to go any further without an explanation. ii. Make the arrangements its not your business

4. Your firm is PM on a project for cleaning land contaminated by toxic waste, your engineers are concerned that one of the sub contractors intend to use a process that they maintain will only work in the short term and may cause more contamination later. And you’ll be gone. Do you

1. Go with the new process 2. Arrange a set of alternatives and their prices, and report your concerns

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