Fair competition
We see the avoidance of corruption and anti-competitive behaviour as an essential management task. The potential damage that a company may incur as a result of corrupt or anti-competitive behaviour on the part of individual employees can be significant.
The construction sector is not immune to corrupt or anti-competitive behaviour by individual persons. Complex accounting processes and the necessity for a great number of contractual relationships during a construction project can make it difficult to fully resolve non-compliant behaviour.
Even if STRABAG generates much of its revenue in countries with a low risk of corruption, the international nature of its business means that some activities are also performed in countries with a higher corruption risk, as measured by the Corruption Perceptions Index. Transparent procedures to minimise risk are therefore required in all regions, especially during contract award or in negotiations with partner companies and subcontractors.
Ethics and Business Compliance System firmly anchored in the Group
STRABAG implemented an Ethics and Business Compliance System in 2008 and has been continuously developing the system ever since. The system is designed to avoid violations of the law and any resulting material and immaterial damage and to maintain STRABAG's good reputation as a business partner, contractor and employer. With extensive measures for employees and leadership, STRABAG is working to promote compliant and ethical behaviour and to create a strong corporate culture based on partnership and trust.
Rules, responsibilities and due diligence
Chief Business Compliance Officer reports directly to CEO
The Chief Business Compliance Officer, as the central contact person for all business compliance matters, reports directly to the CEO. The Chief Business Compliance Officer is currently supported by eleven Business Compliance Officers. Another 50 Business Compliance Partners are responsible for performing the business partner reviews. This system ensures that business compliance is not only operated centrally but is also firmly anchored at the operating entities.
The Business Compliance Committee fulfils another function within the central staff division Business Compliance & Management Systems. The committee, which consists of the heads of the central division Contract Management and Legal (CML), the central staff division Internal Audit and the Chief Business Compliance Officer, deals with proposals drawn up by the Business Compliance organisation for improving the Business Compliance Management System and reviews suspected cases of serious business compliance violations.
Ethics and Business Compliance System
The Ethics and Business Compliance System is firmly anchored in the Group as a group directive. It consists of the Business Compliance Management System (BCMS) and the Code of Conduct, which sets out the Group’s fundamental ethical values.
Structure of the Ethics and Business Compliance System
The Code of Conduct, which was last updated in 2022, is aimed equally at all STRABAG employees, business partners and other stakeholders such as supervisory and government authorities and shareholders.
The STRABAG BCMS fulfils the requirements of ISO 37001 (Anti-Corruption Management Systems) and ISO 37301 (Compliance Management Systems).
The management directives serve as an annex to the BCMS and set out clear rules of conduct for the entire management and all Group employees.
Topics addressed by the Business Compliance Management System
BCMS management directives
The management directive on the prevention of corruption and white-collar crime covers STRABAG’s policy on invitations and gifts. Taking into account the increased risk associated with donations and sponsorships, the directive sets out clear rules and processes to prevent their misuse. The management directive on business partner due diligence addresses the risk-based approach to business partner screenings. These reviews determine which measures are to be applied for which risk. The management directive on antitrust and competition law governs the correct behaviour required to ensure fair competition. The management directive on conflicts of interest requires STRABAG employees to disclose potential conflicts of interest. In addition to avoiding conflicts of interest, the focus of this directive is also on dealing transparently with conflicts of interest that cannot be avoided.
The Supplier Code of Conduct summarises the principles of our business activities, which STRABAG also expects its suppliers and subcontractors to comply with. As a rule, the Supplier Code of Conduct is anchored in the General Terms and Conditions.
A new management directive, the management directive on internal investigations, was added in the reporting year. The new directive governs the internal procedure from the time a compliance violation is identified to the final report. The final report contains proposals for measures and, if necessary, for improvements, including improvement to the Business Compliance Management System. Depending on the severity of the violation, the report is sent to the responsible organisational entity, the Management Board and/or the Supervisory Board.
Assessing, analysing and avoiding risks
The risk assessment procedure is described in the Business Compliance Risk Analysis. The definition of the risk areas is based on the business activities of STRABAG as an internationally active construction group and is confirmed by many years of experience and knowledge of the industry. In this way, specific situations that could represent a risk for STRABAG were determined with the support of the central staff division Internal Audit. In line with STRABAG’s international orientation and its organisation in operating segments, the risk analysis is not based on the location of operations or branch offices, but on organisational entities. These can be structured geographically or according to business areas. The identification and assessment of corruption risks is therefore consistently done in organisational units, whereby the extent of corruption risks can vary greatly from one organisational unit to the other.
The process of risk analysis is divided into the identification of risks (risk inventory), the analysis in the narrower sense based on potential damage and the probability of occurrence, and the final risk assessment. This is used to derive measures to reduce or avoid risks. STRABAG uses the deductive method to identify risks. In this process, relevant information within the scope of STRABAG’s activities are assigned to individual risks in 19 risk categories and assessed. Circumstances that increase risks are also taken into account. Based on an assessment of both the possible damage and the probability of occurrence, the identified risks are subsequently classified into the categories “low”, “medium” and “high”.
As part of the risk analysis, all divisions, central divisions and central staff divisions were subjected to a review of the corruption risk, among other things.
The risk analysis is reviewed annually at a previously determined point in time and adapted or broadened if necessary. The Business Compliance organisation obtains information from the operating units for this purpose. To date, this has been done using risk workshops and, since 2021, on the basis of an annual Management Business Compliance Reporting. Through this mandatory reporting, the assessment of corruption risks is updated annually and continuously improved. The risks recognised in the course of the assessment are incorporated into improvements to the system. In addition, experience and knowledge from employee questions to the Business Compliance organisation, reports from the whistleblower system, findings from violations as well as information from the group’s internal audit department are included in the annual evaluation.
Potential compliance violations, such as collusion, bribery, fraud or corruption, can be reported to the Group’s Business Compliance department via STRABAG’s corporate-wide whistleblower system. Employees, as well as subcontractors and other third parties, have the possibility to anonymously pass on relevant information via the online STRABAG whistleblower platform as well as by phone or by e-mail. STRABAG actively calls upon anyone with relevant information to come forward so we can quickly identify misconduct, respond appropriately and avoid any possible damage. In the event of violations of the legal regulations or of the conduct guidelines applicable within the company, the company will take the requisite disciplinary and legal measures.
Objectives and indicators
The following indicators, among others, were defined for the central staff division Business Compliance in the reporting year:
- Training rate: number of employees trained (cumulative) as part of all classroom and e-learning courses in the area of business compliance
- Special training: number of employees who voluntarily participated in a training course
- Business compliance partners: average number of business compliance partners per operating division
- Business partner screenings: total number of business partners reviewed for risks
The target and actual values as at 31 December 2023 are as follows
Business compliance indicators
Target | Actual | |
Training rate | 0.9 | 0.9 |
Special training | >= 150 | 454 |
Business compliance partners | >= 2.5 | 2.9 |
Business partner screenings | 2,900 | 3,948 |
We are pleased to report that the Business Compliance organisation was able to achieve all target values.
Bcschulungen
Business compliance training
A key factor for ensuring fair competition is to provide employees with comprehensive knowledge about correct behaviour in their day-to-day business dealings, especially about the negative consequences of non-compliant behaviour. For this reason, STRABAG in 2013 implemented a comprehensive training concept to communicate to employees the guidelines and procedures for combating corruption and anti-competitive behaviour.
Comprehensive training concept for all employees
Immediately after joining the group, all STRABAG employees receive instruction in the rules for ensuring fair competition in the form of mandatory e-learning training sessions that must be repeated once every two years. As the management of STRABAG is exposed to a greater risk of corruption, the members of this group of employees are obliged to participate in special training courses on the avoidance of corruption and anti-competitive behaviour in addition to completing the regular e-learning training. These training sessions must be completed by members of the management every three years.
Training concept
Title | Target group | Content | Type of training | Duration | Frequency |
Business Compliance Training | all employees | STRABAG Ethics and Business Compliance Management System | e-learning course | approx. 40 min. | immediately after entry and every two years thereafter |
entire management | Anti-corruption and the STRABAG Business Compliance Management System | classroom training | ½ day | upon attainment of a management function | |
Cartel Law | entire management | Anti-competitive practices, abuse of dominant market position and merger control | classroom training | approx. 3 h | upon attainment of a management function |
Business Compliance Refresher Course | entire management | Review and consolidation of the content from the Anti-Corruption and BCMS and the Cartel Law training courses | classroom training | ½ day | every three years |
The e-learning course Business Compliance Training, which was developed on the basis of the STRABAG BCMS, was rolled out across the Group in February and March 2021 and as at 31 December 2023 had a compliance rate of 90%.
In the reporting period, over 40 classroom training sessions were held on the topics of anti-corruption, antitrust law and the internal business compliance management system. Over 400 people were reached across the Group. The training rates for classroom training for managers were as follows in 2023:
- Anti-Corruption and BCMS: 92%
- Cartel Law: 91%
- Business Compliance refresher course: 88%
Now that all managers from the business unit level onwards are required to complete classroom training, the focus was expanded in 2023 to include the next management level. Group leads were identified as risk-relevant because of their role in acquisitions and their often decentralised activities. Due to the large number of people – over 3,000 in the Group – a separate online training course was developed specifically for this level in 2023. The roll-out is planned for 2024.
Over 20 special training sessions addressing more than 400 people were also held in 2023. The special training sessions not only covered the management level, but also the hierarchical levels below management.
Training rate by region
Anti-Corruption and BCMS | Cartel Law | Business Compliance refresher course | ||||||
Region | Managers for whom training is mandatory | Completed | Completion rate % | Completed | Completion rate % | Managers for whom training is mandatory | Completed | Completion rate % |
Austria | 337 | 327 | 97 | 324 | 96 | 207 | 201 | 97 |
Germany | 610 | 569 | 93 | 578 | 95 | 337 | 307 | 91 |
Poland | 110 | 101 | 92 | 104 | 95 | 77 | 69 | 90 |
Czech Republic | 97 | 96 | 99 | 89 | 92 | 61 | 55 | 90 |
Hungary | 54 | 47 | 87 | 49 | 91 | 25 | 21 | 84 |
Other Countries | 163 | 115 | 71 | 98 | 60 | 71 | 33 | 46 |
Total | 1,371 | 1,255 | 92 | 1,242 | 91 | 778 | 686 | 88 |
Bcfaelle
Incidents and responses
No convictions for corruption were finalised in the 2023 reporting period. However, four offences committed by employees were identified within the Group. Appropriate organisational measures were taken. STRABAG did not have to explicitly dismiss or admonish any employees for corrupt behaviour in the year under report. Similarly, no relationships with business partners had to be terminated due to corruption-related offences. Our whistleblower platform did not receive a single case that would have to be reported to the Management Board on account of the subject matter involved.
In the year under review, two public law proceedings were initiated against STRABAG and former employees in connection with corruption. A total of ten legal proceedings were pending due to anti-competitive behaviour, cartel and monopoly formation. One of the proceedings was concluded in the reporting year.
STRABAG SE was not required to pay any fines in the reporting period. A settlement agreement was concluded with the Latvian antitrust authorities, however.
Two cases will be explained here in detail:
In Austria: The antitrust proceedings against STRABAG AG Austria and F. Lang und K. Menhofer Baugesellschaft m.b.H & Co. KG was concluded in 2021 with a fine of € 45.37 million. On 22 July 2022, the Federal Competition Authority submitted a motion to the Vienna Higher Regional Court to review the decision.
The Vienna Higher Regional Court rejected the Federal Competition Authority’s motion as inadmissible in a decision dated 20 October 2022. On 25 May 2023, however, the Austrian Supreme Court upheld the Federal Competition Authority’s appeal dated 22 November 2022 on the grounds that a formal rejection without a substantive examination was not permissible. The Vienna Higher Regional Court will now have to decide whether the substance of the motion for review is justified.
A criminal investigation is running in parallel, whereby it remains unclear when the first charges will be brought against STRABAG AG.
In Latvia: STRABAG SIA of Milzkalne, Latvia, concluded an ongoing investigation under a settlement agreement with the Latvian antitrust authority. The case stems from an investigation into antitrust violations by a former member of STRABAG SIA’s management in connection with four Latvian road construction projects involving STRABAG in 2016 and 2017. According to the findings of the antitrust authority in the settlement, the managing director was involved in an unauthorised exchange of information with a competitor to the detriment of STRABAG SIA. STRABAG SIA co-operated with the authorities as much possible before agreeing to a settlement. Neither the internal investigations conducted nor the investigations by the antitrust authorities have identified any misconduct by other STRABAG employees. The settlement provides for the payment of a fine in the amount of € 504,533.98.
Projects and initiatives
Following award of ISO 37001 (Anti-Corruption) and ISO 37301 (Business Compliance Management Systems) certification to STRABAG SE and all majority-owned Austrian and German companies in 2022, certification was extended to the entire STRABAG Group in 2023. All STRABAG companies worldwide held with an interest of more than 50% have been certified to the two standards as proof to clients, financial institutions, authorities and other stakeholders of an established and functioning compliance management system. This makes STRABAG the first globally active Austrian company with overall certification in this regard.
Mitgliedschaften
In 2023, STRABAG was again a member of the compliance working group of the Association of Industrial Construction Companies in Austria (VIBÖ). The VIBÖ Collective Action Pact for fair competition and good conduct in the construction industry provides for a regular exchange of experience between colleagues on compliance processes in the member companies.
At the Group Meeting in March 2023, the Chief Compliance Officer reported on the new training concept, the training rates and the evaluation results from the whistleblower platform. At the Group Meeting in November 2023, the Chief Compliance Officer’s report again focused on the topics of awareness-raising and management responsibility with regard to business compliance violations. The central staff division Business Compliance also attended and gave presentations at numerous meetings at the division, management and business unit level.
Close collaboration between the various central staff divisions under the leadership of Business Compliance is required to properly implement and manage the BCMS. In 2023, the central staff division Internal Audit again provided significant support to Business Compliance in enforcing the business compliance rules. Furthermore, at the request of the Business Compliance organisation, Internal Audit conducts special audits, sometimes in coordination with the relevant division management but also, depending on the case in question, only at the request of the central staff division Business Compliance, in order to as best and as carefully as possible examine the information received on suspected compliance violations.
Conspicuous invoices that do not comply with the BCMS approval processes are submitted to the central staff division Business Compliance by a business compliance monitoring system set up by BRVZ in all countries administered by BRVZ. In the year under report, several audits were carried out as a result of the BRVZ monitoring.
In addition to the training concept described above, the central staff division Business Compliance also pursues event-driven measures to raise awareness of compliance issues, above all business partner due diligence. Immediately following Russia’s invasion of Ukraine, business partner screenings were tightened even further. In March 2022, an in-house communication on the sanctions list review of business partners was sent to the heads of all divisions and central divisions. The rule stipulates that every business partner who falls under the parameters must be reviewed for inclusion on the relevant sanctions lists by a Business Compliance Partner before a contract can be concluded.
Outlook
Corporate governance with integrity forms the foundation for ensuring fair competition. The principles of anti-corruption and fair competition remain firmly anchored within the Group and we are continuing our awareness-raising efforts among employees in this regard.
Sources – Fair Competition
Transparency International, 2023: Corruption Perceptions Index, accessed on 30 January 2024