Transparency International UK (“TIUK”), the UK Chapter of the world’s leading non-governmental anti-corruption organisation, has recently published guidance (the “Guidance”) advising businesses on good practice in countering small bribes, including facilitation payments or ‘grease payments’, and also payments made to induce improper action, including cash or vouchers and benefits in-kind, such as tickets for a sporting event, pre-paid phone cards and alcohol. What constitutes ‘small’ is clearly relative – a bribe of £20 to a customs officer may be considered insignificant to a business traveller, but in a country where the average daily wage is £2, this would be a considerable sum of money. Such bribes may be small but they are often made regularly, so easily amount to millions of dollars in bribes every year for a single company.
Small bribes are manifold within businesses across the world – the scale of the problem is highlighted in the statistic from TIUK that globally, more than 1 in 4 people paid a bribe in a recent 12 month period. One of the major issues facing companies affected by small bribes, particularly those operating abroad, is the notion that in some parts of the world, it can be difficult to trade without bribes being frequently demanded. Resisting such demands can have substantial costs for business (such as goods being withheld at customs) and can be difficult for companies to detect if hidden in expense claims or invoices.
The Guidance refers to an ‘ever-increasing spiral of demand’ which can be instigated if a company continually responds to demands. Such payments can lead to a ‘climate of corruption’, with social in addition to economic impacts, as bribery and corruption ‘destroy trust in government and public administration, undermine the rule of law, damage human rights and distort business transactions’ as well as creating an ‘unstable operating environment’ for the company in question. The Guidance instead suggests that companies should establish a no-bribe culture which would lead to fewer demands in the long run and a decrease in bribery overall, thus increasing company credibility.
In order to counter small bribes, the Guidance’s practical advice focuses on 10 principles:
- Ensure a supporting corporate culture – A corporate commitment to ethics and integrity provides an enabling environment for countering small bribes and will include integrity expressed in ‘tone-from-the-top’, a policy of prohibition of bribery in any form and an effective over-arching anti-bribery programme.
- Commit to eliminating small bribes – The company commits to a policy of prohibition of small bribes and a strategy for their elimination through a programme of internal controls and collaborative action.
- Assess the risks of small bribes – The company identifies and assesses the risks that small bribes are demanded or paid in its activities and operations, and the factors that cause them.
- Implement the programme to counter small bribes – A programme of internal controls is implemented comprising detailed policies and procedures to counter small bribes.
- Communication and training to employees – As part of the programme, communications and training make clear the company’s policy of prohibition of small bribes and give requisite information and advice to employees on how to anticipate and resist demands, seek advice and to report concerns or instances of small bribes.
- Attention to countering third party risks – As part of the programme, the company has in place appropriate procedures for third parties including due diligence, contract terms, communication, training and monitoring.
- Ensure internal accounting controls are designed specifically to counter small bribes – As part of the programme, the company’s internal accounting controls are modified and extended to counter small bribes.
- Take appropriate actions if small bribes are detected – The company has a procedure to deal with any incidents including investigation and review, disciplinary action and consideration of reporting the incident to the relevant authorities.
- Monitor the effectiveness of its programme to counter small bribes – The programme for countering small bribes is regularly monitored and reviewed.
- Act strategically to influence the corruption environment – The company accepts responsibility for addressing entrenched factors that lead to demands for small bribe, for example by collaborative working and investing in communities.
Helpfully, the guidance contains practical examples and case studies, a model of negotiation steps for resisting demands and a self-assessment checklist aligned to the ten principles and good practice set out in the guidance.
Overall this advice is intended to help businesses and communities in the face of a substantial problem. By following the advice provided, businesses should be able to stay within the law, save costs, and protect their reputation.