Largest SOEs score zero per cent, remain sluggish in taking anti-corruption measures

Towards Transparency (TT), the national contact of Transparency International (TI) in Vietnam, has just released the second edition of Transparency in Corporate Reporting (TRAC), made possible thanks to the funding provided by Oxfam in Vietnam.

TI is a Vietnamese non–profit consultancy company founded in 2008 to contribute to the prevention of and fight against corruption.

TRAC Vietnam 2018 report was made based on the assessment of the 45 largest companies selected from the 2017 VNR 500 list, the list of the top 500 largest Vietnamese enterprises based on the Fortune 500 model. Of which, there are 15 foreign invested companies, 15 publicly listed companies (PLCs) and 15 state-owned companies (SOEs).

It assesses the 45 largest companies’ disclosure practices, in line with international standards and regardless of their sector of activity or their ownership structure.

According to TRAC Vietnam 2018, the score of reporting on anti-corruption programs of Vietnam, which demonstrates companies’ public commitment to anti-corruption, is not optimistic with the average score of enterprises only reaching 15 per cent (with the lowest score being zero per cent and the highest score being 100 per cent).

Although this score is an increase compared to the score of 10 per cent in the previous year, more improvement is required.

Among the sample groups, foreign subsidiaries score the highest with an average of 31 per cent in this dimension.

Three foreign subsidiaries, Samsung Electronics Vietnam, Unilever Vietnam and Nestle Vietnam achieve the top score of 81 per cent. The highest performers among local companies are Vinamilk and VPBank with 42 and 38 per cent, respectively.

Disappointingly, more than half of the companies (24 out of 45) received a score of zero per cent, divided almost equally among foreign companies , PLCs and SOEs.

Despite being the state-owned enterprise with the highest score in this aspect, Vietnam Electricity Corporation (EVN) only scores 27 per cent. Even though with the mission of providing public services, SOEs are expected to apply the highest standards of integrity and transparency.

This can be explained by the fact that many of these enterprises still lack appropriate anti-corruption programs, in line with international practices.

In addition, among specific policies to prevent corruption, gift and entertainment policies are disclosed most often. Meanwhile, the publishing of Codes of Conduct ranks surprisingly low. Public disclosure of whistleblower hotlines to make confidential and protected reports on corruption cases is even lower.

Where the existence of such channels is unknown to external stakeholders, this limits the possibility of detecting violations of anti-corruption policies even if such policies exist.

Different reasons can be used to explain these results. The Law on Anti-corruption (amended 2012) enacts transparency requirements for government agencies in areas prone to corruption. Nevertheless, the law does not require companies to publicly disclose information on their anti-corruption programmes.

In practice, some companies, mainly foreign, voluntarily disclose their anti-corruption programs. Indeed, due to disclosure policies regarding anti-corruption programs in place at parent companies, their subsidiaries simply implement them and publish their headquarters’ anti-corruption program on the Vietnam’s websites.

Others might have anti-corruption programs, but are not required by headquarters to disclose them on local websites.

Nonetheless, some PLCs go beyond legal requirements by developing anti-corruption programs to meet market demands. For example, Vinamilk introduced anti-corruption policies in 2009 when preparing for listing on the Singapore Stock Exchange.

Although public disclosure of anti-corruption program does not equal to actual performance, the extent of public disclosure is an important indicator of companies’ commitments and efforts to tackle corruption.