Excessive pathetic

Managing Partner of WinnerLex Law Firm, Anna Vynnychenko, provided a comment on the article “Excessive Pathos” in the “Business” newspaper.

The topic of business ethics in Ukraine has been discussed for a long time, but a more detailed study of this issue began a few years ago as part of the discussions on corporate social responsibility (CSR).

“In our company, there are six CSR areas, which are managed by the CSR committee at the headquarters. However, each area is overseen by a specific department—both at the headquarters and in local offices. For example, the operational department is responsible for occupational safety and ecology, the legal department handles business ethics, and the HR department deals with labor rights. Therefore, we don’t see the need to create a separate ethics committee, as the legal department is responsible for implementing and realizing business ethics principles overall,” says Natalia Bondarenko, Legal Director of Carlsberg Ukraine (Kyiv, producer of low-alcohol beverages in Ukraine since 1996; 3,500 employees).

Her words confirm the growing practice in Ukraine, where companies, concerned about their ethical reputation, prefer not to create additional structures.

Employee conduct norms and rules are typically outlined in internal documents with either mandatory or advisory nature, and control is entrusted to various departments.

For instance, dress code and employee behavior fall under the authority of the HR department, while “kickbacks” and gifts are monitored by the security service or the legal department.

In Western corporations, unlike domestic ones, the operation of ethics committees—designed to uphold the honor and dignity of their organizations—has long been an established practice. The structure, powers, and staff composition (usually senior managers) of such committees are clearly regulated.

Such bodies typically deal with extraordinary events: employee involvement in “kickbacks,” offering or receiving bribes, etc. In Ukrainian companies, pure ethics committees or similar bodies have not yet found their place, but promising seeds of such structures are emerging.

For example, at the international consulting company Ernst & Young (Kyiv, operating in Ukraine since 2001; around 400 employees), quality and risk control are ensured through several methods, including decision-making procedures for client cooperation, annual client surveys, global independent audits, and yearly training on maintaining independence policies.

Additionally, the company operates a “hotline” for corporate ethics matters, as well as a special anonymous online EthicsPoint platform on the website, which collects inquiries and forwards them to responsible individuals from the management or legal department.

Through the “hotline,” one can report actions that contradict ethical requirements, regulations, professional standards, or the company’s corporate behavior code. In the Kyiv office of Ernst & Young, there are also special boxes for submitting anonymous reports.

Man to Man – A Friend

In the absence of specialized “ethical” control bodies in Ukrainian companies, it is considered necessary to appoint an employee responsible for overseeing preventive work.

For example, at Kyivstar (Kyiv; telecommunications; operating since 1994; 5,000 employees), according to Svyatoslav Senyuta, head of the corporate and legal department and deputy compliance manager, the “Corporate Code of Conduct” (CCC) was adopted in 2004, which outlines the standards for proper business behavior and ethics for employees.

“The Code regulates the internal life of the company, interactions with business partners, clients, and the public. For example, it defines situations where a conflict of interest arises, which gifts are unethical, what constitutes ‘material inside information,’ etc. If an employee encounters a situation during their work that contradicts the CCC or simply wants to clarify issues related to business ethics, they can turn to the manager responsible for ensuring compliance with the Code. This position is called the ‘compliance manager,'” explains Mr. Senyuta.

Additionally, employees can submit complaints, suggestions, or seek advice on problematic situations through a special electronic form on the internal website.

All inquiries, including anonymous ones, are reviewed. Based on the analysis of these inquiries, the compliance manager can initiate a corporate investigation or prepare recommendations for company leadership on improving business practices.

“It is extremely important to ensure free access to the compliance manager for all employees, so they can inform them about issues. For business, it is crucial to create a culture where employees sincerely participate in improving the business they are a part of,” assures Mr. Senyuta.

A similar scheme operates at Platinum Bank. “A bank is a service institution, and reputation and client opinion are critical here,” says Victoria Mikhno, Head of Corporate Communications at Platinum Bank (Kyiv, operating in Ukraine since 2004; over 4,000 employees).

“Therefore, all bank employees undergo a special ‘Adaptation’ program upon joining, during which they study the bank’s code of conduct, which outlines rules of behavior towards clients and colleagues. This helps avoid misunderstandings and ethical issues in the future.”

In the event of a dispute between employees, according to Ms. Mikhno, the bank has a position called the “Platinum Representative,” whose role is to help resolve the issue and find a solution. There are only three such representatives, and the position is elected, with a one-year term.

“In case of misunderstandings between a client and an employee or between colleagues, we carefully study the situation, considering all viewpoints. Of course, we are assisted in this by the ‘Platinum Representative,’ the PR department, and, in some cases, the security department,” explains Ms. Mikhno (according to Ukrainian legislation, all financial institutions must have organized internal control services. Similar recommendations are found in the Basel Committee on Banking Supervision’s documents, such as ‘Internal Control System in Banks: Basics of Organization’ (September 1998, BCBN 40)).

In reality, ethics issues are raised in many companies, although this activity may not always be formalized.

“The IT sector differs from other industries in its flexibility; we don’t have strict corporatism. Overall, there’s no dress code, and this approach makes communication within the team easier. Colleagues maintain more relaxed relationships with not-so-strict subordination. Nevertheless, the company also has a set of corporate guidelines regarding internal and external matters, the ‘Communication Guideline,'” claims Sabina Krupko, marketing specialist at the Dnipro division of SoftServe (Lviv; software development; operating since 1993; over 2,000 employees).

The company also has an official position—Career Advisor. The employee holding this role acts as a sort of “advocate” for employees and promotes their continuous professional and career growth. This is the first person an employee at SoftServe should contact in case of an ethical problem personally or in their work environment.

Code of Honor

As can be observed, the document that defines the functioning of the “ethical” system is most often the corporate code – a set of rules that every employee must follow.

“Our company’s business ethics code has been developed over the years. It outlines adherence to the dress code and internal labor regulations, as well as the rules for relationships with clients and suppliers, etc. Some components are separate orders for enterprises, which are mandatory for execution,” says Natalia Berezhna, Director of the Human Resources Department at Malbi (Dnipro; confectionery and soft drinks production; operating since 1997; 850 employees).

At the company’s enterprises, the actions of sales representatives are strictly regulated, whether independently or with the approval of higher management, which sets the discount size for the client. In case of questionable transactions, the security service gets involved.

“The idea of creating a corporate document that would reflect the company’s stance on issues like corruption, fraud, embezzlement, abuse of power, emerged in our company a year ago,” says Andriy Likhomanov, Head of Economic Security at Intertype.

Essentially, it is a clear “message” to employees and partners, informing them of the management’s position on economic security matters. “Based on this reasoning, we created our own ‘ethical’ program. So that everyone understands that in case of unethical actions, strict sanctions will be applied to the staff,” explains Mr. Likhomanov.

It is no secret that most “unethical” actions in companies are related to financial flows. This is when there is a risk that an employee, in collusion with a partner, will attempt to gain illegal benefits, for example, by selling products at a reduced price or under special conditions. From a corporate ethics standpoint, this is the biggest issue in Ukrainian companies, and unfortunately, one of the most common.

“The norms of any corporate ethics code regulate relationships at the level of labor relations. They undoubtedly have some impact on shaping the responsible attitude of employees toward their work, but they mainly serve a preventive function (the maximum penalty being dismissal). If a company manager engages in unethical actions that are classified under the Criminal Code of Ukraine as official crimes (for example, accepting a bribe), such actions will be prosecuted by the state, as they endanger important areas of public relations and interests,” notes Anna Vinnychenko, partner at WinnerLex law firm (Dnipro; providing legal services since 2010).

Optimistic Pessimists

However, according to Ms. Mikhno, the time is not far off when employees of Ukrainian companies will demonstrate a high level of awareness.

“I am pleased to see that many Ukrainian companies are not just declaring the principles of corporate social responsibility but also proving it with their actions by creating dedicated departments and committees. I believe this is a significant step toward raising societal awareness. The next step, I hope, will be the establishment of ethics committees within companies,” she explains. However, many skeptics do not share such optimism.

“For example, three or four years ago, it was trendy to create bodies responsible for implementing gender policies,” notes Volodymyr Momot, Doctor of Economics and Head of the ‘Management’ Department at Alfred Nobel University in Dnipro (established in 1993; 300 employees).

“If most employees do not accept the company’s mission and values and reject its core principles of operation, the efforts of such structures will be laughable. It is not so important what we call the organization or even whether it exists at all—what truly matters is that corporate views on culture and ethics are widely shared within the company and that employees are genuinely engaged. If that is in place, everything will be fine.”

Top Manager on Corporate Intrigues

Andriy Lykhomanov (43), Head of Economic Security at Interpipe (Dnipro; manufacturing of pipes, wheels, and railway transport bands; since 1990; 15,000 employees).

“We operate a ‘hotline’ with both landline and mobile numbers, as well as an email address. Employees who wish to report any information, even anonymously, have the opportunity to do so. However, any anonymous tip is not an accusation but merely a suspicion that requires verification.

In large companies, it is common for suppliers to use ‘black technologies’ in the fight for contracts, attempting to drag the economic security service into intrigues by providing false information to discredit competitors. Their goal is often to have a contract terminated so they can take over the vacant position.

Such cases do exist, but we only draw conclusions after thoroughly verifying the information. One must understand that we live in Ukraine, where a specific internal environment has developed, and everyone knows that stealing can sometimes be more lucrative than earning. Cases of kickbacks and bribes are, unfortunately, widespread.”

Employee on the Rules of the Game

Serhiy Kashper (46), Chief Systems Engineer at Motorola Mobility (Libertyville, USA; telecommunications; since 2011; formerly part of Motorola since 1928).

“In our company, it is mandatory for every employee to complete an annual online training course covering proper workplace behavior, mutual respect, and the prevention of racial, sexual, and other forms of discrimination.

Employees must review slides, listen to a lecture, and answer questions in an interactive format. If any violations occur, they are reported to HR through management. The HR department then reviews each case individually and applies sanctions if necessary.”

BUSINESS No. 30-31 (1017-1018) dated 23.07.2012

Oksana Vasylivna Polishchuk

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