The fight against bribery: a year on…

Just days ago, Griffith Energy, a Canadian oil and gas exploration company was fined $10.35m by the Canadian authorities for bribing an African government official.

The company had reported itself to Canadian and US regulators and the size of the fine provides evidence of how tough anti-fraud and corruption legislation is becoming amongst developed nations.

So how is the UK scoring in its fight against bribery?

A year after the UK Bribery Act got Royal Assent there have been two convictions; a court clerk who accepted a £500 bribe to make a speeding ticket ‘go away’ received a three year sentence for bribery with a concurrent six years for misconduct in public office; and a taxi driver who received a suspended sentence after attempting to bribe a Licensing Officer to ensure he ‘passed’ the private taxi license test.

Two private and no corporate convictions since the Act was passed may not seem an impressive 12 months of legislative rigor, but PwC’s research into the world of bribery suggests that the past year has merely been one of preparation and consolidation, and that more proceedings will inevitably follow.

The new Director of the UK’s Serious Fraud Office (SFO) has publicly declared his intention to seek prosecutions for the most serious bribery and corruption cases and there are a reported dozen or so new cases either registered or in development with the SFO Intelligence Unit.

The stark fact is that bribery is not diminishing. Transparency International’s authoritative annual Corruption Perceptions Index (CPI) scores countries on a scale from 0 (highly corrupt) to 100 (very clean) – while no country has a perfect score, two-thirds of countries worldwide score below 50, indicating a serious corruption problem. Amongst the G20 nations, only seven score as ‘clean’.

The rest fall below 50 – including some so-called BRIC nations (Brazil, India, China and Russia); targeted by InvestNi and DETI for export development; but also believed by CPI to be ‘highly corrupt’.

So, how can Northern Ireland organisations grasp overseas opportunities and grow their exports while keeping themselves and their people on the right side of the Bribery Act?

PwC has advised a number of organisations on Bribery Act compliance and our experience is that too many don’t fully understand their responsibilities. Public and private sector organisations in the UK run the risk of being prosecuted for bribes or illegal inducements paid by UK or overseas employees, agents, or anyone acting on their behalf.

The penalties upon conviction under the Act are tough – both in terms of cost and reputational damage – but for the Board to ensure compliance and embed it into the DNA of the organisation may require specific professional advice and experience, not available within the company.

A director who urges his or her export development team to ‘dig deep’ to win new business may be perceived as encouraging or condoning any subsequent illegal behaviour, while the days of ignoring the actions of overseas agents or brokers because ‘they don’t work for us’ are over.

So, while organisations capable of proving that ‘adequate procedures’ are in place may have a defence to prosecution, defining, ‘adequate procedures’ that are transparent and enforceable is tough. In reality, organisations need to be proactive in putting compliance procedures in place, by adopting a four-tiered approach:

• Instilling the right culture – ensuring the behaviour and tone from the top reinforces the importance of compliance, undertaking risk assessments and honest dealing;

• Putting in place a framework of controls – enhancing operational controls and ensuring that they are supported by a strong anti-bribery governance framework including written policies on bribery and corruption and a code of conduct;

• Embedding processes – communicating procedures to staff and providing training in respect of monitoring and reporting suspicions;

• Take action – where a problem is detected the organisation must respond quickly to take corrective action.

The Ministry of Justice has also published a six step guide to help organisations of all sizes to understand the procedures they can put in place to protect themselves against bribery and corruption.

It takes courage to do the right thing and self report issues, but as the Bribery Act spawns an aggressive programme of investigation, discovery becomes increasingly likely. Consequently, embedding the right culture and a proportionate, risk based, compliance regime is the best way of reducing the likelihood of future litigation, financial penalties and corporate disgrace.

For more information contact:
Ian McConnell 
Forensic Services Partner 
Tel: +44 (0) 28 9041 5681
Email: ian.mcconnell@uk.pwc.com