Anti-Bribery in the Supply Chain

What is bribery?

Bribery is defined by Transparency International, a global movement working in over 100 countries to end the injustice of corruption, as the offering, promising, giving, accepting or soliciting of an advantage as an inducement for an action which is illegal, unethical or a breach of trust.

 

These Inducements can take the form of money, gifts, loans, fees, rewards or other advantages (taxes, services, donations, favours etc.).

How does the UK legally cover the issue of bribery?

In 2010 the UK Government passed The UK Bribery Act which criminalised the bribing of foreign officials and business representatives and covers citizens, residents and organisations that originate from the UK or conduct business in the UK.

 

The Act covers four offences:

  • The bribing of another person
  • The acceptance of a bribe
  • The bribing of a foreign public official
  • Failure of commercial organisations to prevent bribery

 

What are the main bribery and corruption risks to a business’ supply chain?

According to law firm Norton Rose Fulbright, the following are the core bribery and corruption (BAC) supply chain risks to businesses:

  • A supplier may pay or accept a bribe in connection with their role in the supply chain
  • In certain markets, an intermediary might be a foreign official which would create a high BAC risk
  • A supplier may bribe an employee of a business to win a contract, not only would this cost the business, but it is also dishonest
  • Employees may use suppliers to pay bribes in relation to a business, or suppliers may be over invoiced to create a ‘slush fund’ – a reserve of money used for illicit purposes, especially political bribery
  • A supplier may have paid bribes on behalf of another client and be investigated

 

Kroll’s Anti-Corruption and Bribery Benchmark Report identified third-party corruption as the top risk to 40% of businesses due to the normalised complexity of third-party networks.

 

How can you protect your business against corruption and bribery?

The Chartered Institute of Procurement and Supply (CIPS) has some top tips to protect against corruption:

  • Advertise policies and processes to combat fraud and any whistleblowing details
  • Create ‘conflict of interest’ documentation ensuring that they are regularly circulated to staff to read and sign
  • Ensure strict policies around gifts and hospitality are drawn up with processes in place to log and report on such instances
  • Conduct regular due diligence on all suppliers
  • Consider setting up a procurement breach process
  • Implement a two person change process within your procurement team to ensure that no suppliers are added or deleted without another member of the team knowing
  • Cleanse your system regularly to ensure that old suppliers are removed
  • Monitor staff movements for example if a former employee goes to work for the supplier the contract was awarded to, investigate this.

 

One other element to protect your business is to implement technology to provide 100% visibility of your supply chain and continually review this and your procurement processes.

How can bribery impact a business?

The size of a business is no defence against bribery or corruption, just ask Coca-Cola Enterprises (CCE).

 

In 2013 CCE’s procurement team noticed issues with quoted tenders and alerted their finance and security teams, who consequently launched an investigation into the matter.

 

A criminal court case followed and resulted in guilty pleas to five counts of corruption.

 

The subsequent investigation found that an electrical and automation manager at CCE took bribes of approximately £1.5million, in exchange for confidential information to help bidders win contracts.

 

Following the discovery, processes were altered to ensure the in-house procurement team at CCE manage all tendering processes going forward, to avoid any future wrongdoing.

What can businesses do to learn from this and minimise the risk from bribery and corruption?

  • Implement formal due diligence processes before contracting with suppliers; and have a regular review process once contracts are in place
  • Ensure there is a formal procurement process in place that has relevant oversight and governance
  • Ensure that a procurement policy clearly sets out a company’s stance on anti-bribery and corruption, as well as wider ethical procurement areas to ensure stakeholders and budget holders are aware of their responsibilities and accountability for letting contracts
  • Utilise technology, such as Calathea, to support the management of supply chains and relationships within a business