Social Responsibility Towards The Contractors, Suppliers and Government

Stopping Bribery and Extortion

Is the government the closest partner of business?

The government (public) is the closest partner of business (private) when it comes to good governance,
transparency, and human development. The identical objective of business and government is to bring
out a better society and strong republic. This partnership, nonetheless, has always been open to
corruption, fraud, bribery, and graft.

What is bribery?

- committed when a company or an individual gives a gift or makes a promise to any person in authority
for the purpose of influencing that official or influence-peddling with special offer.

- the giving of something of value to a person in a position of trust, who in turn violates his/her duty or the
law in order to benefit the giver.

Bribe

A bribe can be in the form of money or favor given or promised in order to influence the judgment or
conduct of a person in a position of trust.

Is it legal and moral?

It is a form of political corruption and is generally considered immoral.

What is extortion?

any form of taking or obtaining property from another person by means of illegal compulsion or
oppressive exaction. It is defined as a crime committed by an officer of the law, who, under cover of
office, unlawfully takes any money or other valuable.

What is moral accountability of briber and extortionist?

Sometimes one wonders who is more accountable: the entrepreneur who bribes in order to do business
or the government official who extorts.

What are the unhappy consequences of bribery and extortion?

Bribery can smash up a company’s reputation and undermine its license to operate.

Bribery and extortion are a betrayal of public and private trust in which the damage inflicted goes far
beyond the material value of the bribe.

Which countries in Asia were most corrupt from 2005-2012?

The Philippines was ranked one of the most corrupt countries in Asia. Meanwhile, the paragon of strong
and honest government is Singapore.

Can businesses avoid conflict of interests?

Do not offer gifts, benefits, or hospitality to officials during periods when important decisions are to be
made by them which will certainly affect the company.

Say ‘no’ to the giving or receiving of gifts, payments, entertainment or benefits whenever this can
influence a decision to be made, whenever the person intends to influence a decision, and also whenever
the parties involved or others could see this as a form of manipulation.

Customs regarding tips and fees differ depending on the culture.

How can social responsibility blend with culture?

These are universal values.

Don’t confuse bad practice with culture.

Respect culture without sacrificing values.

People want those companies with strong CSR policy

Fraud and Other White-Collar Crimes

What is corruption?

It may be defined as any dishonest or illegal practice that undermines the integrity of the organization.
Business integrity can be undermined from within the company, or as a result of pressures from outside,
or through involvement between staff and third parties.

Bribery

Fraud and deception

Vulnerabilities in contracting and procurement

Illegal information brokering

Organized crime

Money laundering

What is a white-collar crime?

White-collar crimes include illegal acts committed by upper-middle and upper-class personalities in
conjunction with their occupational pursuits. They are high-flying persons, with authority and a lot of
money, that corrupt sizeable systems and structures.

What is a conflict of interest?

It is an inconsistency that is man-made, premeditated, calculated, and intentional.

Disclosing confidential information to third parties

Accepting simultaneous employment with another company

Example:

How is fraud tied up with deception?

Fraud, defined as theft with deception, is a form of corruption.

A fraudster may seek direct gain or indirect gain.

The victims of fraud are not only the company and its bottom line, but also all employees, shareholders,
suppliers, and customers.

What are the types of fraud?

Diversion of company funds

Theft of assets, i.e., information, trade secrets and cash

Granting of inappropriate open credit

Fraud connected with bidding processes

Misrepresentation of seismic data on the amount or quality of reserves

Fraud in procurement and contracting

Invoicing and payments fraud

Deliberate non-performance

Theft of stock in transit

Computer fraud

Credit card fraud

Why are contracting and procurement also vulnerable to fraud?

It is because they are potentially high risk areas when it comes to maintaining business integrity.

The size and complexity of contracts.

New forms of contracts.

Counterfeiting of equipment and materials.

How do you deal with corruption?

The private company cannot protect itself always and completely from fraud. To reduce the potential
damage caused by fraud, operating companies have developed fraud investigation policies and
procedures – which must be conducted quickly as soon as possible fraud is detected or suspected.

F.A.S.T.R.A.C.K.

Flexibility
Alertness

Standing

Transparency

Release

Anticipation

Commitment

Knowledge

Corporate Duty to Pay Correct Taxes

What is taxation?

It is an organized mandatory system of raising money or revenue to finance government, support its
existence, and carry out its legitimate objectives.

How do governments justify taxation?

Imposing a tax burden

Determining its distributive impact.

How does distributive justice work in taxation?

Established on the principle of ability to pay, a fair share means those earners of the lower income
bracket should not be taxed as much as those of the high income bracket. Here, distributive justice is the
chief justification of a progressive system.

How does fairness work in taxation?

Fairness involves the ability-to-pay principle that determines whether the burden of a tax is distributed
fairly. One implication of this principle is horizontal equity which, among others, states that people in
equal positions should pay the same amount of tax.

What are the types and forms of income taxes?

There are generally two types:

Individual income tax

Corporate income tax

In the Philippines, you as an individual pay

income tax

when you begin to earn money;

consumption tax
when you spend it;

property tax

when you own a home or and, transfer of ownership inter vivos or mortis causa; and in some,

estate tax

when you die.

What is corporate taxation?

This is one of the most controversial types of taxes. Although the law treats corporations as if they have
an independent ability to pay, many economists note that only real people – shareholders – can bear a
tax burden.

Is corporate taxation a form of social responsibility?

Yes. The principle of justice simple means that each corporation should carry its fair share in taxation for
each fiscal year. The firm should not attempt to evade paying correct taxes to the government, whom is
considered one of the most important stakeholders of business.

How do you differentiate tax evasion from tax avoidance?

Tax evasion is a failure to pay legally due taxes.

Tax avoidance happens when taxpayers exploit some legally permissible alternative methods of
assessing taxable property or income in order to avoid or reduce tax reliability.

When does manipulation happen vis-à-vis corporate taxation?

Controllers (and even other officers) of some companies, by virtue of an attractive incentive package
offered to them, are tempted to manipulate and engage in creative accounting in order to satisfy the
shareholders’ needs and often times earns financial rewards for themselves along the way, either by
engaging in acts of equal to tax evasion or avoidance.

What is the role of ethics in taxation?

Corporate social responsibility requires that the behavior of business leaders and other members of the
organization are well founded in business ethics, even before they can do corporate citizenship.

>>Bribery is committed when a company or an individual gives gift or makes a promise to any person in
authority for the purpose of influencing that official. – A bribe can be in the form of money or favor given
or promised in order to influence the judgement or conduct of a person in a position of trust – Bribery
generally involves payments to someone to pervert the course of business by taking proper or illegal
action. Extortion is any form of taking or obtaining property from another person by means of illegal
compulsion or oppressive exaction. It is defined as a crime committed by an office of the law, who , under
cover of office, unlawfully takes any money or other valuable.

>>Fighting Fraud and Other White-Collar Crimes Corruption of human soul is called sin. This is true in
theology. Corruption may be defined as any dishonest or illegal practice that undermines the integrity of
the organization. Following are certain generic forms of corruption that can undermine business integrity:
1. Bribery 2. Fraud and deception 3. Vulnerabilities in contracting and procurement 4. Illegal information
brokering 5. Organized Crime 6. Money Laundering Fraud, defined as « theft with deception, » is a form
of corruption which all companies have to face.

>>Types of Fraud which company is exposed to include: 1. Diversion of Company Funds. 2. Theft of
Assets like computers, information and cash. 3.Granting of inappropriate open credit. 4. Fraud connected
with bidding processes. 5. Mispresentation of seismic data on the amount or quality of reserves. 6. Fraud
in procurement and contracting. 7. Invoicing and payment of fraud 8. Deliberate nonperformance 9. Theft
of stock in transit 10. Computer Fraud F.A.S.T.R.A.C.K. to Combat Fraud and Corruption

>>Corporate Duty to Pay Correct Taxes Taxation is an organized mandatory system of raising money
Or revenue to finance government, support its existence, and carry out its Legitimate objectives. In
taxation, there are two things to be justified: 1. imposing a tax burden 2. determining its distributive impact
Tax Evasion is a failure to pay legally due taxes. As they affect individual behavior, high tax rates affect
corporate behavior. Tax Avoidance happens when taxpayers exploit some legally permissible alternative
methods of assessing taxable property or income in order to avoid or reduce tax liability.