The Top 50 Hungarian Companies Are Not on the Top in Terms of Transparency

Companies of the automotive and retail industries performed as worst and the telecom sector as best in their reporting on anti-corruption programs revealed Transparency International Hungary (TI Hungary) at a press conference today. The research, which was conducted among the 50 largest Hungarian companies, showed that 1 out of 3 companies do not disclose any information on their anti-corruption measures at all. According to the study, methodology of which is based on an international TI research, none of the companies reached the highest possible score; the average score was 45 per cent. This is the first research of this kind in Hungary and it is unique in the sense that it ranks companies based on their level of disclosure on anti-corruption measures and organizational transparency.

TI Hungary assessed the 50 largest Hungarian companies from 16 industries based on their reporting on anti-corruption programs and the disclosure of their subsidiaries operating in Hungary and abroad. At the event of the presentation of the study József Péter Martin, executive director of Transparency International Hungary, stressed in his opening speech that “the competitiveness of a country is strongly interrelated with the transparency of its business sector. It is something worth to fight for“. Dr. Zoltán Cséfalvay, Minister of State for Economic Strategy and Parliamentary Affairs, highlighted that“transparency is best secured by competitiveness and publicity. This is true on the other way round, as institutions and tools like code of ethics and anti-corruption company measures can further enhance transparency, thus contributing to the competitiveness of companies and the country”.

Few leading, many falling behind

In reporting on their anti-corruption programs, companies’ average score was 45 per cent. The best result, 96 per cent, was attained by 4 companies: Hungarian Telekom; MOL group; Telenor and TVK (None of the companies achieved the highest possible score). One third of the observed corporations, 14 companies, had a result of 0 per cent. This means that no answer was found to any of the 13 questions concerning e.g. anti-corruption measures, leaders’ personal commitment to anti-corruption, or existence of code of conduct on the companies’ website.

Reporting on Anti-Corruption Programs – Company Results

Among the industries, telecom sector performed as best with an average result of 90 per cent, followed by the chemical sector with 81 per cent. Retail sector and automotive were performing as worst with average results of 18 and 0 per cent, respectively.

Reporting on anti-corruption programs – sector analysis

Questions regarding organizational transparency and country-by-country reporting targeted the level of disclosure on domestic and foreign subsidiaries and covered ownership structure, location of operation and incorporation and certain financial data.

The category of organizational transparency was relevant to 38 companies, as 12 companies do not have any subsidiaries, whereby 11 corporations achieved the highest maximum score. 7 companies received zero percentage, meaning that no information was provided about their subsidiaries on their website at all. The average result was 53 per cent.

No measure is visible, even if they exist

It turns out from the study that there is only a low level of personal commitment from company leaders to anti-corruption and integrity.  Soft and general statements, most times only from the global head of the company, are not enough in practice to operate and work according to ethical norms.

According to the structure and contents of websites, it is clear that companies pay significantly more attention on displaying their business results rather than disclosing information on ethical standards based on which these results have been achieved.

It could easily be a sign of non-existence if a company does not even partly reveal any information on its integrity measures or anti-corruption programs to investors and the public.

TI Hungary believes that the fight against corruption relies on transparency and accountability, both in the business and in the public sector. Corporations have an important role in fighting against corruption. Responsible companies should introduce comprehensive anti-corruption programs and make their operation and organizational structure available to public, thus become accountable towards stakeholders.

Companies should introduce coherent rules and systems in order to extensively tackle corruption risks and maintain regulatory compliance. Through these, companies are able to impede bribery and corruption.

We believe that all efforts made towards transparency eventually pay off. Transparent business conduct increases responsibility which improves effectiveness. Effectiveness contributes to increased profitability that ultimately improves the level of competitiveness of a country. The competitiveness of a country is strongly interrelated with the transparency of its business sector. It is something worth to fight for” said by József Péter Martin, executive director of Transparency International Hungary.

About the “Transparency in Corporate Reporting in Hungary” research

Transparency International Hungary conducted a research by analyzing the transparency of corporate reporting among the 50 largest Hungarian companies, covering 16 industries, and thus ranking their performance. The observation relies on three pillars:

  •  Reporting on anti-corruption programs
  •  Organizational transparency (disclosure of subsidiaries)
  •  Country-by-country reporting

TI Hungary assessed the 50 largest Hungarian companies between April and September 2013. The selection of companies was based on the ranking of the top 200 companies published by Figyelő Magazine, and was supplemented by 6 leading financial companies (3 banks and 3 insurance companies).

The concept and the methodology of the current research were based on the international research, ‘Transparency in Corporate Reporting: Assessing the World’s Largest Companies’ by Transparency International.

All selected companies were notified about the research and were approached to give feedback on collected data. A methodology workshop was also organized during the data collection period. According to the experiences, companies showed a great interest during the research.

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