Anti-Bribery And Corruption

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21 Aug, 2024

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Anti-Bribery And Corruption (ABC) refers to the set of rules, policies, and guidelines published on the matters of bribery and corruption occurring within organizations. It is widely deployed, even in companies. Thus, it aims to detect, prevent, and report illegal activities involving bribery in major.

These anti-bribery and corruption policies are an effective tool for identifying the source of crimes and corruption. It helps in sensing any dishonest and fraudulent code of conduct in the business. Thus, a company making payments to a third party or government officials in an unethical way leads to the enforcement of ABC acts.

What Is Anti-Bribery And Corruption?

Anti-bribery and corruption refers to the book of rules and regulations on bribery and corruption matters.
It is applicable to those entities, officers, directors, and employees giving, accepting, or promising to pay a sum as a bribe to foreign officials.
Some of the popular acts and guidelines include the United Kingdom Bribery Act and the Foreign Corrupt Practices Act (FCPA).
If found guilty, the person or entity may face prison for up to five years or a fine of $10,000 (civil fine) or $100,000 (criminal penalty).

Anti-Bribery And Corruption Policy Explained

Anti-bribery and corruption policies refer to the guidelines and rules listed for organizations or individuals indulging in corruption and bribery. It can be monetary (money) or non-monetary (favorable treatment) from or to another party. Also, it supports whistleblowers in reporting misdoings within the firm. Thus, the company that tries to bribe employees or ask for premium treatment becomes liable under this law. However, there is a vast difference between anti-bribery and corruption clauses.

In technical terms, anti-bribery is unwanted or excess payments made to another party to get things done from them. It is greasing someone's palm with coins without letting anyone trace it. However, corruption is the opposite of bribery. Here, unlike bribes, the influential person or political party tends to create an undue influence on an individual. In short, bribery is a part of corruption. As a result, there may be a hub of illegal activities happening in an organization. For instance, a company may record dummy (or inappropriate) purchases or questionable purchases in the business. In such cases, the whistleblower, via anti-bribery and corruption laws, comes into the picture.

In a global context, there are various laws and acts registered as ABC. They serve as a base for reporting such fraudulent activities. In total, around 46 jurisdictions operate in relation to anti-bribery and corruption laws. However, it varies depending on the state and country where the entity resides.

Laws And Guidelines

Various anti-bribery and corruption programs and clauses fight against these activities. In the United States, there is the Foreign Corrupt Practices Act (FCPA) of 1977, the UK Bribery Act, and many others. Let us understand them in brief:

#1 - Foreign Corrupt Practices Act

As the name suggests, this act focuses on the corrupt practices happening within the organization or entity. It prohibits or refrains US residents from paying bribes to foreign officials or parties. Plus, it applies to both public and private companies. Furthermore, it can collaborate with ISO 37001 law. However, there are some implications to it. They are as follows:

It is unlawful to accept, pay, or promise to do so to any foreign official for obtaining or restoring the business.
The accuser can be a company director, employee, stockholder, officer, or member of any political party.
The act also covers the spread of crime within the boundaries of the US.
Employees or contractors learning of such activity must report it to the concerned regulatory bodies.
The record-keeping guidelines require companies to maintain proper records of all financial transactions and books in detail.
Organizations or entities found guilty in this act are liable for a penalty of up to five years in prison, up to $10,000 as a civil fine, and up to $100,000 for criminal activities.

#2 - The United Kingdom Bribery Act

In British territory, the UK Bribery Act serves as a crucial law. Overall, the guidelines are similar to those of the FCPA. However, it does include some additions. For instance, in this case, any third party or official accepting a bribe on behalf of another company is also liable. Here, intent is not required, despite entities gaining favorable treatment in return. Legal penalties include:

Five years in prison.
Prohibition from public contracts.
A ban on directorship for up to 15 years.

Examples

Let us look at some examples of anti-bribery and corruption programs to comprehend the concept in a better way:

Example #1

Suppose Samuel and James own a business in a partnership format under the name Forsons Ltd. It has been twenty years since they have been running the textile firm. In the later years, the firm also entered the fashion industry. However, the employees needed to be convinced by the business model. In other words, there was something unethical running in the blood. Therefore, Kevin decided to accuse the firm of wrongdoing.

In the past few years, an unknown payment of $20,000 has been made to John Steward. And the strangest fact was that there was no such client or supplier of Forsons Ltd. Also, the top management resulted in better results and refrained from giving a salary raise. After analysis and findings, Kevin found that this payment was made to a person for not revealing their unethical secret practices. However, his name was disguised as John. Thus, Kevin reported this misdoing as a whistleblower to the anti-bribery and corruption assessment law, and the court sentenced them to jail for four years.

Example #2

According to recent news updates as of April 2023, the Wolfsberg Group (non-government association) published the new version of the anti-bribery and corruption law. This recent 2023 version is an amendment to the update released in 2017. It highlights key points such as commitment from the top (senior) management, identifying risks and methods to tackle them, employee and third-party training, and lastly, testing these solutions in a controlled environment.

How To Achieve Anti-Bribery And Corruption Compliance?

The prevalence of such bribery and corruption cases is common in many industries. However, achieving a proper standard and methodology can avoid them to a greater extent. So, let us look at some steps on how to set such compliances in organizations:

#1 - Developing ABC Compliances And Standards

The foremost step in achieving compliance standards is to develop one. It means to curate a set of guidelines, rules, and policies that fall in line with national standards like the FCPA and the Bribery Act. Firms can further ensure that the policies are tailored to their needs and are practically applicable.

#2 - Performing Risk Assessments

Likewise, businesses must also conduct frequent risk assessments in different areas of the company to detect any traces of fraud or bribes. If they are likely to occur, priority must be first given, and suitable action must be enforced.

#3 - Providing Training To Employees

Also, providing appropriate training to the employees on the anti-bribery and corruption assessment is crucial. It guides them with their roles and duties in such scenarios and how they can prevent it. Moreover, the involvement of real-life case studies and industry analysis can help them detect the possible factors that can lead to.

#4 - Due Diligence With Other Entities

Entities should also conduct due diligence with third parties while entering into any deal. In short, verifying the identity, background, and reputation of the other party is crucial to mitigating the risk of bribery or corruption.

#5 - Compliance Monitoring

Lastly, firms must ensure that compliance, adherence, and monitoring are equally important. Companies can conduct frequent audits and internal checks and stay updated on the recent laws on ABC compliance programs. If found, they can take suitable action on the matter.

Frequently Asked Questions (FAQs)

How can firms reduce the risk of anti-bribery and corruption?

Although these risks are often visible in some areas of the organization, the following methods can be fruitful in tackling them. Let us look at them:

• Clearly defining the objectives and commitments of the organization
• Understanding the common ABC risks and developing methods to resolve them
• Providing enough and adequate tools for conducting business with integrity.

Who is responsible for anti-bribery and corruption compliance?

In most cases, the CEO (chief executive officer) is responsible and liable for any wrongdoings or bribery practices carried out by the organization. Also, the CEO must be accountable to the board of directors for the same. However, to assess the matter, the compliance committee may evaluate the controls and track the sources or persons associated with them.

What is the OECD anti-bribery and corruption law?

The Organisation for Economic Co-operation and Development (OECD) also has an anti-bribery convention that penalizes bribery by foreign officials. Unlike other acts, the OECD punishes the entity performing bribery and not the one receiving it.