Zero tolerance and the corporate defence

Zero tolerance and the corporate defence

09 March 2016

Your adequate procedures seem sufficient, your tone at the top is robust, and everyone in your London office understands that the reason James was escorted out was the company’s zero tolerance approach to Bribery.  Job done?

 

The question of dealing with corruption in countries with known and significant corruption problems came up recently at an event we attended (facts adjusted to protect anonymity).  In the example, a company had bid for some work, via a third party, in a well-known hotspot for both offering and receiving bribes.  This company had a well-written policy, which everyone in the company knew about, and had gone on to make sure that their agents and various third parties had subscribed to their strict policy.  The due diligence was enhanced, recognising the increased risk, and any concerns duly acted upon.

 

“But,” came the follow up, “we think that bribery is probably taking place.  How deep do we dig?” 

 

At first glance the adequate procedures looked reasonable – indeed in places commendable - but for that one remark.    The conviction in the Sweett case hasn’t answered every question about corporate liability but it has made it clear that a failure to detect and prevent bribery can be an indicator of inadequacy.  The Deferred Prosecution Agreement granted to Standard Bank further makes it clear that companies can’t rely on third parties or group companies to manage Anti Bribery and Corruption risks and due diligence – particularly in high risk cases.  In high risk jurisdictions it looks therefore as though the answer must be to “dig deeper” – to be sure that no bribery is taking place in your name, by being the ones conducting all the Know Your Customer checks and insisting upon enhanced and continuing due diligence. 

 

Implementing procedures that are actually adequate, in that they grant you a high level of confidence that there is no corruption in your business flows, might seem onerous.  Indeed proper risk assessment can lead to the conclusion that you will need to walk away from some opportunities simply because the risk is too high.  Making sure that your compliance department are involved at an early stage of business and ensuring that your teams have a strong understanding of bribery and the related individual and corporate offences will help mitigate the costs of these decisions. After all, that lucrative opportunity won’t look so inviting following an unlimited corporate fine and potential custodial sentences for individuals involved. 

 


 

 

The Economic Crime Academy created it’s Understanding, Preventing and Investigating Bribery course to cover everything that the anti-bribery practitioner needs to know about how bribery works.  Over three days, delegates receive guidance on how to reduce the risks of operating in (or expanding into) high risk jurisdictions, and how to implement procedures to protect organisations from rogue operators.  Together with a strong insight into red flags, delegates will leave the course well equipped to reduce their organisation’s exposure to bribery risks. Click here to find out more.

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