Working Group on Croatian Compliance Guidelines

Working Group on Croatian Compliance Guidelines

ICCrA | January 3, 2021

On the 22nd of october 2020, starting at 11.00 a.m. in the premises of the Hilton Hotel, the Garden Inn in Zagreb,  the III. ICCrA conference titled “Working Group on Compliance Guidelines“ was held under strict epidemiological measures, aimed at presenting the members of the non-governmental working group for drafting Croatian guidelines for Compliance. The conference was opened with an intoductory speech given by ICCrA chairman Davor Iljkić in order to greet all the guests, numerous sponsors, including the Government of the Republic of Croatia, which made a decision at the meeting of the Coordination for the economy on the 12th of october 2020. according to which three ministries: the Ministry of economy and Sustainable Development; the Ministry of physical planning, Construction and State property and the Ministry of Justice are officially sponsoring the III. ICCrA Conference titled “Working Group on Compliance Guidlines,” whose aim is to emphasize the importance of drafting Croatian guidelines for Compliance, which is at the same time one of the requirements set by GRECO in its V evaluation Report for Croatia.

In his speech, the president and founder of the ICCrA Institute Davor Iljkić thanked all his sponsors and accentuated the importance of partnership with the US Embassy in Croatia and their support for the development of Compliance in Croatia. Davor Iljkić, as the head and coordinator of the working group, presented the other 17 members, and their parent companies and institutions from which they come, who will work on Compliance guidelines and briefly present some points to be dealt with by the working Group for the Preparation of Croatian Compliance Guidelines (compliance), concerning 11 GRECO recommendations stated in their report.

After the host, the welcome speech was traditionally delivered by the US Ambassador to Croatia W. Robert Kohorst, who thanked the ICCrA president for the invitation and congratulated the ICCrA Institute for taking an important role as leader in the development of Compliance in Croatia. He also emphasized the importance of working on drafting guidelines for companies and praised the selection and quality of speakers who participated in the conference program as well as the sponsorship of the Government of the Republic of Croatia, AM Cham, Croatian Chamber of Economy, the City of Zagreb, Croatian Employers' Association etc. In his speech he pointed out that the interest of the private sector and the Government of the Republic of Croatia for this important initiative of the ICCrA Institute only adds value. He referred to trade cooperation between Croatia and the United States and added that some institutional changes should be made. He welcomed the steps taken by the Government of the Republic of Croatia with the aim of reducing taxes and other tax reliefs as well as relieving the birocracy. Croatia needs to continue to fight corruption. “The more people are aware of what is happening, the less chance for corrupt activities” said Ambassador W. Robert Kohorst. Croatia should continue to pursue reforms aggressively. Difficult decisions have to be made, but they will eventually pay off. More and more american companies want to invest in Croatia, but the investment climate remains a challenge. It is important to change the way of doing business in Croatia in order to attract clients. This is an important moment for Compliance, effective Compliance Guidelines and clear expectations for employees, but the appointment of compliance officer - responsible person - is the most important factor as the person responsible for the entire process. Companies without an efficient Compliance regime were viewed as unsafe for investors. The more the risk of investing through Compliance and transparency is reduced, the greater the chances for investors. I hope that the guidelines will help develop internal processes for companies thus making them attractive to investors. Finally, he ended his speech that good work should continue and that the US Embassy would continue to support such activities.

In his opening speech, the CEO of the Croatian Employers' Association, Damir Zorić, PhD., highlighted his current partnership with the ICCrA Institute as well as future ones. "It only shows the confidence in the business community that Compliance is an important mechanism in preventing all negative phenomena that we unfortunately witness from time to time. My first encounter with Compliance was in 2006. when I was to be licensed with the state regulator for the management affairs I was doing then. Compliance is becoming more and more present. Compliance is a mechanism that should, with strict application, give us all the opportunity not to experience these negative manifestations. Compliance somehow quietly came to Croatia, much less noisy than his younger brother GDPR." The implementation of Compliance seems somewhat slower to me, but it is about becoming a general place, and therefore I am very glad that there is an Institute (ICCrA), that there are other institutions, conferences like this, which not only determine the knowledge and capabilities of Compliance but also publicly promote it and point to its need, to the quality it offers. “I hope that Compliance will become an increasingly important instrument in Croatia as soon as possible,” said Damir Zorić, the CEO of the Croatian Employers' Association.

 Marin Mrčela, PhD., president of GRECO (Group of States against corruption) and judge of the Supreme Court of the Republic of Croatia: „I'm glad I'm here as president of GRECO, I'm glad as well that the US ambassador is here. As you know, the USA is an important and a full member of the GRECO and who participates equally with other members in the work of the GRECO.“ He presented what GRECO is doing: “GRECO is an Anti-corruption body of the Council of Europe, our job is to ensure the harmonisation and effective implementation of international anti-corruption standards, for 50 GRECO member States, all members of the Council of Europe and three other States that are not. These are USA, Belarus and recently Kazakhstan. The current focus of GRECO is on the integrity of the public sector. It is an effective way of preventing corruption in the legislative, executive and judicial authorities. He briefly described how GRECO functions and how important reports of NGOs are in reporting to GRECO. The key is whether the states and institutions have the necessary tools to prevent corruption. If we have people who are honest, who have integrity, then it is quite clear that standards will be respected and that we may not need tools to prevent corruption," concluded Judge Mrčela.

Ivan Crnčec - assistant minister at the Ministry of Justice and Administration. At the beginning, he thanked the organizers for organizing the conference, welcomed all guests, speakers and sponsors, as well as members of the working group that will provide quality and good guidelines on Compliance, which will help raise the compliance system to another, higher level. The establishment of such a system also represents the fight against corruption, said Crnčec, which is also handled by the Ministry of Justice and Administration in its repressive and preventive part. He announced the development of a new National Anti-corruption Strategy for the 2021-2030 period, which has a number of mechanisms and measures to combat corruption in companies. One is an anti-corruption programme for companies in majority state ownership, and the other is the drafting and entry into force of the Act on the Protection of Replicants of irregularities.

Leon Žulj - assistant minister at the Ministry of physical planning, Construction and State property. He thanked the organizers for the opportunity of being a sponsor and a part of this conference. He gave his full support to the organizer in all activities by setting new standards, when speaking of the compliance function, “but also the implementation of these activities in our segment of activities and activities for the overall Croatian society and economy,” highlighted Leon Žulj. Decision of the Government of the Republic of Croatia defines 39 legal entities of special interest to the Republic of Croatia whose total nominal value of share capital is 43 billion HRK. Over the past year, these legal entities earned 51 billion HRK  in revenues and managed assets worth 218 billion HRK. Investments in capital programs accounted for 8 billion HRK and employed 46 000 employees. Although the Government of the Republic of Croatia decided to introduce the Compliance funcoe of 17th of october 2019 and gave a deadline of 6 months, several of them did not introduce the function of Compliance. Until today 32 legal entities have been introduced, while 13 of them have introduced the role of Compliance from the CERP portfolio of 18 companies. After the introduction of the compliance function, the Ministry intends to continue monitoring the development of the function and the results thereof.

Tomislava Pribanić - Ethics & Compliance Novartis, Croatia and Bosnia and Herzegovina spoke about the importance of ESG indicators in the economic community (Environmental, Social and Governance indicators), their importance in practice and importance for Compliance. She pointed out the following: “These are standards of indicators on the basis of which we see how we stand in the Environmental Social and Governance Times. How we see them. Whether or not we invest in the company and what the risks are. We have a set of criteria in the Environmental criteria, how we handle the environment and how the company is dealing with these environmental problems. Then the “social” criteria - how we relate to employees, which became very popular. In the past investors did not invest in ESG indicators. The question arose as to how this would be measured and how such data would be collected. Governance is one of the most important indicators, i.e. 86% of the respondents place the most in them. "

At a roundtable discussion, led by the president of the ICCrA Institute, Davor Iljkić,the   panellists were Tomislava Pribanić – Compliance Officer Novartis Croatia, Bosnia and Herzegovina,  Marin Mrčela, PhD. - President of GRECO, Sandra Damijan, PhD – Sigma ratings Senior Advisory Board Member for Europe and economic analyst Damir Novotny, PhD. The participants had the opportunity to hear the extent to which the drafting of Croatian guidelines for Compliance is expected to help.

Marin Mrčela emphasized that it is good that the Croatian government announced that they would start implementing the recommendations in contrast to the Parliament, where we have waited six and a half years for one to be implemented and the same recommendation that is one for both Parliament and the Government – and that is a recommendation to adopt the Code of Ethics for Members. In the end he said, “You can make the best guidelines but you need to lobby to accept them, transparently and pay nothing. Political will is needed. You have an extraordinary group of people and experts who understand the problem and know how to solve it. “It is crucial that these guidelines be accepted by the one they refer to, and that is, as far as the Chapter V of the evaluation round is concerned, the government is the key political will for acceptance.

Tomislava Pribanić reviewed the pharmaceutical industry and explained how with the development of guidelines she expects easier business operations in the pharmaceutical industry and empasized that the equalisation will help. She thinks that Compliance with the drafting of guidelines will be clearly defined.

Damir Novotny referred to the state of corruption in state companies. He mentioned the banking crisis of 20 years ago which happened because politicians took part in the loan approval process. When there is too much politics in banking sector, there is a great deal of room for manipulation. Many politicians wanted to turn banks into state enemies No .1, thus turning around and the process of harmonization started.

Sandra Damijan presented Sigma Ratings, a company involved in ratings, monitoring companies and countries. She briefly explained how they were tracking the money. Sigma ratings was founded in 2017 with colleagues at MIT when they started developing Terminal software (based on AI-Artficial intelligence) one of the tools that monitors both States and companies and other ratings and non-financial indicators such as ESG, which was mentioned earlier, and becomes increasingly important and Covid stress test showed this. We cooperate with the EIB where these non-financial indicators will be increasingly important to investors. Companies that implemented the guidelines up to 6.5 times were more successful in doing business and faced a crisis more easily.

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