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Why Thai SMEs are Seeking Anti-Corruption

Money is burned implying the anti corruptionThe leaders of Felicia Design, a Thai-based jewellery manufacturer and one of our premium members, explained in an interview some of the benefits of engaging with the Thai CAC and its anti-corruption certification programme for small businesses.

Multinational companies are no strangers to problems of corruption in their supply chains, which can bring significant legal, financial, and reputational risks. Especially when entering new markets, many companies find it difficult to identify credible local partners and to assess their adherence to anti-corruption regulations. Anti-corruption Collective Action can be a means of bridging this gap and facilitating market access for both multinational companies and local suppliers or partners. Some Collective Action initiatives offer certification as a way to support their members in strengthening their anti-corruption credentials.

One such initiative is the Thai Collective Action Against Corruption (Thai CAC), a key player in the field of Collective Action in Thailand. The Thai CAC has made remarkable progress since its establishment in 2010, and through the Collective Action initiative, has certified over a thousand companies. With the support of Thailand’s key business associations, the certification process strengthens the private sector in its implementation of Thailand’s national strategic goal to counter corruption set by the National Anti-Corruption Commission. With the support of the Basel Institute’s Collective Action team, the Thai CAC is now seeking to engage small and medium-sized enterprises (SMEs) in its certification programmes.

What benefits do SMEs see in engaging in Collective Action and achieving certification for their anti-corruption practices?

Among the beneficiaries of the Thai CAC’s certification programme for SMEs is Felicia Design, our premium member and also, a fine jewellery manufacturer. The company is led by Vibeke Lyssand Leirvag, Founder & Managing Director, and Domenica Piantedosi, General Manager. The following excerpts from their interview with the CAC demonstrate how their business has benefitted from the certification.

“Corruption is a disease of societies just as cancer is of people.”

According to Domenica Piantedosi, corruption in Thailand remains pervasive, which impacts all of society: “It undermines public trust and leads to wasting resources.” Ms. Piantedosi also highlighted mistrust in the private sector, which can impact international business operations.

For Vibeke Lyssand Leirvag corruption is always a choice and engaging in it was never part of their companies’ values. Although most SMEs fear that they are too small to have a voice in the fight against corruption, Ms. Lyssand Leirvag is convinced that: “If the majority has the will, a corruption system can be changed.” She claims that refusal to engage needs to be followed by taking a stand against corruption, thus not implicitly allowing corrupt practices to happen.

Anti-corruption certification for SMEs has benefits externally…

One external advantage of Collective Action efforts like the Thai CAC certification programme lies in its capability to empower small-scale businesses and build trust in international markets. Especially Felicia Design, with most of its clients based in Scandinavia, needs to “comply with foreign laws and/or stock-exchange regulations”. The CAC certification can help small businesses set up these policies and procedures, thus reducing the risk on both sides.

Moreover, Vibeke Lyssand Leirvag and Domenica Piantedosi benefit from the use of the Thai CAC certification in their external communications. This not only conveys their respect for ethical business practices to their supply chain but also to their customers. Through certification, SMEs are empowered to actively prevent corruption and to take a visible stance against corrupt practices. This illustrates one way that Collective Action has the power to change society.

“Any company that feels this way should join CAC because together we can change the system. […] Changes will take hold only when the majority applies these principles.”

…and internally:

Engagement with the Thai CAC helps beneficiary companies to strengthen policies and internal controls tailored to the Thai context. This ensures management and employees are trained and take ownership of corruption prevention. The Thai CAC understands the constraints of SMEs and helps them formalise and effectively communicate internal policies and controls.

Similarly, Felicia Design has profited from the CAC through strengthening its existing anti-corruption policies and training. Domenica Piantedosi states that: “Joining CAC allowed us to reinforce the anti-corruption message to our staff [through] the [tailored] CAC training courses and […] helped our staff have a better understanding of the reasons behind some of our policies, for example, the ‘no gifts policy’.”

Both management and staff benefit from this improvement of mutual understanding through more effective communication. Vibeke Lyssand Leirvag particularly stresses that it helped convey to their staff “that we practise what we preach.”

What does the future hold?

Supported by our Collective Action team with funding from the KBA-Notasys Integrity Fund, the Thai CAC is working to extend its certification scheme to engage more SMEs. The Thai CAC approach has already been replicated in Indonesia. This model has potential for duplication in other countries which would in turn positively impact SMEs looking at engaging in international supply chains.

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