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Bribery and corruption continue to be an issue across the world. Such practices intersect a number of services and organisations including in business, governments, sports and the financial sector. Corrupt practices and criminal activities (including bribery, terrorism financing and money laundering) facilitate crime, undermine fairness and can ruin the reputation of an organisation if this corruption comes to light.
The ability to monitor, recognise, report and take steps to prevent suspicious activities is key to maintaining integrity and upholding ethical standards in a range of contexts.
Frontline employees can offer a unique insight and fundamental understanding of day-to-day operations at work, which may place them in an optimum position to recognise criminal or suspicious activity. In this article we will discuss the central role that individuals play in preventing bribery and corruption.
Understanding Bribery
Bribery is widely regarded as giving someone an incentive (financial or otherwise) to perform (or agree to perform) their functions or role in a way that is improper or unfair. It could also be given to reward them for having already done so.
Bribery is often linked with:
- Corruption
- Other types of economic crime (fraud, money laundering)
- Unfairness
- Illegal activities
- Lack of ethics
The Oxford Dictionary definition of corruption is:
‘dishonest or fraudulent conduct by those in power, typically involving bribery’
Bribery usually involves an abuse of power or a breach of trust.
Bribery does not always involve a cash or monetary payment. Bribery can include gifts and hospitality which may be more difficult to recognise and report. In the decade immediately after the Bribery Act 2010 was introduced, gifts and hospitality only featured in 9 out of 86 completed cases and have never been a central feature in a case.
Acts of bribery can be split into two distinct categories:
- Active bribery
- Passive bribery
When an individual offers, promises or provides a bribe, this is called active bribery.
When an individual requests, takes or accepts a bribe, this is called passive bribery.
If you recognise suspicious activity that suggests either active or passive bribery is going on in an organisation, it needs to be reported and investigated. Many countries focus only on active bribery; however, both are a cause for concern and can have a negative impact on businesses and the wider community.
The overwhelming majority of prosecuted cases involve commercial bribery as a central feature. This includes bribes being paid to gain confidential information, to secure contracts in the public sector, and to gain finance or funding. Prosecuted cases outside of the commercial sector include bribes being paid within the judicial system to avoid or reduce a judicial sentence and corruption within sport (including match fixing).
Businesses and organisations need to understand their responsibilities in terms of bribery and have guidelines in place to meet other statutory requirements to prevent money laundering activities such as:
- Customer due diligence (CDD)
- Good record keeping
- Reporting suspicious activity
There are six key principles that are outlined in the Bribery Act. These principles form the backbone of any risk assessment that is required to limit suspicious activities from occurring. Understanding the six principles will also help to draft a suitable anti-bribery policy:
Proportionality
The action that will be taken should be proportionate to the risk that the business faces. This might relate to the size and scope of operation of the business, the sector you operate in or which countries you routinely do business with.
Top-level commitment
This is an understanding that the people at the top (usually directors, executives or senior management) hold a key position in embedding an anti-bribery culture within the company. They are responsible for showing staff (or third parties who conduct business on their behalf) that bribery will not be tolerated under any circumstances.
Risk assessment
You need to consider what specific risks your company might face. This might mean conducting research about the levels of corruption in countries that you will be doing business in, or only partnering with reputable companies. You should also consider other common external risks including sectoral, transaction, business opportunity and business partnership. Internal risks are also a factor such as whether you have a high staff turnover or a lack of transparent financial controls in place.
Due diligence
You need to conduct due diligence on those who you are directly engaging with in business or those who perform functions with you on your behalf. This means that it is unlikely you could be held accountable for bribery that occurs further down the supply chain. That said, it is always wise to perform checks and ensure those who you are dealing with are reputable and trustworthy.
Communication
Clear communication is always key in business. You should ensure that staff are trained in anti-bribery and that any gaps in their knowledge or skill set are addressed. It is also vital to have an open-door policy so that anyone who has concerns knows who to approach and how to go about it.
It is important that those you directly employ or those who perform any business functions on your behalf, are aware of your policy on anti-bribery and whistleblowing. You might consider when additional training or refresher training will be needed.
Monitoring and review
As with any policy, it is important to see the steps you take to avoid bribery in your business as a process that is subject to change. As the business grows or you tap into new markets, the risks that you now face might increase or evolve. It is also important to keep up to date with any legislative changes that could affect your compliance and review procedures accordingly.
An anti-bribery policy is a written document that outlines a business’s commitment to anti-bribery. It needs to relate to legislation, namely the Bribery Act 2010. It outlines a company’s approach to preventing and handling bribery.
Minimally, your anti-bribery policy will need to include something in writing that states that you have:
- Assessed the risks of bribery occurring in your business
- Given guidelines to staff on the issue including how to report suspicions of bribery and what to do if anyone attempts to bribe them
- Put appropriate and proportionate measures in place to address and prevent bribery
- Agreed to assess these measures on an annual basis (or sooner if the way the business operates changes in such a way that the risk level increases)
You can find anti-bribery policy templates to guide you by searching online.
Businesses who fail to prevent bribery could be prosecuted and face unlimited fines in the UK:
- Section 7 of the UK Bribery Act is entitled ‘Failure to Prevent Bribery’. It outlines the liability for a company or organisation if their employees or associated persons commit bribery in order to reward or create an advantage for the business.
- You will not be deemed to have committed an offence under section 7 if you are able to prove that your organisation had relevant and ‘adequate’ procedures in place to prevent acts of bribery.
By promoting a culture of compliance and having adequate procedures in place, you can safeguard your organisation from prosecution if suspicious activities come to light at a later date. You may do this by:
- Conducting a risk assessment
- Having a robust anti-bribery policy
- Training staff thoroughly on anti-bribery and making sure they have read and understood the policy
- Keeping up with changes in law and reviewing procedures regularly
- Performing ‘due diligence’
- Top-level commitment – directors and those in Level 3 management positions should be seen to foster a culture that is anti-bribery and anti-corruption
For individuals to be able to recognise red flags and make reports about suspicious activity, they require the knowledge, power and resources necessary to do so effectively and within legal frameworks.
For the effective recognition and reporting of suspicious activities, individuals need to be:
- Engaged
- Empowered
- Alert
- Well trained
- Skilled
- Supported by those higher up in the organisation
Some common red flags that indicate suspicious activities may be happening within an organisation include:
- Unexplained or unusual financial transactions – unusual or large payments made to individuals or entities with decision-making authority
- Requests for favours, concessions, or preferential treatment in exchange for money, gifts, or other benefits
- Requests for payments to be made via third parties
- Cash demands – especially those that are made with urgency
- Individuals demonstrate patterns of behaviour inconsistent with established policies or ethical standards, including secrecy, evasion or reluctance to disclose relevant information (such as the source of their wealth)
- Lack of discernible paper trail for transactions
- A customer is behaving out of character or making requests that do not seem to make sense
- A business opportunity seems untenable, has unclear parameters or numerous external third parties and intermediaries involved
- Transactions involving high-risk countries, politically exposed individuals or that are of unusually high value
Organisations should ensure that they conduct thorough regular training that covers what suspicious activity may look like and how to recognise red flags. Once concerns or anomalies have been identified, clear procedures need to be in place for reporting suspicious activities.
Reporting Procedures
Employees need to be trained on the reporting procedures that are in place to deal with bribery, corruption and other suspicious activities that may crop up.
Minimally, employees should understand:
- How to report suspicious activity (online, in writing, via phone, in person etc)
- Who to report to and whether it should be done externally or internally (this may depend on the nature of the concern and who is involved)
- How to escalate their concerns
- What supporting evidence they need to collect
- Following established protocols such as upholding confidentiality and protecting whistleblowers from retaliation
Depending on the red flags that they have identified and the procedures in place within the organisation, reports about suspicious activity may be made to:
- An internal compliance department
- Ethics hotlines
- Regulatory agencies
Many organisations will want red flags to be raised internally to allow them to investigate and address suspicious activity. In some cases, this will not be possible or the organisation may lack the resources to deal with the problem.
The Serious Fraud Office (SFO) is a specialised government department that investigates a small number of economic crimes each year. They deal with complex cases that involve intended harm to the public, the reputation and integrity of the UK as an international financial centre, or the economy and prosperity of the UK. The cases they deal with often involve large amounts of data or information, conduct or evidence located over multiple jurisdictions or complex criminal networks.
You can also report bribery and corruption to the National Crime Agency (NCA). After receiving your report it will be assessed and a criminal investigation may be opened. You do so by making a Suspicious Activity Report (SAR). SARs are used to alert authorities about suspicious activities such as fraud, money laundering or terrorism financing.
Your local police department may also be able to offer advice on what you should do regarding any red flags you have noted and how you should proceed.
Promoting Ethical Culture and Compliance
Internal factors can affect the likelihood of suspicious activities occurring. Some businesses and organisations fail to prevent, or even encourage, such activity, such as:
- An embedded bonus culture where excessive risk-taking is rewarded
- Lack of clear guidelines relating to financial controls, gifts, donations and expenditure
- Poor understanding of how to manage and address conflicts of interest
- Gaps in skills and training within the workforce and third parties acting on the business’s behalf
- A weak message about anti-bribery and a lack of interest or commitment from top-level management
Fostering an ethical culture that prioritises transparency, honesty and compliance is vital to preventing and combating instances of bribery and corruption.
- Conduct regular audits and assessments to ensure compliance and transparency
- Lead by example
- Ensure staff are well trained and appropriately resourced
- Provide regular training on anti-bribery policies, laws and ethical standards
- Establish and share clear guidelines and procedures for conducting business ethically and handling potential bribery concerns
- Encourage open communication and transparency to facilitate reporting and investigation of bribery allegations
Conclusion
Frontline staff are in an ideal position to recognise and report red flags and suspicious activities, but they can only do so if they are adequately resourced and appropriately trained. Individuals should stay informed and remain vigilant to suspicious activity at work in order to ensure a fair, compliant and ethical working environment.
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