'Tone from the top' matters in fighting graft

At Kasikornbank, when it comes to corruption, actions mean more than words, and it is important that the actions start from the top.

"If a fish rots from its head, the entire body will be rotten. But if just the body rots, its head may be spared," said Teeranun Srihong, president of KBank.

Addressing some 20 top executives and directors attending a course by the Thai Institute of Directors (IOD), he stressed the importance of top executives setting the "tone from the top" to bind all staff at all levels.

The course was designed to strengthen Thailand’s private-sector-initiated Collective Action Coalition against Corruption (CAC), which has 449 members, 96 of whom have been certified  for compliance standards. Lessons from certified companies are being shared to reach a collective goal – a business environment with corruption reduced or eliminated.

Teeranun said zero tolerance of corruption from the top would set a clear culture, paving the way for effective performance by all staff.

"There are always people ready to abuse the system. It is necessary to ensure compliance at all levels," he said, citing research indicating that corruption in the Thai banking system caused damages exceeding Bt1 billion per annum.

"A clear culture will influence thousands of transactions executed daily. Eventually, compliance will produce greater benefits to the organisation than any external influence."

The management must play the leading role, strictly following the rules. At KBank, if important issues come up, the executives must clearly state the approaches the staff should follow. The management also has an independent supervisory board to watch for corrupt practices. Fraudulent practices will be reported directly to the management.

The operational risk committee convenes on a monthly basis, reviewing potential risks. It was noted that risk indicators skyrocketed whenever the soccer World Cup returned.

It is also the branch managers’ duty to monitor the lifestyles of all staff and clients’ transactions. For example, a client always withdraws a large sum of money for mutual-fund investment and yet, on that particular day, he just took the money without making an investment. Why?

Code of conduct

All KBank staff are required to uphold a code of conduct. Manning the internal control unit are veteran staff who have experience in different departments and thoroughly understand the work processes. Compliance officers are clear with their roles and have sufficient access to management.

Explaining that chief executives must be the primary custodians of a business’ culture, always visible to staff, Teeranun said only a strong anti-graft corporate culture would ward off corrupt practices, whether blatant or in grey areas. As well, written rules must be communicated to staff at all levels.

"A clear corporate governance structure can bring about great benefits to the organisation. It can create a competitive advantage, based on public trust without doubt. Sustainable business growth is assured while the organisation becomes a safe and sound workplace," he said.

In the half-day of training, participants were told why collective action is necessary.

In Transparency International’s Corruption Perceptions Index 2014, Thailand was ranked 85th, against 59th in 2005. Bandid Nijathaworn, president of IOD, warned that corruption diverts necessary funds from needed investment that would strengthen the country’s long-term competitiveness.

Bandid stressed that if the private sector were to spearhead the expansion of best practices in Thailand, it would require cooperation from a large number of companies, to stop illicit payments collectively and steer behaviour towards clean and corruption-free business.

A website – www.thai-cac.com – has been launched to be a discussion centre, and a new tool will be launched to receive tips on bribery payments from private companies.

As a founding member of CAC, IOD will hold another training course later this year to involve executives tipped to climb the corporate ladder.

Despite active participation, CAC still has a long way to go to eradicate corruption. To be certified, a company needs to put in place 71 measures. Though this can be completed in five months, commitment from the top is the essential part.

At the training session, Teeranun stressed: "Any company’s business goal is to maximise shareholder value. Yet we must also safeguard the benefits of other stakeholders. We just need to make sure that our profits are sufficient to take care of all stakeholders, which will ensure the organisation’s long-term sustainability."

In all this, "the CEO must be the primary custodian of the culture".