Bribery law will benefit business

As today’s leader in the FT stated, “anti-bribery legislation is good for Britain and for British business”.  Failure to press ahead with this legislation does little for our reputation either at home or abroad.  The Ministry of Justice should resist pressures to dilute the legislation and produce its guidance as quickly as possible.

Business calls for greater clarity have focussed on three main areas:

  • due diligence of suppliers
  • selecting and managing overseas agents
  • gifts and hospitality

GoodCorporation has worked with many leading global businesses, for the last 10 years, helping them to develop robust anti-corruption policies.

1. Due Diligence of Suppliers

To minimise the risk of corrupt activity in the supply chain, GoodCorporation has developed a Due Diligence process, to enable businesses to decide when and how to undertake due diligence on their suppliers.

 Step 1: Is the supplier interacting with a government official on your behalf?

Here the risks are obviously elevated and these suppliers should be screened carefully and controls put in place, combined with a strong anti-corruption procedure.

Step 2: Is a supplier providing any type of services?

If the supplier is providing a product without any service element then the risks of being prosecuted under the Act are minimal. When a service is being provided, there is a higher risk of corruption taking place with government entities, your customers or other suppliers. Suppliers of products, with no service element attached, can therefore be removed from any due diligence exercise, which greatly reduces the work required for most UK companies.

Step 3: Is the supplier selling on behalf of your company?

In most circumstances, a business should conduct a careful screening exercise before allowing sales agents to operate on your behalf. Again strong, specific anti-corruption controls will be needed in most cases of this type. (See managing agents below)

Stage 4: Is the supplier selecting or managing other suppliers on your behalf?

Companies that hire suppliers or contractors for their clients pose a similar risk.  A consulting engineer selecting and managing a construction company would be a typical example.

Leo Martin, director of GoodCorporation said, “Following these simple tests should allow a company to decide which suppliers should be subject to due diligence. While the due diligence itself can be complex, the decisions on whether or not to undertake it are not.”

2. Managing Agents

Agents (or advisers or intermediaries) are widely used in various sectors to carry our business development or win contracts. Included within our Anti-Corruption Framework is a set of rules that should be followed to ensure that adequate procedures are firmly in place for the selection and management of these intermediaries.

  • There are clear due diligence procedures to examine the ethical practices of current and prospective agents or intermediaries.
  • Clear terms and conditions for sales intermediaries are in place
  • Compensation paid to agents and other intermediaries is appropriate and justifiable.
  • Remuneration for agents and intermediaries is made through bona fide channels.
  • Agents and intermediaries follow clear rules and controls on the offer and acceptance of gifts and entertainment, which ensure that these do not influence business decisions.
  •  All appointed sales intermediaries and agents follow the organisation’s policies on bribery and corruption.
  • There are clear rules for agents and intermediaries to ensure that any lobbying does not have undue influence on government and customer decisions.
  • Interactions by agents and intermediaries on behalf of the country are properly recorded
  • There are well-defined guidelines for carrying out major bids, which ensure that expenditure is devoted to the quality and communication of the bid only.

3. Gifts and Hospitality

Entertaining clients can legitimately remain part of business life, but companies need to ensure that hospitality is proportionate and clearly designed to build on business relationships rather than influence decisions.

“In our experience, most businesses lack is a clear and simple decision-making process. Deciding on corporate hospitality should be straightforward,” said Michael Littlechild, director at GoodCorporation. “A simple decision tree  can be put in place which will make it clear whether hospitality can be offered for 95% of cases. There are always grey areas, but nothing like as complex as some commenters are suggesting.”

Posted: February 2011

Notes to Editors:

  1. Leo Martin and Michael Littlechild are available for interviews, briefings or written comment.
  2. GoodCorporation is a leading adviser in the field of business ethics, specialising in the assessment of responsible management and anti-corruption practices.  For further information visit our website.

Media Enquiries:

Sally McGeachie 020 8877 5300