What is Bribery and Corruption?
A major key to running an ethical and compliant company, is to ensure that bribery and corruption is properly managed in all its forms. In doing so, companies can strengthen their ESG strategy, abide by the business’s legal obligations, (under the FCPA and UK Bribery Act 2010,) and install trust both from employees and supply chain workers.
So, what exactly are the definitions of bribery and corruption?
Corruption is defined by Transparency International as, “the abuse of entrusted power for private gain.” It is a broad set of crimes, often committed by those on a senior level, that involve, “the abuse of entrusted power for private gain.” Some of these crimes are common and grudgingly accepted as just the price of doing business. Others actively stifle competition and subvert the free market. Forms of corruption vary, but can include bribery, lobbying, extortion, cronyism, nepotism, parochialism, patronage, influence peddling, graft, and embezzlement.
Bribery is a more specific subset of corruption and is defined as the offering, promising or giving of something to influence someone’s behavior, conduct or actions. It may involve making or accepting unethical or illegal offerings of any loan, gift, payment, advantage, or reward for personal gain.
What are the Types of Corruption to Look Out for in Business?
So, what counts as corruption and bribery? The main types, and some examples in business, can include:
- Bribery: Accepting/offering items or money, in return for preferential treatment e.g., promotions, extra work benefits or getting away with misconduct. (See examples below).
- Fraud: Dishonest and illegal activities perpetrated by individuals, or entire companies, to provide an advantageous financial outcome to those persons or establishments.
- Embezzlement: Taking the company's goods or funds for personal gain.
- Kickbacks: Payments made to businesses by vendors in exchange for contracts that overinflate, or exaggerate, the cost of the work performed at the expense of those receiving the services and paying for the contract.
- Bribing a senior member of staff to hire a certain candidate.
- Wanting to cover-up an employee or business mistake by offering gifts or money.
- Bribing a member of staff of higher authority to gain a pay rise or extra company perks.
The consequences by law for the discovery of bribery and corruption in an organisation can be highly damaging. Even if corruption and bribery is not discovered by law enforcement, it can lead to unwanted internal effects and negative retaliation by employees and the entire workforce. Consequences can include:
- Damaged reputation: Businesses which have poor anti-bribery and corruption compliance attract less business. Commercial organisations will be wary and unlikely to do business with them.
- Damaged finances: The government can legally hand out an unlimited fine for bribery, that can go beyond $3 billion, and corruption offences. This can significantly damage company finances. Both fines and lost business can result in a damaged public reputation.
- Lower employee morale: Being guilty of bribery, or having a workforce that knows it goes on, can result in lower employee morale and negative workplace culture. This leads to lower productivity in the workplace and a potentially higher employee turnover. Coupling this with fines and damaged reputation, it can be a death blow to any, even large, business.
What Can Companies Do to Tackle ABC Issues?
In the UK (United Kingdom), the 2010 Bribery Act came into effect due to the rising number of corruption cases being reported in companies. The act requires that organisations must have adequate procedures, policies, and measurements in place to prevent bribery and corruption. Similar legislation also exists in other countries, such as Sapin II in France. With the extensive potential consequences companies can face, if bribery or corruption are uncovered by law, it is vital that organsations remain compliant with the act. Simple ways companies can do this include:
- Updating anti-bribery & anti-corruption policies regularly, ensuring clear communication of them to employees
- Getting the tone right from top senior management leads as an example to the rest of the company
- Embedding anti-bribery and anti-corruption principles in corporate culture
- Ensuring gifts and hospitality meet a key criterion of rules
- Conducting due diligence on all third parties and refusing to work with agents, distributors, or overseas partners who either refuse the procedure, request that payments be made into an offshore account or will not sign a written agreement
- Watching out for potential bribery and corruption red flags amongst employees
To be legally compliant, businesses must have a zero-tolerance approach to bribery, both in and out of the workplace. If an employee offers or accepts a bribe, on any level, there must be action from senior management. Gifts can range in size and value, but employment law still considers them bribes.
How NAVEX Products Can Help
At NAVEX, we can help businesses tackle potential bribery and corruption within the workplace using our NAVEX solutions and Anti Bribery and Corruption online training courses. To learn more about what we can do for your organization, click here, or contact us to speak with one of our team specialists.