The Threat of Bribery & Corruption

The changing face of corruption

Bribery and corruption risks are often elevated in times of crisis and through 2020 it has been noted that the risk of misconduct has changed and in some cases increased as employees work from home with less oversight. Business priorities have shifted, and emergency measures or snap decisions have been made. The increased pressure from the pandemic also means people are vulnerable to making wrong or risky decisions.

Bribery and corruption are illegal through laws such as the Foreign Corrupt Practices Act in the US, and companies must remain aware of these issues not just directly within their organization but within their supply chains and wider ecosystem. Bribery allegations could see a business not just hit with severe sanctions but by significant reputational damage.

Bribery

Means giving or receiving a reward to influence someone’s behavior, sometimes known as a “kickback”.

Corruption

Is improper behavior that seeks to gain an advantage, such as, but not limited to bribery, abuse of power, extortion, fraud, deception, collusion, cartels, embezzlement or money laundering.

Facilitation Payments

Are often seen under the guise of ‘local customs’ and are sums of money paid to officials to speed up or “facilitate” activities they should perform anyway. Many company policies will treat such payments as bribes. 

Gifts, entertainment and hospitality

Although not prohibited under national legislation such as the UK’s Bribery Act, this is an area that can cause significant difficulty in business circles. Many company policies put caps on what employees can accept in terms of gifts, entertainment and hospitality and may require employees to declare even low-value gifts. 

Supply chains

Can pose a significant risk. If there are new third parties or government actors in foreign jurisdictions, ensure you take the necessary precautions and don’t skip due diligence responsibilities. If, for example, a third party is introduced into your supply chain or if you decide to outsource, ensure you follow up with appropriate checks and balances.

Any well-meaning institution must strive to maintain a positive reputation for fair dealings and tight controls and occasionally, bad things happen. However, the presence (or even lack) of an antiquated system for employees to report misconduct and abuse within the organization means that the systems are either not used or are not effective in alerting relevant stakeholders.