Building a House of Integrity
On the face of it, the risk of bribery and corruption in business remains high. But we are entering a new phase in the fight against corruption. This phase began following the 2008 global economic crisis when the broader expectations of society, particularly investors and stakeholders, shifted to demand that business is conducted in a better way going forward. Since then, there has been an expectation that companies not only focus on profit, but also on purpose and their place in the societal ecosystem. This shift has some important consequences for how companies approach bribery risk management.
Increasingly, ‘soft’ indicators such as the assessment of the cultural environment of a situation or organisation are becoming an important element in the design of an efficient bribery risk management programme. In part, this is being driven by a growing demand both at policy and regulatory level, as well as at voluntary level, for broader non-financial reporting. So there is a need to take into account broader indicators such as organisational culture, as much as any hard controls that need to be imposed when embedding a bribery risk management programme.
In pursuing this route, it’s important that companies don’t fall prey to the assumption that
bribery is a problem based purely on geographical lines, whereby the main risks lie in forging business relations with the developing world. It’s true the developing world is playing catch up with more developed countries which have stronger business structures and more sophisticated legislation and powers in place to deal with such events. But in reality, bribery and corruption come in many forms and has little regard for location.
Additionally by viewing bribery primarily as a geographical problem, companies risk miss-diagnosing the symptoms completely or even missing out on potential growth regions in order to avoid getting captured by anti-bribery legislation. On this note, it is important to remember that successive administrations have stated that it is not the intention, with the introduction of strict liability in the UK Bribery Act, to disadvantage UK businesses, or inhibit them from entering new markets. So how can UK PLC put this into context when assessing bribery risk?
One solution is to approach bribery risk as an aspect of integrity risk management. What we mean by this is to put in place the controls to manage the entire risk of misconduct within an organisation. This includes misconduct in all its guises; whether that’s market manipulation, insider trading, data misuse or theft.
This concept of integrity risk also touches on wider areas including the way you hire and fire; the way you promote; the way you remunerate; as well as taking into account nepotism and conflicts of interests – aspects of business that are not necessarily covered by bribery risk management alone.
Taken together, however, they help build a house of integrity from within that will help organisations achieve a more holistic approach to implementing bribery risk management in the future.
How we play our part – UK initiative
Our close involvement with bribery risk management developments means we have a clear insight into the likelihood of the UK government extending the concept of strict criminal liability found in the Bribery Act, to other forms of corporate dishonesty, which we believe is now on the horizon. As such, the development of a programme that treats bribery risk management as an aspect of broader integrity risk management issues, built upon the twin foundations of prevention and detection, will put companies ahead of the curve in terms of dealing with such future challenges. Equally important, it helps embed a culture of ethics whereby businesses can operate with purpose as well as for profit.
Howard Shaw. Head of Anti-Bribery & Corruption Services. Mazars UK