In some countries, bribery and corruption are considered normal business practices. However, the US, the UK and a number of other countries have taken a stand against bribery and corruption, heavily penalizing companies that engage in such shady business practices. Many companies have learned from first hand experiences and the misdeeds of others that bribery and corruption don’t pay. For example, think of the hundreds of millions of dollars that Avon has already pumped into their internal investigation into FCPA violations – and the investigation isn’t even over yet!
According to the introduction of this year’s KPMG Global Anti-bribery and Corruption Survey, “7 of 10 executives recently surveyed believe there are places in the world where business cannot be done without paying a bribe”. Some of the key results highlighted from the KPMG survey include:
- Two in five U.K. and U.S. organizations with written anti-bribery and corruption policies do not distribute them to agents, distributors, vendors, brokers, joint-venture partners or suppliers.
- Three in five companies with such compliance programs that incorporate employee training do not require any third-party representatives to participate in the training.
- Nearly one in four U.K. and one in three U.S. companies require training less than once a year.
- Three in five companies do not exercise “right to audit clauses” in third party contracts.
- 10 percent of the U.K. companies and more than half of the U.S companies do not obtain periodic compliance certifications from those with whom they do business in other countries.
What Does This Mean for the Future?
Mitigating bribery and corruption risks isn’t an easy feat, but it’s possible. The results from these types of surveys need to be taken into consideration by organizations, as they shed light on some very important gaps. One of the critical issues that organizations need to address is third party/supplier risk. Before you invite another company into your supply chain, you need to thoroughly evaluate the candidates to make sure their business practices are inline with the expectations set forth in your own organization. Once you’ve selected a company to work with, make sure you provide them with your company’s anti-bribery policies and work with them to encourage ethical actions. We discussed mitigating supply chain risk in our blog post “The Importance of Supply Chain Ethics and Compliance”.
Another sore spot identified by the survey was compliance programs and policies. Companies need to use the information included in the US Federal Sentencing Guidelines and documents prepared by the OECD as tools to develop top notch compliance programs. Every employee needs to be provided with workplace policies and training. Programs need to be updated to reflect changing risks and amendments to laws. As a growing number of countries put anti-corruption laws in place, companies need to ensure that all employees are provided with the necessary information to make sure that their actions comply with laws rather than break them. Guidance offered in the study discusses the importance of monitoring your compliance program, and your financials, in order to detect and deter bribery.