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GRC Professional : GRC Spring 2011
16 grc professional • Spring 2011 A complete defence to this offence is available if the commercial organisation has implemented “adequate procedures” to prevent bribery. The UK Secretary of State for Justice has issued official guidance on what constitutes “adequate procedures” (see page breakout on right). By having in place robust procedures, a commercial organisation may avoid prosecution, or at least have minimal penalties imposed, for isolated and unauthorised acts of bribery by employees or agents. Compliance frameworks A common feature of organisations where bribery has been committed is that it’s not usually a rogue salesperson in a single act of corruption, but an endemic culture of ‘that’s just the way we do business’. A robust anti-corruption framework can go a long way to addressing the problems. Ellis suggests starting with the basics: “Do you address corruption in the first place? Do you have ‘you should not pay bribes’ in your code of conduct?” She says you should then conduct a risk assessment that includes the countries where your business operates and how isolated the sales staff are. “Do you have employees that are left alone to make decisions? What questions are asked about how they make decisions?” Ellis says. Another risk factor is the level of pressure on the sales and business development teams. “You want to make sure that the structure of your business doesn’t encourage them to pay bribes to get the business in. If a person decides not to pay a bribe, is that person actually rewarded?” She suggests having a hotline that sales staff can call if they find themselves in a situation that they feel could be unethical. “If you don’t know, if you feel under pressure and you don’t know what the answer is – or you realise you are skating on thin ice – there needs to be somebody they can call.” Skinner says it can be challenging to train sales teams in anti-corruption policies and procedures. “In my experience, seasoned sales teams who operate in developing markets can have a healthy degree of cynicism about anti-bribery policies,” he says. “I am a big believer in the benefit of in-person training for front line employees, with time for questions and debate. My tip would be to get in front of them and be ready for a robust discussion.” Skinner notes that another challenge for compliance managers is creating procedures that help, not hinder, business development. “It is important to focus on high risk areas of the business and avoid unnecessarily tying up other areas in red tape,” he says. “Good procedures create a forum for an open and effective dialogue between the business-winning teams and those with specialist knowledge so that high-level decision makers can make an informed judgment about how the company will proceed.” He says the most important feature of a company culture in preventing corruption is maintaining a level of openness and a willingness to discuss difficult situations at high levels within the organisation. “There is no doubt that avoiding bribery and corruption in some countries is very challenging and involves difficult issues of judgment, but if people in-country are supported and encouraged to escalate the issues to appropriate specialists within the organisation, it is much easier for decision makers to obtain an accurate assessment of the risks and possible mitigation steps and then come to an informed decision about how to proceed.” Red flags Blake Dawson’s Jane Ellis says that one of the difficulties of policing corruption internally is that there is usually little to no actual evidence of the bribe. Records are falsified, bribes are hidden or not recorded at all. A bribe in its very nature is secretive. Ellis says a red flag can be a lack of detail, for example, large sums of money being spent on ‘consultancy services’ without any further explanation. Over-inflated sales commissions are another warning sign. She cites, for example, the case of Alcatel-Lucent (see opposite page), where two consultants in Costa Rica were paid US$18 million – a “quantum leap” ahead of what they could normally be expected to receive. X there is no doubt that avoiding bribery and corruption in some countries is very challenging and involves difficult issues of judgment. Adequate anti-bribery procedures The UK Secretary of Justice has issued guidance that an organisation with the following procedures in place could have an adequate defence against a charge of “failing to prevent bribery”: • proportionate procedures: Does your organisation have in place anti-bribery policies and procedures, and are those policies proportionate to the size, nature and complexity of your business and the risks it faces? • top level commitment: Does your top level management foster an anti-corruption culture, and ensure that all staff and management know that bribery is not acceptable? • risk assessment: Has your organisation assessed the nature and extent of the bribery risks it faces, and is this assessment informed and documented and undertaken periodically, particularly when the organisation enters new markets and business arrangements? • due diligence: Does your organisation undertake thorough due diligence of persons and other organisations who will perform services for and on its behalf? • communication: Does your organisation conduct training of staff and regularly communicate with staff about its anti-bribery policies and procedures? • monitoring and review: Does your organisation monitor and review its anti-bribery procedures? Does your organisation make any necessary improvements or changes over time as the risks faced and the effectiveness of procedures change? Source: Blake Dawson
GRC Summer 2012