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Rory More Advocates 'Partnerships in Integrity' for a Consolidated Future
Keynote Presentation at Vital Ethiopia Diamond Conference
By: Administrator
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Jun 9 2005 12:00AM
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Reference: 2273  

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Addressing the Conference on Integrity & Investment held in Addis Ababa, Ethiopia, on March 7-8, 2005, Rory More O'Ferrall, Director External Affairs, De Beers said in his extensive presentation. Without demonstrable integrity, without proper transparency, without real engagement with society, the reputation of business will continue to languish at the bottom of the league table of public esteem.

There is a debate currently about what constitutes a 'good company'. On one hand there are those how maintain that the primary objective of business is to maximize profits, and that this alone - though the creation of jobs and payment of taxes - serves the greatest public interest and should not be distracted by lip-service to Corporate Social Responsibility (CSR)-a mere 'ticking of the boxes' of required virtue.

On the other hand, there are those who insist that business must earn the right to profit from the provision of goods and services, that it must, in effect, obtain a licence to operate. For this body of opinion, CSR is a binding obligation, not a philanthropic option.

At De Beers, we don't see it in such extreme terms. We are governed by the maxim laid down by Sir Ernest Oppenheimer, grandfather of our present Chairman, when in the 1950s - long before it was accepted wisdom - he said: 'The purpose of the Company is to make profits for its shareholders, but to do so in a way that makes a real and lasting contribution to the countries and communities in which it operates'.

We do not see the two sides of the argument about what is a "good company" as irreconcilable. We believe that what has been described as 'unadorned capitalism' can indeed serve the public interest, but that 'adorned capitalism' can serve that interest even better.

Through the development and deployment of sound CSR polices in terms of employment and labour practices, health and safety, non-discrimination, human rights and environmental best practice, companies can not only gain significant advantage in terms of reputation, recruitment and investment, but also, when coupled with the impact of their core business activities, can make a real difference on the ground.

Of course it is important that companies are not just 'ticking the boxes' in this regard, or just producing glossy CSR reports. "Trust me, I'm a spin-doctor" won't wash these days. "Show me" is much more effective, and companies must be prepared and able to demonstrate what they are doing - both operationally and in social investment projects - to governments, journalists, NGOs and, indeed, to the communities in which they operate.

A Benign Environment:

The best companies are likely to be "good companies", but it is a mistake to think that business will be driven instinctively by ethical and/or philanthropic considerations alone - and certainly not in all circumstances. A benign economic, political and fiscal environment within the rule of law creates the conditions in which companies will choose to operate, to generate good returns for shareholders as well as revenues and other benefits for the host communities. We take the existence of such a benign environment for granted most of the time - and certainly in the developed world.

However, with our focus here on Africa and, in particular, on 'weak governance zones', this sort of environment does not always exist and cannot be created by business alone

In order to obtain those conditions in which business can flourish to the benefit of all, we need to harness the energy, the expertise, the finance and the development potential of business and link it with the critical and essential role of governments and the international community in the establishment of stability and security.

Private sector capital flows and direct investment, from both internal and external sources, are key to economic growth. Investors must know their money is safe. Security of tenure, of property rights and of contracts protected by law, administered by courts immune to political whim and bureaucrats free of corruption, are essential pre-conditions of benign investment.

In turn, business must ensure that profits gained make the real and lasting contribution to which Sir Ernest referred, and this should be doe by active engagement and cooperation with both local and international NGOs.

Government, international institutions and business can work together, encouraged and supported by the moral authority of responsible civil society, to create the virtuous circle: Security - Economic Activity - Development - Stability - Peace.

With regard to 'weak governance zones', we should not underestimate the positive impact of collaboration between international institutions, business and civil society on conflict prevention and post-conflict reconstruction, and in assisting governments to grasp the benefits that flow from embracing good governance as an absolute priority. A fine example of this, in the diamond context, is the Kimberley Process, in which De Beers is proud to have played a part.

The process now has some 70 nations as participants and, whilst not a perfect construction on which further work is necessary, it has been highly successful in limiting the trade in both conflict and illicit diamond. Without the commitment and endorsement of the United Nations, the wholehearted and active collaboration and sheer hard work of civil society, governments and business, this could not have been achieved.

The relative success of the Kimberley Process does not mean that we can be complacent. Not only is there more to do to ensure that it is properly effective, but there are also concerns about the unregulated, and often illicit, alluvial diamond mining in parts of Central and West Africa. Whilst the Kimberley Process Certification Scheme may largely protect rough diamonds from the first point of export, there is often no control internally from earth to export. Not only are the proper revenues not being collected, but the working conditions and remuneration of the diggers are completely unacceptable.

I spoke of this in April 2003 at the Washington conference on 'Kimberley Next Steps'.

More recently, Global Witness and Partnership Africa Canada issued an excellent report entitled "Rich Man Poor Man", highlighting the plight of the workers in these informal mining operations
(http://www.globalwitness.org/reports/show.php/en.00064.html).

Diamond Development Initiative:

Last month, Global Witness, Partnership Africa Canada and De Beers jointly convened a meeting in London to discuss what we are calling 'Diamond Development Initiative'. (Reported elsewhere in detail in this issue).

De Beers' Managing Director, Gary Ralfe, reiterates on a regular basis that all of us in the De Beers Group - collectively and individually - are ethically accountable. To that end, De Beers has developed its Best Practice Principles, a mandatory ethical code of practice - independently verified - to which the De Beers Group and its customers and suppliers subscribe. We see the need, as should all companies, to go beyond what is required of us by law, as not everything that is legal is necessarily ethical!

These Best Practice Principles apply wherever we operate, and even more importantly in 'weak governance zones'. In such countries it is by insistence on doing business with integrity, and not using local custom as an excuse for lower standards, that business can be an agent for change and assist the process of economic and political reform. Companies cannot dictate to sovereign states, but have a real interest in seeing economic and political reform develop in a way that enables the benign investment climate to which I referred earlier.

Through dialog and by example, companies can assist host governments to recognize the benefits of good governance, but the active support and engagement of the international community and civil society is critical.

Also, the development of robust local NGOs, and an independent media, is an essential component in which we should all assist.

% Setting Standards:

Whilst I would hope and expect business to apply proper ethical standards in 'weak governance zones', it is unrealistic to suppose that every commercial organization will do so instinctively. Thus, "basic corporate common sense" is not an adequate threshold for conducting business in these countries.

Need for Practical Code of Conduct:

As I said in my submission to the OECD in Paris last December, and in the light of the negative experience with the UN Panel, there is a clear need for a more practical code of conduct than currently provided by the OECD Guidelines. This should not only set out the criteria for operating in conflict or 'weak governance zones', but also establish a better mechanism for dealing with alleged breaches of the code.

Furthermore, the international community and civil society should continue to call for both companies and governments to sign up to the Extractive Industries Transparency Initiative, the UN Global Compact and the World Economic Forum's Partnering Against Corruption Initiative. All parties should be called to account, it would be illuminating, also, were MGOs to be obliged to reveal their sources funding!

The title of this Conference is Alliances for Integrity. Alliances, or partnerships, are at the heart of De Beers' business philosophy. Just as I believe that partnerships between governments, international institutions, business and civil society are central to the success of post conflict reconstruction, conflict prevention and development in 'weak government zones', De Beers has, seeks and aspires to partnerships in all it does. This is evident from the various partnerships we have all over the world.

India's Partnership:

I have mentioned already how pleased we are to be working with Partnership Africa Canada and Global Witness in the Development Diamonds Initiative, and in India we have the government as our partners in prospecting for diamonds.

Partners of Choice:

Globally, we aim to be the Partner of Choice in prospecting and mining, the Supplier of Choice to our customers and the Employer of Choice for our staff.

None of these can be achieved unless the company has, and is seen to have, the very highest ethical standards and to conduct its business - every aspects of its business - with integrity.

Leadership with Integrity:

Finally, I should just like to say that Integrity in business depends on leadership - it has to come from the top. Leadership with integrity means that business leaders must speak out on those issues that affect us all. As we approach the report of the commission for Africa (to which De Beers has been pleased to contribute) and the G8 Summit, there is real need, a duty, for us all to raise our voices on Africa's behalf. De Beers, a company proud of its African roots, will continue to do so.

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