Integrity Assessment of private sector to be conducted for the first time ever

The results to be produced at the end of Dec. this year...self-assessment model for individual companies to capture the extent of ethical management to be also provided online in the ACRC’s web page from June

June 3, 2019

Anti-Corruption and Civil Rights Commission

The Republic of Korea

For the first time ever, an assessment will be carried out to diagnose the level of integrity in the private sector. In addition, a ‘self-assessment model’ will be provided for individual companies to measure their current status of ethical management on their own.

As part of the efforts to realize innovation of the government, the Anti-Corruption and Civil Rights Commission (ACRC, Chairperson Pak Un Jong) plans to carry out an integrity assessment of the private sector for the first time ever this year, in order to support the voluntary anti-corruption and integrity efforts in the private sector more efficiently, and to produce the results thereof at the end of December this year.

The 2019 assessment will be conducted as a strategic and cooperative research project of the National Research Council for Economic, Humanities, and Social Sciences, and the Korean Institute of Criminology will take charge of conducting the assessment as a lead research institute. The ACRC is to provide an assessment model for companies, which was developed last year through its policy research service.

Starting from June, the ACRC will also make the self-assessment model publicly available in its official web page to support companies in self-evaluating their integrity in the process of business management and utilizing the results thereof to improve their own business ethics.

For the assessment to be conducted this time, focus will be placed on having it play a role as a tool for preventive check-up, rather than another regulatory burden on companies.

Companies will be classified into major industry categories (types of business)* and assessed on an industry-by-industry basis, rather than on an individual basis.

* 10 or so business industries, including the manufacturing, construction, wholesale and retail, transportation, finance and insurance, professional services business

Based on the international standard used by international rating agencies, the assessment results will be drawn on a comprehensive set of existing data sources produced by the public and private sectors with respect to the extent of corruption in private industries and various qualitative data derived from the opinion survey.

Along with this, the assessment model generated last year will be supplemented in consultation with a number of experts and internal stakeholders, etc. of industries regarding the measurement model and methodology, in order to make it possible for the assessment to precisely reflect the characteristics of the private sector different from those of the public sector.

Through the policy research service performed in 2018, the ACRC developed an assessment model which can systematically diagnose the integrity level of large-scale industries that have a great impact on the market.

In recent years, the integrity and transparency level of the private sector in a country has had a growing impact on the national competitiveness, and a majority of corruption problems have been caused by the interplay between the public and private sectors, however, integrity assessment and anti-corruption policies have been skewed toward the public sector, causing asymmetry, as some criticized.

The assessment model developed last year applies the standard or criteria that have been adopted by many international rating agencies, and is structured to assess the integrity level by using the combination of two indices, one to capture the status of corruption and the other to measure the effectiveness of corruption prevention, by each of the major industry categories.

▲ A Corruption Status Index measures the extent of corruption in business transaction relations, management activities, such as accounting, and the extent of violations of fair trade and social public values, etc. ▲ A Corruption Prevention Index measures the level of transparency, including corporate disclosure, etc., the accountability of the management, anti-corruption activity performance, and how well the anti-corruption system is established, etc.

The Director General of the Anti-Corruption Bureau of the ACRC Lim Yoon Ju said, “I hope the integrity assessment of the private sector to be conducted this time will be utilized as a basic source of policy development to more effectively support the voluntary anti-corruption and integrity efforts of the private sector, and serve as a momentum for businesses to strengthen their own anti-corruption efforts in the future.

※ The following assessment model derived from the results of the 2018 ACRC policy research is subject to supplementation and change in part according to the results of the 2019 integrity level assessment