The development of the economy worldwide followed by a greater scale of globalization has been followed by bigger challenges with regard to anti-bribery and corruption (ABC) compliance. The globalized companies started expanding their activities in less developed countries with less regulated legal frameworks on the one hand, or the very well-regulated but ineffective agencies to provide with full enforcement of the legal and compliance framework. Under these circumstances, companies were left to the decision and efforts to self-develop new strategies of compliance that are not only global but also take into consideration the differences in the national regulations.
Anti-Bribery and Corruption Laws and Standards
Some of the laws and acts effectively in force to manage bribery and corruption are mentioned below:
- OECD’s Code on Anti-Bribery and Corruption
- ISO 37001 standard
- The Prevention and Combating of Corrupt Activities Act (PCCA)
- The UK Bribery Act
- The US Foreign Corrupt Practices Act (FCPA)
- Many others in force on a national level
What Is an Anti-Bribery and Corruption Policy?
An anti-bribery and corruption policy sets out the company’s stance on all forms of corruption. As policies are generally adopted by a governance body within the company, the ABC policy is about to send a powerful message from the top management to the employees, the third parties operating with the company, and possible regulatory authorities as well. The best practices show that the expected questions to be answered via the ABC policy in the company could be the following:
- What is bribery? What are the most common features of bribery and corruption?
- How is that demonstrated internally and externally? What measures have the companies taken to manage third-party operations?
- What is the regulatory framework to nationally comply? Are there any new best practices foreseen to mitigate the reputation risks associated with it?
- What are the company’s plans to raise the awareness by strengthening the control environment: training programs, surveys, etc.?
Challenges in Managing ABC
As stated in the list of laws and standards, the first initiatives were from the members’ organization of OECD (the Organization for Economic Co-operation and Development) who signed a convention aiming the establishment of the legally binding standards to criminalize the bribery of public officials. Since then, a growing number of states have embraced the practice and passed ABC laws. However, despite all the extended efforts to combat bribery, the illicit payments to the counterparties continue to burden economies. Referring to the surveys conducted by several international consulting companies, the findings have the same denominator:
- There is a high responded number of the participants from the companies’ part of the surveys that confirm that “they are challenged by the issue of ABC compared with the survey results of years ago.”
- As companies continue to globalize, management of third parties poses the greatest challenge in executing ABC programs.
- Despite the high attention towards the matter, the right to-audit clauses over the third parties have not exercised the right. Plus, due to the frequent and complex transactions, the difficulty of monitoring the business dealing with the third parties remains a high-risk area.
- Recently, data analytics is supporting the assessment of ABC controls in a more efficient and effective way. Yet, despite of having a cost-effective tool in place, more remains to be used in data analysis.
- Lack of resources and continuous training programs to manage ABC risks, are not set high in the top management.
Compliance is about to strengthen by conducting risk-based anti-corruption due diligence procedures on the potential business acquisitions and/or operations to avoid not only any successor liabilities but also any future bribe payments. Companies should take at least the steps to inform themselves as much as possible from publicly available sources about the targeted company, its reputation and the management ethics, its likely customers, and government relationship.
Ultimately, it remains critical that the top management not only issues policies with regard to ABC, but it foremost ensures that they carefully approach how they deal with the implementation in practical manners of them turning themselves into the role models for the employees and the third-party representatives.