Petty Cash, Expenses, Goods of Value, and Orders, Including Benford’s Law
Taken together, cash, expenses, goods, and orders represent four key sources of bribery funding from a company. A $20,000 order for a generator can, at face value, appear legitimate; however, with a simple conspiracy, that generator order can, in reality, be an order for a car intended to bribe, say, a government official; there are multiple methods through which a generator order can be turned into a car supply.
Benford’s Law, also known as the First- Digit Law, is an extremely useful tool that enables the numbers in expense claims, invoices, and the like to be analyzed for irregularities. It lends itself to activities that have the potential for bribery, such as quantities, pricing, transaction levels, disbursements, and sales.
From personal experience, Benford’s Law identified a disproportionately large number of invoices that were being received in the ranges of £400 to £499 and £4,000 to £4,999; the signing limits were £500 and £5,000 and keeping below these limits was done with the intention of avoiding additional, senior scrutiny.
Risk Recognition Failure, Including Third Parties
As has been highlighted earlier, companies often unwittingly expose themselves to the risk of bribery and then do not have the controls, processes, or presence of mind to recognize those risks. This is often because of misplaced belief—“it wouldn’t happen here,” “it couldn’t happen here,” “they wouldn’t get involved in bribery,” or “we’d know about it.”
However, in the Sainsbury’s potato bribery case also featured earlier, one of the culprits drank—using proceeds from the bribery—to such an extent that he became ill and was diagnosed with cirrhosis of the liver; another was “aware of what was happening at a very early stage” but did not report it. The case also highlights the clear need to understand who a company is doing business with, and the potential risks that arise from those third parties.
Clearly, full identification of bribery risk involves a number of functions and roles, including audit (“looking through the mirror”), compliance, and risk management (“looking through the windshield”).
The Bribery Syndromes, Including “Big Desk” and “Mother Ship”
Bribery can take place because the people involved in it have the “big desks”—that is, they have the positions and seniority that enable them to organize the necessary collusion, conspiracy, and overrides—coupled with the “importance” in a company, leading them to believe they can, and will, get away with it. Clearly, that is not to say that only people with seniority will be involved in bribery or other forms of white-collar crime; indeed, history is littered with examples of junior employees embezzling funds. In one of the Ikea bribery cases, the employees involved were relatively junior, but, as procurement officers, they were in roles at high risk for bribery.
Many companies have extensive international operations and invest heavily in ABC compliance and training, but fail to consider the real risks associated with small teams and subsidiaries, particularly when they are operating overseas, often in high bribery risk countries. Many such small teams and subsidiaries consider the company or company headquarters to be just the “mother ship.” They occasionally make contact for funds and contracts, but otherwise, they are their own bosses, running their own business.
As a consequence, they can see themselves as unaffected and uninvolved with ABC, and they simply carry on doing whatever they believe is necessary to deliver targets and achieve bonuses and thus, recognition. In a small team of, say, ten employees, often working directly alongside their manager, it would be relatively easy to identify a whistleblower. It is for just this reason that potential whistleblowers may simply decide not to take the risk of reporting what they know.