Corruption is big business. Bribery costs an estimated $1 trillion a year according to the World Bank and a recent GoodCorporation survey of business practices revealed that anti-corruption policies are ineffective. But from the increasing amount of dirty linen on display in the press, notably the recent Man Group and Siemens scandals, and the long-awaited publication of a draft Bribery Bill (the first revision to UK anti-corruption law in over 100 years), corruption is moving up the corporate agenda.

The current economic climate has placed company ethics firmly under the spotlight for businesses of all sizes. Practices that a decade ago would have been dismissed with a resigned shrug of the shoulders are now politically very incorrect and will soon become legally incorrect once the draft Bribery Bill becomes law.

So, what constitutes good practice in avoiding corruption? Asking employees to simply sign an anti-corruption policy will not be sufficient. Particularly if your business wants to avoid falling foul of the new corporate offence that will result in companies being prosecuted if good practice to avoid corruption has not been applied.

Setting employees straight
• A zero tolerance policy towards bribery must be clearly communicated.
• Avoid falling into the ‘gifts and entertainment’ trap by making it clear what can be given and what can be received
• Have clear rules about what constitutes a conflict of interest and what might be seen as influencing a business decision.
• Make sure employees are aware of commercial confidentiality. There should be adequate electronic and physical security on information
• Set up reporting procedures so that honest employees know that it is their duty not just to decline, but to report to senior management

Safeguarding suppliers
• Expected behaviour must be clearly communicated, with a clear message that misbehaviour will be met by sanctions.
• Separation of powers to approve procurement decisions is essential and ensures that suppliers need to corrupt not one but many.
• Senior management should be wary where suppliers have been continually re-engaged with little attempt to explore the alternatives. Single sourcing without competition is sometimes inevitable but should be surrounded by extra safeguards and challenges.
• Separation of duties should also apply to the acceptance of goods delivered and of work completed, as well as to approvals of invoices.

Clarifying customer relations
• Customers can bribe as well as suppliers, generally to gain advantages in pricing or service levels. A well-controlled pricing policy is essential here, with procedures and business cases for approving discounts.
• Customer entertainment will always be part of business life but it should be able to stand up to external scrutiny.
• Bid spending is often necessarily and worthwhile commercially for big deals. But the rules of engagement should be clear and the accounting fully transparent.

Public officials
• Under the proposed new Bill, there is no longer a distinction between so-called ‘facilitation payments’ and bribery.
• The practice of lobbying is not unacceptable but should follow the general rules on customer and supplier relations and should be transparent and kept to business matters. Lobbying is best done, as far as possible, through an industry association to avoid accusations of special favours.

Businesses are fond of proclaiming their stance on corruption. They should also visibly support those governments that set up policies and institutions to combat corruption. Too many currently sigh in private or, worse, thwart the efforts that are made by giving in to obstructive officials.

All this sounds remarkably like sound business practice that should be adopted in a perfect, corruption-free world. We routinely see companies failing to get beyond a finely written Code of Conduct and failing to put in place consistent processes that would underpin and embed it. The new legislation will make the clarity, traceability and strength of anti-corruption processes all the more important for protecting companies and their directors.

For more information visit www.goodcorporation.com [1]