Failure to establish strong and effective due diligence processes is the area where businesses are most likely to fail now that the Bribery Act has come into force – see table below. The management of agents to make sure they don’t pay bribes on behalf of companies is also a significant weakness.

Four of the ten most poorly implemented Anti-Corruption policies involve the due diligence and management of agents, intermediaries and suppliers. Weaknesses include a failure to examine the ethical practices of current and prospective agents, intermediaries and suppliers and the failure to ensure that they have their own strong anti-corruption policies.

Gifts and hospitality policies, the area under considerable scrutiny by both business and the media, also come in for criticism, with many companies still failing to set up processes to record and monitor the receipt and offer of gifts and hospitality.

Top Ten weakest anti-corruption practices

1. Failure to publish information about anti-bribery and corruption (ABC) policies and implementation

2. No clear due diligence procedure to examine the ethical practices of current and prospective agents, intermediaries and key suppliers

3. No clear rules for agents and intermediaries to ensure that lobbying does not have undue influence on government and customer decisions

4. Failure to engage in constructive dialogue with government and authorities when corruption discovered

5. No process for deciding when anti-bribery and corruption due diligence is required

6. Failure to ensure that appointed sales agents and intermediaries follow the organisation’s ABC policies

7. Interactions by agents and intermediaries on behalf of the company are not properly recorded

8. Failure to record all gifts and hospitality

9. Failure of senior management to actively participate in anti-bribery and corruption initiatives

10. No clear due diligence procedures to examine ethical practices of acquisitions and JV partners

Under the new law, failure to implement Adequate Procedures to prevent corruption from taking place could mean board directors facing 10 years in prison and unlimited fines should corruption occur.

Many FTSE 100 companies in high risk sectors such as aerospace, oil and gas, pharmaceutical and mining have used their significant resources to strengthen their procedures. However many FTSE 250 companies with fewer resources have not done enough and lower down the size chain, a lot of companies are really struggling. From our list of weak practices it seems that companies are most at risk from a failure to check the behaviour of third parties. This is undoubtedly one of the hardest areas to manage, but is where businesses will be seriously vulnerable to charges of failing to put Adequate Procedures in place.

The Ministry of Justice has made it clear that reasonable levels of hospitality will be acceptable. However, past prosecutions show that there will be a keen interest in the activities of agents working on a company’s behalf.