Project Management Ethics

The ethical standards required of project managers are increasingly being backed by the force of law. For a number of years the US Foreign Corrupt Practices Act (FCPA) has imposed legal obligations on organisations working, or with a presence in the USA and Australia has had similar provisions in its Criminal Code since 1999 based on the 1997 OECD Convention on Combating Bribery. Now the UK Bribery Act 2010, which came into force on 1 July 2011also places obligations on organisations world-wide. The UK law is intended to be the toughest legislation in the world!

The Act has wide application. It applies to those conducting business in the UK, including international companies. It also applies to those conducting business elsewhere in the world where they have a close connection with the UK, which includes bodies incorporated in the UK, Scottish partnerships, British citizens, British nationals and UK residents. Employees, agents and associated persons of a commercial organisation affected by the UK Act are themselves covered by the UK law and the organisation itself has strict liability if a person associated with it offers, promises or gives a bribe to another or offers, promises or gives a bribe to a foreign public official (with the intention to obtain or retain business or an advantage in the conduct of business for that organisation).

There are three main offences under the UK Act:

  • offering, promising or giving a bribe – i.e. a financial or other advantage;
  • requesting, agreeing to receive or accepting a bribe; and
  • bribing a foreign public official.

These offences can be committed by organisations, as well as individuals. An individual found guilty of any of these offences faces a maximum sentence of 10 years’ imprisonment and/or an unlimited fine; a convicted organisation will be liable to an unlimited fine. If any of these offences is committed by an organisation with the consent or connivance (i.e. knowledge and positive or tacit agreement) of a senior officer (or a person purporting to act as such) who has a close connection with the UK, the senior officer can also be prosecuted for the offence and faces a maximum sentence of 10 years imprisonment and/or an unlimited fine.

Corporations can reduce exposure to their liability by incorporating six core principles into their governance procedures:

  • Proportionate procedures: maintaining bribery prevention policies that are proportionate to the nature, scale and complexity of the organisation’s activities, as well as to the risks that it faces.
  • Top level commitment: ensuring that senior management establishes a culture across the organisation in which bribery is unacceptable, which may include top-level communication of the organisation’s anti-bribery stance and being involved in the development of bribery prevention policies.
  • Risk assessment: conducting periodic, informed and documented assessments of the internal and external risks of bribery in the relevant business sector and market.
  • Due diligence: applying due diligence procedures that are proportionate to the risks faced by the organisation; since an organisation’s employees are “associated” persons, appropriate due diligence may become part of recruitment and HR procedures.
  • Communication and training: ensuring that bribery prevention policies are understood and embedded throughout the organisation through education and awareness.
  • Monitoring and review: putting in place auditing and financial controls that are sensitive to bribery, including consideration of obtaining external verification of the effectiveness of an organisation’s anti-bribery procedures.

Defining the line between legitimate corporate hospitality which is allowed under the Act (provided it is proportionate and reasonable) and bribery will require the development of policies for both the provision of the hospitality and the receiving of gifts. For more on Governance see: http://www.mosaicprojects.com.au/Resources_Papers.html#Governance

With this law now in force, maintaining appropriately high ethical standards is becoming increasingly important. To download a copy of the PMI Code of ethics and professional conduct see: http://www.mosaicprojects.com.au/PDF/PMICodeofEthics.pdf

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One response to “Project Management Ethics

  1. Pingback: Ethics and Governance | Mosaicproject's Blog

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