Bribery and corruption

Businessman takes money from unmarked envelopeIn recent years, high-profile cases of corporate corruption and bribery have given rise to diplomatic tensions between countries, and fines for companies involved have reached new records beyond the $1 billion mark.

In 2009, in an effort to combat this trend, the development of the new Bribery Act was announced in the UK. The intention is to clarify and strengthen the UK’s legislation to tackle bribery and corruption, whether within the country’s borders or by UK organisations overseas.

In the US, too, the Justice Department is increasing its prosecutions of alleged acts of foreign bribery by US corporations. A crackdown under the Foreign Corrupt Practices Act (FCPA), a law largely dormant for decades, now extends across five continents and penetrates entire industries. In 2009, more than 120 companies from all sorts of industries were under investigation, a stark increase from previous years.

The new Bribery Act in the UK is set to come into effect in 2011, and is broader in scope than the FCPA. Many commentators believe it is likely the US will follow suit with an extension of its own legislation.

There are four main offences under the UK Bribery Act:

  • Giving bribes
  • Receiving bribes
  • Bribing public officials
  • Failure to prevent bribery.

All of these, particularly the last, challenge businesses to implement ‘adequate control measures’. Clearly, there is work to be done to establish a more detailed understanding of how the term ‘adequate’ should be interpreted. However, there are some obvious places to start.

Current corporate policies often fail to address adequately the implications of corporate hospitality, nor the common practices of making ‘facilitation payments’, many of which would be considered an offence under the new Bribery Act. Even where comprehensive policies exist, their implementation across global operations presents another challenge that the Bribery Act requires companies to take on.

According to data from the Tomorrow’s Value Rating, most companies still have some way to go to move into full compliance with legislation. For instance, our research found that:

  • Little more than a third of global retailers and FMCG companies demonstrate high standards in combating corporate bribery and corruption. This is despite the fact that their global supply chains offer significant scope for bribery.
  • Global ICT companies fare better, but we are still seeing significant gaps and a lack of clarity within policy frameworks.
  • Heavy industry, mining and diversified industrial companies often have detailed policies but only a basic array of implementation mechanisms, often resulting in question marks over the level of internal awareness achieved and the ability to demonstrate practical compliance.

How we can help

Two Tomorrows can help you by:

  • working with you to understand your exposure to corruption risks across functions, business units and geographic operating regions
  • reviewing and developing effective policies to combat corruption
  • developing guidelines, training and awareness-raising programmes
  • developing and auditing whistle-blowing procedures
  • advising on specific situations.

Our work will help ensure you are reducing the risk of non compliance, and will establish clear and effective reporting to minimise the potential for reputational damage.

To find out more about how we can help you in this area, contact group director Jon Woodhead at jon.woodhead@twotomorrows.com.