The U.S. Foreign Corrupt Practices Act (FCPA) reached the statute books in 1977. The Act has developed significantly since then and a combination of high profile cases, determined prosecution and significant sentences has resulted in the Act becoming one of the most well-known and arguably, feared pieces of legislation.
By contrast, for the next 34 years, the UK stuck with a mishmash of anti-corruption laws spread across a multiplicity of ancient statutes with the not surprising result that prosecutions — particularly successful ones — were few and far between.
However, in 2011, the UK Bribery Act 2010 (UKBA) came into force and in the intervening five years since then the UK anti-bribery landscape has changed significantly, after what was a relatively slow start given the challenges facing the UK prosecuting authorities.
But yet, bribery has deeper and more personal effects than worldwide humiliation and share plummeting.”
What is not in doubt, however, is that the UK Bribery Act of 2010 is gaining global respect and rightfully so.
Recently, Rolls-Royce paraded news outlets such as The Guardian and The Telegraph with allegations of bribery to secure contracts in 12 countries. However, bribery cases are now hitting mainstream media whether they’re a household name or not.
In February, a construction company known as The Sweett Group PLC failed to prevent a bribe intended to secure and retain a contract, was sentenced a £2.25M ($2.8M) fine and will suffer irreversible damages to its public reputation. World Finance, a magazine that covers international business and the global economy, lists construction companies along with extraction, communication, transportation and IT organisations as the most bribe-heavy industries in the UK. The UK Bribery Act (UKBA) has clearly stirred the pot and we are smelling the smoke.
Bribery has the power to destroy businesses inside and out. Negative press coverage can damage a company’s reputation externally, while internal personnel changes and lawsuit battles create a deceptive image within their industry.
For example, when the Sweett Group’s case hit the news, the construction company replaced its chief executive and chairman, withdrew business from the Middle East and experienced expensive probing, estimated at £3M ($3.7M) not including fines and other contingency costs. But yet, bribery has deeper and more personal effects than worldwide humiliation and share plummeting.
These cases of corruption are often the result of insufficient compliance systems.
Executives must be models for ethical behavior and practice enacting these values in every part of their business. Research from University of Amsterdam Business School reports increased employee trust and perceived effectiveness in leaders who employ ethical decision making. Without the example for ethical standards, a domino effect of corruption dismantles a culture of morality and ethics. This puts a company at an ever greater risk for compliance failure and places a lot of pressure on compliance officers and general councils to assess and mitigate risks.
A plethora of spaces exist, especially in large companies like those in bribe-heavy industries (communication, extraction, transportation, etc.) for compliance to be put to the test. According to Corruption Watch UK, the Organisation for Economic Co-operation and Development Working Group on Bribery (OECD WGB) recently visited London to review its anti-bribery legislation. This is the UK’s sixth review making it the most reviewed country in the OECD. The WGB has conducted reviews in the UK three times more than another other major OECD country, including Germany, France and the US.
News of WGB presence may sound like a bad thing, but it is quite the opposite.
Attention from the WGB leads to changes in anti-bribery legislation that holds organisations accountable to ethical business practices. Following large government groups and agencies has helped us learn about what they are doing to make businesses more ethical. It takes a lot of work from influential legislators and internal officers alike to maintain upstanding ethical standards. And integrated compliance and ethics systems are dynamic because they can provide frameworks for organisations to operate ethically on a large scale, but must also protect every organisational member on a personal level as well.
When a bribe comes to light, the news tends to focus on legal proceedings and features the organisation’s executives. But the involved agents, executives, and lawyers aren’t the only people who are affected by cases of corruption. Those employees who participate in bribery are not just risking their own careers; they’re risking the reputation of the entire company and the financial and psychological well-being of all employees.
In some cases, a single large business might be responsible for the majority of a town or small city’s employment, directly or indirectly. A bribery case, like any form of corruption, could have potentially devastating effects on workers’ salaries, benefits and ability to support themselves and their families. The good news? Bribery is preventable.
Employing an ethically-sound team of executives is a great starting foundation. However, external pressures, incentives, and temptations can push people to partake in acts of corruption. The explicit and implicit requirements of the UKBA require companies and organisations to establish what are known as ‘adequate procedures’ – processes, training, and other tools adequate to prevent bribery in their business. However, what might be adequate for one business may be totally inadequate for another, and that’s where bribery risk assessment comes in. Fortunately, the tools needed to keep an organisation compliant with all anti-bribery laws are accessible and easy-to-use. No more are the days a company can scrape by with disorganized spreadsheets, manual processes, and data living in disparate systems.
The Global Anti-Bribery and Corruption Survey conducted by KPMG Forensics found that “prohibited cash payments” is the number one area of violation susceptibility for 61 percent of businesses in the UK. The risk of bribery can be decreased by promoting disclosures and policy attestations. Having a comprehensive compliance and ethics platform is a common way for an organisation to ensure ethical business practices and mitigate internal risks.