By Derek Smith Jr
Corruption and bribery risk by all indications increase during crisis. Over the past decade, a sustained number of corruption and bribery cases have occurred because of entities not fully appreciating the risk attached to their vendors and weak anti-bribery regimes, within legacy corporate walls.
In the Bahamas, I conclude that there is no difference.
The Bahamas was ranked 81st in the 2019 Bribery Risk Matrix released by TRACE International, a globally recognized anti-bribery business organization and 29th least corrupt nation out of 180 countries by Transparency International.
I have had the distinct fortune of previously working for an institution that had a well-defined and developed anti-corruption compliance culture. It is against this background that I appreciate the complexities of a robust “culture of compliance”.
Notwithstanding the above, each institution has its own corporate culture.
It is imperative that despite an institution’s size, local or global footprint or industry, companies must embody a strong culture of high ethics, honesty, and legal and regulatory compliance. This is more than possible with senior management commitment, their openness to support efforts of their risk and compliance teams over a sustained timeframe and the mindset that not all business is good business.
A strong Anti-Bribery & Corruption (“ABC”) policy is a key component of your institution’s risk and compliance framework and will help kick corruption risk out. The ABC policy promotes transparency, the avoidance of conflict of interest and applies standards internal and to third parties.
During this pandemic, companies should review and evaluate their “culture of compliance” pertaining to stamping out corruption and bribery risk. Additionally, they must examine, at minimum, the following areas:
Tone of Senior Management
“Managers and employees take their cues from these corporate leaders”, noted the Resource Guide to the Foreign Corrupt Practice Act, issued by the U.S. Department of Justice and the U.S. Securities and Exchange Commission. The release further added, “A well-designed compliance program that is not enforced in good faith, such as when corporate management explicitly or implicitly encourages employees to engage in misconduct to achieve business objectives will be ineffective.” Simply – without clear and consistent communication from the top that echoes an anit-bribery culture, organizations may expose themselves to facing fines or sanctions.
Third Party & Outside Business Director Management
If you have not applied your anti-bribery policy to your third parties, i.e. a person or group besides you that represents you or acts on your company’s behalf – your process is fundamentally flawed. But do not be alarmed, as you have now identified a lapse and there are steps to remedy the potential risk. Establish processes and controls that gives your company sufficient assurance that third-parties are legitimate and do not expose you to any financial risks, reputational risks and corruption risks. Similarly, understanding your company’s exposure to conflicts by way of employees involvement in personal business ventures and even non-governmental involvement great assists in management the anti-bribery environment.
Red Flag Training & Management
A red flag is any circumstance that could lead to an ethical, legal or compliance concern. A vigorous control environment assists with and deters non-compliance and leads to the identification of red flags. Bespoke training is paramount in helping employees understand the applicable content within your industry and more importantly, your company. The more aware staff are, the more likely they will notice and report red flags.
Politically Exposed Persons (“PEPS”) Management
The Financial Action Task Force (“FATF”) provides strategic guidance regarding PEPs. Whether a domestic or foreign PEP, companies must ensure that extra precautions and controls are established to mitigate and manage corruption and bribery risks. Furthermore, they must ensure that persons close to PEPs are identified and monitored based on the risk rating. Company’s must not forget that voluntary organizations and charities associated with your client should also be closely monitored.
In short, although the above is not an exhaustive list, an anti-bribery and corruption regime must at minimum include a number of elements – tone of senior management, third party & outside business director management, red flag training & management and politically exposed persons (“PEPS”) Management. Now more than ever is the time to assess, adapt and act regarding your company’s anti-bribery and corruption regime.