"Say What You Mean, Mean What You Say" : Anti-Corruption Measures for Compliance

There were no real surprises when the EU Anti-Corruption Report was released this February by the European Commission. Across its Member States, it found a wide variety of corruption-related problems, which in turn are being addressed by equally diverse corruption control mechanisms with varying degrees of success. No doubt, the more aggressive regulatory climate we’re experiencing coupled with damaged reputations and high-profile fines for alleged corrupt activity, have focused senior management attention on bribery and corruption.

However, like leading politicians in EU Member States, business leaders having competing priorities and frequently react to such events with new initiatives that require significant investment but have marginal impact. Such initiatives may “tick a regulatory box,” but in terms of reputational risk, sanctions and fines, one has to ask: how we can make them more effective?

Yes, designing an anti-corruption program is a huge task, but business leaders can introduce meaningful anti-corruption measures to include:

With recent political scandals in Europe and a number of corporations involved in the financial crisis, it’s going to take some time and a significant effort on the part of EU politicians and business leaders to reach the overall goal of making corruption socially unacceptable. We’re a long way from achieving that but again; it should start at the top.

• Clear Statements That Corruption is Not Tolerated. There is no one anti-corruption policy or code of conduct to fit all businesses, but a clear statement from the top that corruption will not be tolerated is one consistent message that can and should be applied.
• Start with new employees; let them know from the outset that any form of corruption is unacceptable, with severe repercussions should it occur. Similarly, make anti-corruption initiatives and controls as measurable as any other element of a performance review. This will encourage line managers to take a greater interest in compliance and closely scrutinize an employee’s workflow and behavior.
• The challenges of implementing centrally created anti-corruption policies in diverse locations. Recognize that regions can have differing perceptions of what constitutes a gift, a facilitation payment or a bribe.
• The degree to which corruption is prevalent varies significantly across EU Member States, and therefore companies need to channel their anti-corruption strategies to those countries and cultures where it’s most needed. The effectiveness of any anti-corruption policy will depend on how it is communicated and implemented at a local level.
• Creation of safe reporting mechanisms. Employees and others stakeholders must feel they can report corrupt activity without fear of reprisal and be confident in the integrity of the reporting process. The cultural and social aspects of confidential reporting can differ from country to country, and careful and sensitive analysis needs to be undertaken before implementing whistleblower or “speak up” programs.
• The understanding of cultural risks as well as the financial rewards of entering new markets. You are asking for trouble if you engage with intermediaries, local partners, suppliers and/or distributors about whom you have only minimal knowledge. Conducting a proportionate level of due diligence is essential when entering new markets and in engaging third parties for whom, from a regulatory standpoint, your company and specifically your senior directors are now accountable. For existing relationships, proactively look for red flags by adopting a risk-based approach that includes vendor due diligence and data analytics of financial records.
• Recognize the contribution made by risk control functions. It’s also now time for risk control functions such as anti money-laundering and compliance to be recognized for the contribution they make in ensuring hard-earned revenue and reputations are not compromised by what are now significant fines and sanctions.

With recent political scandals in Europe and a number of corporations involved in the financial crisis, it’s going to take some time and a significant effort on the part of EU politicians and business leaders to reach the overall goal of making corruption socially unacceptable. We’re a long way from achieving that but again; it should start at the top.