Anti-corruption policy is essential

Picture: Bill Henry

Picture: Bill Henry

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Corrupt practices do business no favours, says Andrew Walker

According to Transparency International’s global corruption barometer, 49 per cent of people in the UK believe that business is corrupt or extremely corrupt. Five per cent of these respondents admitted to having paid a bribe in the 12 months up to July 2013 – a 4 per cent increase since the same question was asked as part of the annual survey in 2010.

Picture: Craig Stephen

Picture: Craig Stephen

In a climate where business is fighting to recover and the influence of market perception is increasingly influenced by the immediacy of social media, these figures are worrying indeed. Besides the moral and reputational drawbacks, bribery and corruption will do nothing to help Scottish businesses capitalise as economic revival starts to take hold.

Anti-corruption legislation not only protects Scotland’s interests on the international stage, it aids competitiveness by protecting businesses and individuals from falsely inflated costs.

Anti-corruption procedures not only for super-rich companies

With a number of high-profile corporate corruption cases featuring in the media in recent years, it would be easy to assume that bribery and anti-corruption procedures are the domain of super-rich companies only. They’re not.

Bribery is offering, giving or promising to give a financial or other advantage with the intention of inducing the recipient to improperly perform their job. In the commercial world, this can include giving money, gifts or other inducements in order to obtain advantage over other business competition.

In the UK, current legislation stipulates that companies are liable for bribery committed by their employees, unless they can prove they adequately prescribed and implemented procedures to prevent corruption; and these laws apply to any business operating in the UK and to UK-domiciled businesses of any size, in any part of the world.

The most current example is GlaxoSmithKline, which is under investigation amid allegations that employees of its China operation tried to bribe public health officials to put more of their drugs on their shelves. While it is too early to count the full cost of the scandal to GSK, the share price has dropped more than 3 per cent over the past month, and it will almost certainly result in revenue losses in China if not elsewhere.

Similarly, Siemens recently counted the cost of a contract bribery scandal at over £2 billion after most of the board had to be replaced for failing to prevent corruption once improper sales practices had been brought to its attention. In the US, JP Morgan Chase settled out of court by paying £45m when two former directors were accused of trying to bribe public officials in one state. The bank also agreed to forfeit $647m in fees.

Simply put, the costs to business of corruption are vast and should not be ignored. It therefore behoves all business owners and senior managers to ensure they have adequate policies and, most importantly, implement them. In at least one of the examples above, the companies lost because they were found not to have correctly implemented the existing anti-corruption policies.

With this in mind, here is a short list of how to get your anti-corruption and bribery policy in place:

• Familiarise yourself with your responsibilities – the Ministry of Justice has published a worthwhile Quick Start Guide – and have your legal counsel develop an anti-corruption policy which clearly defines bribery in the context of your business while remaining consistent with the Bribery Act and other relevant legislation.

• This policy should be formally approved by the board or equivalent body, which should also receive formal training and written guidance on its responsibilities, as well as regular updates on implementation of the policy.

• The policy must be actively implemented, preferably by a senior manager, with ultimate responsibility resting with the owner, chief executive, or equivalent top level manager. Clear lines of authority need to be reiterated on a regular basis.

• The policy should include procedures for confidential reporting or whistle-blowing.

• Employees should be trained and equipped to comply with the policy, and asked to attend and sign an annually updated declaration that they have read and understand the company’s business conduct requirements.

• Your legal counsel should monitor anti-bribery laws and court judgments, advise on any updates required, and provide regular checks and advice on implementation of the policy in practice.

If you lead by example and take a clear and determined approach to anti-corruption in your company, all these actions will prove relatively simple to implement and could save you significant time and money in the long run.

• Andrew Walker is a partner at law firm HBJ Gateley www.gateleyuk.com

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