In September 2010 the Government issued draft guidance to help commercial organisations determine what bribery prevention procedures should be put in place. The draft guidance is formulated around “Six Principles for Bribery Prevention” which are summarised below.
Each company needs to tailor the principles to their business, taking into account the nature of the company, its operations and the jurisdiction(s) in which it operates.
Principle 1: Risk assessment
In order to put in place effective controls to prevent bribery, it is essential that organisations have a thorough understanding of the bribery risks that they face. Risk assessment procedures will vary enormously between different organisations.
Factors affecting internal risk include:
- employees not understanding the organisation’s business profile and associated bribery risks
- the organisation’s remuneration structure (for example, are staff motivated by commission payments and the like to procure business at any cost legal or otherwise)
- deficiencies in employee training or skills sets
- lack of clarity in the organisation’s policy on gifts, entertaining and travel expenses.
External risk factors include:
- Country risk – perceived high levels of corruption as highlighted by corruption league tables published by reputable organisations.
- Transaction risk – for example, transactions involving charitable or political contributions, licences and permits, public procurement, high value or projects with many contractors or involvement of intermediaries or agents.
- Partnership risks – business partners located in higher-risk jurisdictions, associations with prominent public office holders, insufficient knowledge or transparency of third party processes and controls.
- Principles 2 to 6 deal with how the risk assessment will inform the development, implementation and maintenance of effective anti-bribery policies and procedures.
Principle 2: Top level commitment
Establishing a culture in which bribery is unacceptable across the organisation.
Principle 3: Due diligence
Knowing the extent of the organisation’s business relationships; understanding the risks that a particular business opportunity raises; seeking reciprocal anti-bribery agreements and being in a position to feel confident that business relationships are transparent and ethical.
Principle 4: Clear, practical and accessible policies and procedures
Ensuring that these are applied to everyone employed by the business as well as business partners under the organisation’s effective control and ensuring that they cover all relevant risks such as:
political and charitable contributions; gifts and hospitality; promotional expenses; and responding to demands for facilitation payments or an allegation of bribery coming to light.
Principle 5: Effective implementation
Embedding anti-bribery in the organisation’s internal controls, recruitment and remuneration policies, operations, communications and training on practical business issues.
Principle 6: Monitoring and review
Ensuring effective financial monitoring and auditing with controls that are both sensitive to bribery and transparent and considering how regularly the business needs to review its policies and procedures.
Organisations will need to ensure that they are devoting sufficient resources to the assessment and mitigation of bribery risks and as the business evolves and external conditions change.
The above principles will apply when companies develop their own anticorruption policies. If companies enter into outsourcing arrangements, these policies should set out what specific procedures will apply to the selection of suppliers and outsourcing contracts.
In the following sections we consider what these principles could mean in practice when entering into outsourcing transactions and the conduct of supplier/customer relationships.