Bribery and corruption are enterprise risks that need to be planned for
- Published: Thursday, 12 May 2022 07:17
Bribery and corruption is often greater in times of crisis and the pandemic has only aggravated vulnerabilities further. Leas Bachatene explains why the importance of having a strong anti-bribery and anti-corruption programme in place has never being greater.
Not only do business leaders need to take a stand for moral integrity, but it’s important that they are aware of the risks that corruption and bribery presents to organizations of all shapes and sizes. Far from the stuff of fiction and the silver screen, businesses are being targeted at this very minute. Naivety is not an excuse.
Despite a wide range of strategies to combat corruption and heightened awareness of anti-bribery legislation, there remains a discrepancy between these efforts and the collective capacity to realise change. Organizations continue to face hurdles in their efforts to implement effective anti-bribery and anti-corruption programmes, These roadblocks can include a lack of top-level commitment among other internal difficulties.
Here are some of the hidden pitfalls and challenges that organizations can often face when implementing an effective anti-bribery and anti-corruption programme, and how to overcome them.
Lack of acceptance at the organizational level
Despite growing awareness of long-term business impacts, some organizations still feel that anti-bribery and anti-corruption laws don’t apply to them. This may stem from a lack of understanding of the full scope of the legislation now widely being enacted.
Resistance also comes from specific departments that view additional compliance constraints as roadblocks to conducting business. Sales teams would rather not face delays in the pipeline and procurement teams are wary of disruptions to the supply chain. However, a successful anti-bribery and anti-corruption programme only works if it is consistently implemented across the organization. Often such hurdles can be overcome with frequent communication and training to build a better understanding of bribery and corruption risk and create buy-in at all levels.
Resistance at the executive level
It is absolutely essential for top-level management to be fully invested in the effectiveness of an anti-bribery and anti-corruption programme. The importance is clearly highlighted in specific guidance under the UK Bribery Act designed to directly address executive commitment. However, many organizations still struggle to achieve a significant level of buy-in from senior management.
A lack of understanding of the importance of preventing bribery and corruption fosters dangerous and potentially damaging level of disregard from the executive suite. Without clearly communicated commitment from the C-suite, it is nearly impossible to get an organization to demonstrate a level of dedication to anti-bribery protocols and processes.
Ineffective budget allocations
Determining the right level of anti-bribery and anti-corruption efforts for any organization can be complicated. Doing too little may expose it to severe risk, while excessive efforts that go beyond the organization’s needs can divert capital and resources away from key business objectives. Finding the right balance is an ongoing challenge for many and the result is seen in budget allocations that have been stymied by indecision.
Often, constrained budgets go hand-in-hand with a lack of executive buy-in. Money signals priority and, without it, implementing an effective bribery and corruption risk management process will be an uphill battle. A cost-efficient compliance programme is achievable with the right solutions and an integrated prevention strategy in place. However, an inadequate or unrealistic budget is the equivalent of having no programme in place at all.
Insufficient corporate compliance resources
Many corporate compliance departments are leanly staffed and often hold responsibility for several areas of risk management, with bribery and corruption prevention being one of many issues to contend with. Trying to do more with fewer resources creates internal strain and often leads to shortcuts or the incomplete implementation of an effective compliance plan.
One solution for limited resources is an anti-bribery and anti-corruption plan that facilitates easy information exchange between all function groups within an organization. An emphasis on information transparency underpinned by systems that support easy routes to share key pieces of intelligence can go a long way and help maximise limited resources.
Identifying and addressing risk
Identifying potential bribery and corruption risk within your customer and third-party vendor base is half the battle in the fight against financial misconduct. Efficient due diligence can be achieved throughanti-bribery and corruption questionnaires that automate the delivery, reception, and interpretation of information. This ensures a comprehensive and clear assessment of your third-party corruption risks and anti-bribery compliance.
Deciding the actions to undertake based on screening outcomes is the second half. Decision-making is the area where the key tenets that underpin your compliance programme truly come together, including executive buy-in, frequent communication and training, information transparency and clearly defined protocols and expectations. Each opportunity can represent a slightly different situation, depending on the nature of the business being conducted and factors like geopolitical region and culture.
An effective anti-bribery and anti-corruption programme features consistent protocols that are implemented and communicated on an organization-wide level. Building in escalation paths and preventative actions that are flexible enough to accommodate unique business opportunities is critical. The most effective compliance programme is one that is designed to support core business goals, facilitate timely transactions, and protect the business against exposure to bribery and compliance risk.
There are several hidden pitfalls that can act as obstacles for organizations seeking to initiate a strong anti-bribery and anti-corruption programme. These setbacks can be frustrating to deal with and repeated delays and internal barriers can often seem endless. However, achieving success in today’s complex business arena defies simple solutions.
The unprecedented and formidable nature of due diligence requirements ensures that there is no single solution for every case. By undertaking a detailed review of new and existing clients, business partners, and third parties, however, you can identify key issues relating to bribery, corruption, financial crime, governance and a number of other potential risks.
More importantly, you can safeguard your reputation and remain in compliance with regulatory requirements. The threats to organizations that fail to take hold of this issue are great, but the tools and processes for prevention are now readily available. It’s time to fight back.
Leas Bachatene is CEO of ethiXbase
For more information on bribery and corruption prevention, download the Key Trends in Anti-Bribery & Anti-Corruption in 2022 & Beyond and Anti-Bribery and Corruption Sentiment on a Global Scale e-books.