Bribery and Corruption: Has Covid-19 Made You Vulnerable?
Bribery in the business context has been a subject high in the government’s priorities for some years, a position since displaced by Brexit and now also by covid-19. But it remains an important issue and businesses need to be aware of the increased risks of bribery during the pandemic, when the economic environment is increasingly difficult.
We look at the current risks and how businesses can identify and work to mitigate these risks by limiting their potential exposure. The key underlying risk is new and relates to changes in priority for companies: they have had to adapt extremely quickly to the covid-19 business environment. They have, for the most part, had to switch to different working practices and the increased reliance on technology to ensure their on-going success, or in some cases, survival.
Organisations have, for perfectly valid and obvious reasons, been concentrating on how they can efficiently and effectively implement the covid-19 regulations while keeping their operations running profitably. This means the routine pre-covid assessments of bribery and corruption risks have taken somewhat of a backseat.
But this will have created weaknesses to be exploited by corrupt individuals and businesses. Assessing risks associated with individuals in other jurisdictions, for example, is much more challenging online and in person.
Recognised risks
The bribery risks during the pandemic have been recognised since early in the pandemic. In April, the OECD Working Group on Bribery said the global response to the pandemic must not be undermined by bribery and announced that it is to examine the possible impact and consequences of the coronavirus pandemic on foreign bribery.
There are three major risk factors to be alert to:
· Your supply chains: businesses need to take a closer look at their supply chains and identify if alternative or new third parties, or even government actors, in other jurisdictions are involved.
· Due diligence: a business may be under severe financial strain but resources should not be diverted from conducting the necessary due diligence. That includes where new third parties are identified in a supply chain; where cash is spent on outsourcing when, perhaps, it wasn’t before covid-19; and the ‘new’ need for remote verification and or signing of documents or individuals.
· Pressures on individuals: severe financial pressures should not be allowed to tempt any individual to succumb to bribery or corruption to meet a target; secure a contract; or to influence external individuals or businesses to find favour with the payer. Businesses need to be able to recognise if any member of the workforce or any agent of it is more susceptible in the current conditions.
Remember that in the covid-19 environment, most people’s mental health has been under strain for many months now, making them more vulnerable to acting out of character and more likely to take risks they would not have done a year ago. Leaders need to ensure they are monitoring and supervising individuals and communicating with them as much as possible.
No excuse
Be warned: the regulators will not allow any firm to rely on covid-19 as a good reason for bribery. Their legal responsibilities remain, notwithstanding the unprecedented changes the world is adapting to. Companies continue to be obliged to demonstrate they have ‘adequate procedures’ in place to satisfy the requirements of the Bribery Act 2010.
Business leaders and their compliance officers will find useful the advice set out by Transparency International for ensuring anti-bribery and corruption best practice from the top of their organisations. This can be accessed here https://www.transparency.org.uk/anti-bribery-corruption-compliance-coronavirus-covid19-tips-advice/
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