As has been highlighted earlier, there are often misplaced corporate beliefs or assumptions—things like “it wouldn’t happen here,” “it couldn’t happen here,” “they wouldn’t get involved in bribery,” or “we’d know about it.” These beliefs and perceptions can often lead to significant bribery exposure, through apathy, ignorance, and lack of operational processes and controls.
Conflicts of Interest
From personal experience, a conflict of interest compliance questionnaire issued to all employees resulted in a multitude of responses regarding second jobs in fast-food restaurants and the like— second jobs that people were desperate to keep if they were to make ends meet. What that questionnaire didn’t do was expose those employees whose partner had set up a company that was being used to launder bribery funds...or those employees who had a personal financial interest in a supplier to the company...or a host of other conflict scenarios, including consulting services, job selections, and competitive service provision.
These types of conflicts of interest offer significant potential for bribery exposure, and they require a risk-based, concerted, structured, and targeted approach, within applicable laws, in order to identify those employees who have, or could have, a serious conflict of interest.
Margins and “Bribery Reservoirs”
Bribery clearly requires a supply of funds, goods of value, favors, services, and/ or other incentives. The most common sources of funds typically include petty cash, expenses, and orders.
However, another source of funds is that of any surpluses created by operations. Typically, this includes inflated margins being used to create a bribery fund, or “bribery reservoir.”
Bribery perpetrated in this way has been featured in the press recently involving a subsidiary of a major U.S. company.
It is for this reason, among others, that the U.S. Foreign Corrupt Practices Act (FCPA) is considered a “books and records” offense; it is inaccurate books and records, often coupled with the lax bank account controls highlighted earlier, that allows such bribery reservoirs to be created and used.
Gifts and Hospitality/Gifts and Entertainment
Employees can become exposed to the risk of bribery from what starts as something as simple as an invitation for a quick bite after a meeting, which then becomes an expensive meal, and thereafter quickly escalates. For example, an employee can face both personal and professional pressures to establish a relationship with a supplier and other individual, because of their role in delivering a contract—a contract that, in turn, may be a key facet of the employee’s target and bonus structure. As a consequence, a good relationship with that supplier is essential, both personally and professionally, and this can result in the risk of bribery.
Extensive—and lengthy—ABC policies and procedures can look impressive on the desk, but they are not going to be what an employee consults or considers when they are in discussion with a potential supplier and receive an invitation to that first meal. Employees in such a situation should ask themselves, “Is it reasonable, can I reciprocate?” This is a very good, simple, and easily remembered test of reasonable hospitality.