On a day when fears were raised that the Bribery Bill may be derailed or dramatically watered down, senior business leader and NGOs debated the likely impact of the Bill on businesses in Britain.
The debate began with a summary of the circumstances most likely to lead to corruption. Globally, bribery occurs most often post conflict or after natural disasters and in countries rich in natural resources. Although it occurs for commercial reasons, it contributes to poverty, a lack of development and accelerates the depletion of natural resources. It also distorts the true picture and is anti-competitive. When a contract is awarded as a result of bribery it is not a true contract or necessarily the best one for the job in question.
Much of the debate focussed on adequate procedures. In a show of hands at the start, the room was split roughly 50/50 between those that thought they had adequate procedures in place and those that thought they still had a way to go. Only a few felt unsure.
Many were nervous of exposure despite the implementation of tight compliance procedures such as supplier investigations, due diligence, implementing codes of conduct as well as minimising and tightly controlling the use of agents. There was genuine concern that companies may be caught out by something they had not thought of and consequently urged that guidance on adequate procedures be prescriptive.
The City of London Police has identified four types of corporate behaviour:
- The really bad company with no compliance that knows it is doing wrong
- The otherwise good company that is doing wrong without knowing it
- The good company with strong policies at the top that have not filtered down to middle management or below
- The very good company with strong policies but with the occasional bad apple
Businesses were reassured that the guidance notes would be comprehensive but also warned that controls are meaningless if they are not properly implemented. The key to adequate procedures is not guidance notes but rather effective implementation; form must not triumph over substance.
The government’s guidance will not be a blueprint for adequate procedures but a guide to the key elements that should be in place. Prosecutors are likely to focus on:
- Clear leadership from the top, which should extend to collective action with other companies and pressure put on countries where corruption is prevalent
- Risk assessment (of countries and sectors)
- Good method, especially in relation to agents and subsidiaries
- A code of conduct and supporting procedures, including due diligence
- Public interest factors. Prosecutors will not devote effort to one-off misdemeanours such as a facilitation payment, but they will if they are regularly occurring.
Bribery is never acceptable. Businesses must make this clear, providing support and protection to all staff to assist them in conducting their business properly at all times. Whislteblowing lines can be effective, but in some countries they are not legal, raising the question as to how countries will successfully cooperate to stamp out corruption.
With much of the debate focussed on adequate procedures, compliance was also hotly debated. Compliance departments have mushroomed in recent years. Some felt that successfully implementing adequate procedures would depend on how much a company was prepared to invest in its compliance function. This, it was suggested, may penalise SMEs who may not have the resources to invest in this. Others felt that implementing the right processes and procedures was a behavioural issue that should be driven initially by the compliance department, but that if behavioural changes are successfully made, a compliance function may no longer be necessary.
It was suggested that relying on a compliance department was potentially dangerous as this might lead to an assumption that tackling corruption is the responsibility of the compliance team, rather than that of individual employees. To ensure success, every employee must implement anti-corruption practices as a matter of course. Broadly, however, it was agreed that compliance teams activate change and will be crucial to embedding codes of conduct, at least in the short term.
No matter how tight the procedures, it is not always possible to regulate behaviour. Consequently there was also concern about the steps a business should take if it discovers that corruption has been taking place. It was said that promoting ethical behaviour was the ultimate goal and that self-reporting should be seen as part of that and therefore encouraged. Others, however, warned that using self-reporting could be seen as a mitigation strategy and that could be damaging.
In the US, self-reporting is standard practice as the penalties for not doing so when something has gone wrong are far worse. But in some emerging markets self-reporting has been shown to result in repeated hefty fines for a single offence. In such circumstances this is tantamount to state-funded organised crime and should be reported to the UK Government or the local embassy.
Embassies can be called upon to assist UK business when demands for payments are made. However, those who had done so reported a great disparity in terms of the response they received. A show of hands revealed that very few organisations had ever made a report when a demand for payment was made. If businesses joined forces to take collective action the demand for facilitation payments could be eradicated, it was claimed.
The issue of settlement is a thorny one. For some it has seemed like extortion when experienced in certain countries. Sometimes, however, settlement is reached either because there is not enough evidence or because the offence is not serious enough to prosecute. Companies asked what happened to the fines and were reassured that in the UK, settlement fines are redistributed, where appropriate, to the country that has been defrauded by corrupt business practices.
Procedures and processes that are properly embedded will be fundamental to staying on the right side of any new legislation. But the integrity of individuals will also be crucial. Although there is much anxiety over the definition of adequate procedures, common sense, it was suggested is often the best solution. The vast majority or people, after all, know the difference between right and wrong.
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