LECTURE TWO

ETHICAL CODE OF THE PROCUREMENT PROFESSION

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 Learning Objectives

At completing this unit students should be

able to:
• Know ethical codes and their meaning
• Interpret the codes for their compliance at
the work place
• Know the interpretation of gift and
hospitality acceptance in procurement
ethics

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 A Code of Ethics
• Is a document that explains specifically
how employees should respond in
different situations.
• A code of ethics is especially useful when
problems arise.
• A code of ethics helps different people
approach problems in the same way.

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 A Code of Ethics Cont’d
• The problem with creating and applying a
code of ethics is that drawing a line
between right and wrong isn’t always easy.
• Is it wrong for a business person to
give a client a gift because that client
has been a valued customer over the
past year?
• Or is this bribery?

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 A Code of Ethics Cont’d
• Is it wrong for a politician to make a phone
call to a bank manager to help a friend
obtain a business loan?
• Is the politician using political influence for
personal purposes?
• Instead of referring to a written guideline,
you can ask yourself, “If I take this action,
will anyone suffer as a result?”

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 The use of ethical codes

• A common first step in large business

organisations is to prepare written
standards of conducts to which staff are
expected to adhere.
• Secondly, to ensure that the written policies
are followed in practice,
• managers should ensure that they are
published widely and reinforced through
staff appraisal, development and training.
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The use of ethical codes Cont’d

• Managers should foster (by example) an

ethos or culture where ethical behaviour is
regarded as a positive, and key
organisational value, with zero tolerance
for abuse.
• There should also be open fora for
discussing ethical issues of concern to
staff.

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The use of ethical codes Cont’d

• Procurement and Supply Chain

professionals have ethical codes setting
out what moral principles or values are
used to steer and conduct activities that
are considered unethical.

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 CIPS CODE OF ETHICS

• The CIPS Code of Ethics is the ethical

standard and disciplinary framework (the basis
of best conduct) for procurement professionals
in the area of procurement ethics.
• The Code makes it clear that seeking
membership of the institute is in itself an
undertaking to abide by ethical standards, and
failure to do so may be dealt with according to
a defined disciplinary process.

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 CIPS CODE OF ETHICS

• The ethics emphasise that members

should not use their position of authority for
personal gain.
• Equally, members have a responsibility to
uphold the standing (dignity and
reputation) of the procurement profession
and the Institute, by their conduct both
inside and outside their employing
organisations.
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 General Guidelines of CIPS Code of
Ethics
• Members must disclose any personal
interest which might impinge on their work
activities, or which might appear to do so in
the eyes of others.
• Members must respect the confidentiality of
information and must not use information
received for personal gain.
• The information they provide should be
true and fair.
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 Guidelines of CIPS Code of Ethics

• Except for small-value items, business

gifts should not be accepted.

• Only modest hospitality should be

accepted. Members should not accept
hospitality which might influence a
business decision, or which might appear
to do so.

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 Specific Areas of CIPS Code of Ethics

1. Enhance and protect the standing of the profession

2. Maintain the highest standard of integrity in all
business relationships
3. Promote the eradication of unethical business
practices
4. Enhance the proficiency and stature of the profession
5. Ensure full compliance with laws and regulations
 

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 Guidelines of CIPS Code of Ethics

1. Enhance and protect the standing of the

profession, by:
• Never engaging in conduct, either
professional or personal, which would bring
the procurement profession into disrepute

• Not accepting inducements or gifts (other

than any declared gifts of small value which
have been sanctioned by the employer)
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 Guidelines of CIPS Code of Ethics

• Not allow offers of hospitality or those with

vested interests to influence, or be
perceived to influence, my business
decisions
• Being aware that my behaviour outside my
professional life may have an effect on
how I am perceived as a professional.

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 Guidelines of CIPS Code of Ethics
2. Maintain the highest standard of integrity in
all business relationships, by:
• Rejecting any business practice which might
reasonably be deemed improper
• Never use my authority or position for my own
financial gain
• Declaring to my line manager any personal
interest that might affect, or be seen by others
to affect, my impartiality in decision making.

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 Guidelines of CIPS Code of Ethics
• Ensuring that the information I give in the
course of my work is accurate and not
misleading.
• Never breach the confidentiality of information
I receive in a professional capacity.
• Strive for genuine, fair and transparent
competition.
• Being truthful about my skills, experience and
qualifications.
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 Guidelines of CIPS Code of Ethics

3. Promote the eradication of unethical business

practices, by:
• Fostering or promoting awareness of human
rights, fraud and corrupt issues in all my
business relationships
• Responsibly managing any business
relationships where unethical practices may
come to light, and taking appropriate action to
report and remedy them.
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 Guidelines of CIPS Code of Ethics

• Undertaking due diligence on appropriate

supplier relationships in relation to force
labour (modern slavery) and other human
rights abuses, fraud and corruption
• Continually developing my knowledge of
forced labour (modern slavery), human
rights, fraud and corrupt issues, and
applying this in my professional life.

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 Guidelines of CIPS Code of Ethics
4. Enhance the proficiency and stature of the profession,
by:
• Continually developing and applying knowledge to
increase my personal skills and those of the
organisation I work for.
• Fostering the highest standards of professional
competence amongst those for whom I am
responsible.
• Optimising the responsible use of resources which I
have influence over for the benefit of my organisation.

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 Guidelines of CIPS Code of Ethics

5. Ensure full compliance with laws and

regulations, by:
• Adhering to the laws of countries in which I
practise, and in countries where there is no
relevant law in place I will apply the
standards inherent in this Code.
• Fulfilling agreed contractual obligations.
• Following CIPS guidance on professional
practice.
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 GIFTS AND HOSPITALITY

• The giving of gifts and offers of hospitality

are among the common courtesies of
business dealings.
• The problem is to decide when such
practices amount to an attempt to induce a
favourable sourcing or contract award
decision, information disclosure or other
favourable treatment.

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 GIFTS AND HOSPITALITY
• There are obvious cases where buyer and
seller collude to ensure that the seller wins
a contract, the buyer in return receiving a
reward.
• This is defined as bribery and corruption –
and it is illegal in Ghana and many parts of
the world.

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 GIFTS AND HOSPITALITY
• The more problematic cases are those
where no explicit link is made between the
gift and the award of business.
• A major difficult may be the difference in
perceptions between buyer and seller.
• To the seller the gift may be merely a token
of appreciation, of a kind that his
organisation virtually expects him to bestow
on most or all customers.
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 GIFTS AND HOSPITALITY
• To the buyer, however the gift may
become a material inducement to favour
that supplier.
• Any potential interest or conflict of
interest should be disclosed, so that
proceedings are transparent and open
to control.

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 CIPS POSITION ON GIFT &
HOSPITALITY
The CIPS Code of Ethics explicitly addresses
these issues.
• Other than items of a very small intrinsic
value, such as diaries or calendars,
business gifts should not be accepted.
• The recipient should not allow himself to be
influenced or to be perceived by others to
have been influenced, in making business
decision as a result of accepting hospitality.
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 GIFTS AND HOSPITALITY
• The frequency and scale of hospitality
accepted should be managed openly and
with care and should not be greater than
what the members’ employer is able to
reciprocate.
In practice, debate continually rages around
the ff:
• What the ‘reasonable’ limit on the value
of acceptable gifts should be
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 GIFTS AND HOSPITALITY
• Whether any gifts should be kept by
individuals (or donated to charity)
• Whether gifts (of any value) should be
formally logged (as the basis for taxation)
and/or approved.
• Whether there is flexibility for cultural
differences in regard to gift-giving and
hospitality.

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 Question
What are the expectation of Procurement
professionals with respect to the following
CIPS Code of Ethics:
• Enhance the proficiency and stature of the
profession
• Promote the eradication of unethical
business practices
• Ensure full compliance with laws and
regulations
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 Case study
• During the evaluation period of a large-value
contract financed by the Bank, a bidder is seen
in a restaurant having dinner with two members
of the evaluation commission and the Task Team
Leader for the project. In fact, the reason for the
invitation was not connected to the work of the
evaluation commission, but nobody believed
them.
Task
• What lesson does this situation offer?
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