Bribery Act 2010: Supplier Audits Benchmarking

Fulcrium offers a range of supplier audit and compliance services that help clients to proactively manage, and respond to, their supplier bribery and corruption risks. We also help design control frameworks to ensure due diligence is performed over third party firms to mitigate undue risk.

Bribery Act 2010: Supplier Audits’ Benchmarking.

Fulcrium offers a range of supplier audit and compliance services that help clients to proactively manage, and respond to, their supplier bribery and corruption risks. We also help design control frameworks to ensure due diligence is performed over third party firms to mitigate undue risk.

If you want expert anti-bribery and corruption supplier / supply chain compliance audits then Contact Us today.

Overview.

The UK Bribery Act 2010 came into force on 1 July 2011 to address the requirements of the 1997 OECD anti-bribery Convention,and is regarded as setting the global standard for anti-bribery and anti-corruption legislation alongside the US Foreign Corrupt Practices Act (FCPA). However, the Act differs in several respects from the FCPA and compliance with the ECPA does not constitute compliance under the Act.

The Bribery Act created four prime offences:

  • Two general offences covering the offering promising or giving of an advantage, and requesting, agreeing to receive or accepting of an advantage.
  • A discrete offence of bribery of a foreign public official.
  • A new corporate criminal offence of failing to prevent a bribe from being offered, given or received on its behalf. This applies to any relevant commercial organisation defined as a body incorporated under the law of the United Kingdom (or United Kingdom registered partnership) and any overseas entity that carries on a business or part of a business in the United Kingdom. In addition, it applies to suppliers and other third parties working for the company - one of the main differentiators from the ECPA.

Clients refer to Fulcrium as their “highly valuable secret intelligence resource.”

Consequences.

The first successful prosecution under the Bribery Act was of Standard Bank in November 2015 which required the bank to pay financial orders of $25.2 million, to pay the Government of Tanzania $7 million and to pay the Serious Fraud Office’s costs of £330,000.

These financial penalties have since been dramatically exceeded: in 2017 two companies in the Rolls-Royce group agreed to pay penalties of approximately £652 million as a result of 12 counts of bribery, corruption and fraud dating back to 1989 in the United States, Brazil, India, Russia, Nigeria and Indonesia. https://www.bevanbrittan.com/insights/articles/2017/rolls-royce-to-pay-652-million-for-bribery-and-corruption-offences/

Defence.

If faced with an allegation of wrong-doing under the Bribery Act, the only defence a firm can point to is that it developed adequate procedures to prevent this taking place.The six principles covered by the UK Ministry of Justice guidance on these adequate procedures are, in summary:

1. Proportionate procedures

Bribery prevention procedures should be:

  • Proportionate to the risks faced and the size and complexity of the business.
  • Clear, practical, accessible, properly implemented and enforced.

2. Top-level commitment

Top-level management should:

  • Take responsibility at the board level for bribery prevention.
  • Foster a zero-tolerance culture toward bribery.

3. Risk assessment

The risk assessment should:

  • Consider both internal and external risks.
  • Be performed periodically and documented.

4. Due diligence

Due diligence should be:

  • Conducted on parties performing services for or on behalf of a business.
  • Proportionate and risk-based.

5. Communication

Communication and training:

  • Should ensure that bribery prevention policies and procedures are embedded and understood throughout the business.
  • May include external communication and a secure, confidential and accessible “speak up” procedure.

6. Monitoring and review

Regular monitoring and review should:

  • Evaluate the effectiveness of current bribery prevention procedures.
  • Identify and implement necessary improvements.

Key Internal Risk Areas.

Bribery can be a risk in many areas of the firm. Below are the key areas you should be aware of in particular:

  • Excessive gifts, entertainment and hospitality:
    can be used to exert improper influence on decision makers. Gifts, entertainment and hospitality are acceptable provided they fall within the firm’s Corporate Entertainment Policy.
  • Facilitation payments:
    are used by businesses or individuals to secure or expedite the performance of a routine or necessary action to which the payer has an entitlement as of right.
  • Record keeping:
    can be exploited to conceal bribes or corrupt practices. The firm must ensure that it has robust controls in place so that records are accurate and transparent.
  • Actions by third parties for which the firm may be held responsible:
    can include a range of people i.e. agents, contractors and consultants, acting on the firm’s behalf. Appropriate due diligence should be undertaken before a third party is engaged. Third parties should only be engaged where there is a clear business rationale for doing so, with an appropriate contract. Any payments to third parties should be properly authorised and recorded.
  • Reciprocal agreements:
    or any other form of ‘quid pro quo’ are never acceptable unless they are legitimate business arrangements which are properly documented and approved by management. Improper payments to obtain new business, retain existing business or secure any improper advantage should never be accepted or made.

Key Supplier and Supply Chain Risk Areas.

If you have framework agreements in place with large suppliers, your key risks are:

  • Active and Passive Bribery
  • Risks when interacting with domestic and foreign public officials
  • Bribery in the Supply Chain through employees, agents or subsidiaries
  • Assurance of the Adequacy of Companies’ Internal Procedures in preventing bribery
  • Money Laundering
  • Fraud
  • Overcharging
  • Not performing up to documented standards

The Need for Benchmarking.

Most of our clients have in place a comprehensive compliance procedure and high quality anti-bribery and corruption training for their employees. Where they are more vulnerable under the Bribery Act is in not:

  • Establishing adequate audit measures for monitoring and assessing non-compliance issues or risks of bribery and corruption activities.
  • Benchmarking their audit measures against known best-in-class companies inside and outside their own industry sectors.

With unlimited fines and custodial sentences, the Bribery Act certainly has teeth. But there is no need to fear that there are gaps or cracks in your anti-bribery and anti-corruption programmes.

Fulcrium’s unique proprietary benchmarking database enables us to measure and compare the performance of anti-bribery and anti-corruption programmes against best practices in your own company, in peer companies, and across many geographies.

For evidence to prove your company is watertight on the UK Bribery Act, contact us today.