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Anti-Bribery and Corruption

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In essence, corruption is a broad term for misconduct in the workplace and the business. There are many types of corruption in business, and bribery is a form of corruption. This means bribery will always be corruption, but not all forms of corruption are bribery.

Bribery and corruption are significant ethical breaches that can critically undermine the integrity of a business environment. In essence, bribery involves offering, giving, receiving or soliciting something of value as a means to influence the actions of the recipient. Corruption, on the other hand, is a broader term. It pertains to dishonest or fraudulent conduct by those in power, typically involving bribery.

 

Corruption

 

In its many forms, corruption can be as devastating to a business or public organisation as any external threat. In business, one example is fraud, where company resources are misused for personal gain, such as manipulating financial statements to project inflated profits. Embezzlement, another form of corruption, involves misappropriation of funds entrusted to an individual for their personal benefit. Nepotism, preferentially hiring or promoting family members or close friends, regardless of their qualifications or skills, is another pervasive corrupt practice.

In public settings, corruption can manifest as abuse of power, where public officials exploit their position for personal benefit. Patronage, whereby favours are granted in return for support, and clientelism, where goods or services are exchanged for political support, are widespread forms of public sector corruption.

These corrupt practices result in a colossal waste of resources and money, undermining economic efficiency. Funds that could have been allocated to productive uses are instead diverted, leading to suboptimal outcomes and hindering economic development. Corruption further breeds a culture of injustice, as it often rewards dishonesty and punishes honesty. This not only demoralises honest employees but can also dissuade talented individuals from joining the organisation, thereby affecting recruitment and retention.

Corruption also tarnishes the reputation of the involved entities, often leading to lost business, decreased investment, and even legal repercussions. The reputational damage can be long-lasting and difficult to recover from, leading to significant financial losses.

 

Bribery

 

This is a pervasive form of corruption which can manifest in various forms in both business and public settings. In the corporate sphere, it could involve an employee accepting a monetary gift in exchange for selecting a specific vendor, or a company offering luxury holidays to procurement officials to secure a lucrative contract. Wanting to cover-up an employee or business mistake by offering gifts is also a form of bribery, along with bribing a member of staff of higher authority to gain a pay rise. In public settings, it may take the form of citizens paying public officials to expedite service delivery or circumvent legal requirements.

 

The ramifications of such illicit activities extend beyond legality, detrimentally affecting the very lifeblood of organisations and society. Employee morale often diminishes in the face of bribery. The perception of favouritism or unfair advantage erodes trust, fosters disunity and, ultimately, saps motivation. This translates into decreased productivity as disillusioned employees become less committed and engaged in their roles.

Further, a company’s reputation, painstakingly built over years, can be tarnished overnight by bribery allegations. This loss of reputation can lead to a loss of customers, business partners, and investor confidence, which directly impacts an organisation’s financial health. In addition, there are often hefty fines and legal penalties imposed on companies implicated in bribery scandals.

 

Action against corruption and bribery

 

Anti-Bribery and Anti-Corruption Laws refer to international and local laws that collectively prohibit bribery and corruption. Such laws include the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act. The UK Bribery Act is considered one of the most robust pieces of anti-bribery legislation worldwide. It came into force in July 2011, and it covers four main offenses:

  • Bribing another person: This involves offering, promising, or giving a financial or other advantage to induce a person to improperly perform a relevant function or activity, or to reward them for the improper performance of such a function or activity.
  • Being bribed: This offence involves requesting, agreeing to receive, or accepting a financial or other advantage for the improper performance of a relevant function or activity.
  • Bribery of foreign public officials: This offence is committed if a person offers, promises, or gives any advantage to a foreign public official with the intent to influence the official in their capacity as a foreign public official.
  • Failure of commercial organisations to prevent bribery: This offence is committed if a commercial organisation fails to prevent a person associated with it from committing bribery on its behalf to obtain or retain business or a business advantage.

 

In its Guidance on the Bribery Act (2010), the Ministry of Justice, presented six principles for implementing adequate procedures to prevent bribery and corruption:

  • Proportionality:  This principle underscores that the procedures an organisation puts in place to mitigate bribery should be proportionate to the bribery risks it faces and to the nature, scale and complexity of the organisation’s activities.

 

  • Top-Level Commitment: This principle holds that an organisation’s top management, such as its board of directors, must be committed to preventing bribery. They must set a clear, unambiguous, and exemplary standard of conduct from the top, fostering a culture within the organisation in which bribery is unequivocally unacceptable.

 

  • Risk Assessment: This principle mandates that organisations comprehensively assess the nature and extent of their exposure to potential external and internal risks of bribery. This assessment should be periodic, informed and documented.

 

  • Due Diligence: This principle necessitates that organisations take proactive steps to understand the bribery risks they might face in various contexts and relationships. It implies that organisations should thoroughly scrutinise individuals and entities before entering into business relationships.

 

  • Communication: This principle stresses the importance of organisations ensuring that their bribery prevention policies and procedures are effectively communicated, understood and implemented across all levels of the organisation. The goal is to create a corporate culture in which bribery is inherently recognised as unacceptable behaviour.

 

  • Monitoring and Review: This principle advocates for the continual assessment and refinement of bribery prevention measures within an organisation. It implies that organisations should regularly review their anti-bribery procedures to ensure their effectiveness. The process ensures that the implemented policies stay relevant, effective and responsive to evolving bribery risks.

 

Bribery and corruption are certainly very dangerous and can have extremely significant effects for both organisations and individuals. The principles and focus of the Bribery Act (2010) provides the UK framework for dealing with both elements. In the follow-up to this introduction, we will examine how institutions can detect bribery and corruption, and look at ways in which it can be mitigated against in both policy and practice.

 

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