Research and Destroy
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www.rahmanravelli.co.uk eBook Edition 016 / October 2013 Serious Fraud, Regulatory and Complex Crime Lawyers RESEARCH AND DESTROY An international survey shows that a worrying number of companies worldwide have little knowledge of how to prevent bribery and corruption. Aziz Rahman explains why a little research into the risks can go a long way to removing them. Not every survey tells us something lawyers at some of the world’s largest business. And yet the survey did find that that we either need or want to companies. Of those asked, 13 corporate those asked were keen to report know. Yet the findings of a survey counsel respondents said the chances of suspected corruption. More than of more than 300 international their company having to investigate a two-thirds of respondents said they were companies produced some breach of anti-bribery laws by an now more likely to report suspected unpleasant reading that many in employee in the next two years was bribery involving an employee to business should really take note of. between 90 and 100%. Another 60 of regulators than they would have been in The findings, published in those asked said such an incident was previous years. Over half said they would “International Business Attitudes to likely – and only a third of respondents report a suspected bribe to regulators Corruption’’, painted a disturbing classed such an outcome as very unlikely. before conducting an investigation, even international picture of many companies The picture the survey painted of if the details were uncertain. Those who simply not taking any notice of the risk companies relying on luck rather than said they would investigate the suspicion they are running when it comes to design becomes more alarming when a first and only self-report if the violation prosecution for business crime. closer look is taken at the survey details. was confirmed were in the minority. And These findings included the facts Bribes were cited as the main cause of only 15% said they would only report a that: concern by 58% of respondents, with confirmed violation if it was likely to be • Only half of the companies surveyed 29% bemoaning the risk of demands for discovered by the authorities. have procedures in place to ensure bribes when trying to secure new So, based on this survey, it would background and reputation checks are contracts. Despite this, 91% of those appear that even if the big companies’ made on business associates in local surveyed said their companies had no legal boys are aware their anti-corruption and foreign markets. specialised anti-corruption training for procedures are inadequate they are at • Over a third of them have no formal employees in high-risk areas – and nearly least prepared to report any wrongdoing policy statements forbidding bribes. 75% of those asked had no anti- that may become apparent. But such an • Nearly half do not have policies or corruption training at all. Only 40% had attitude begs the question: why don’t statements banning facilitation confidential whistleblowing hotlines for they choose compliance over risk? Why payments. employees to report corruption concerns. don’t they make their company fully Perhaps what is most telling is that On the whole, the survey offered aware of the legislation that is in place, the survey was based on an evaluation of little encouragement for those looking for the penalties it can carry and the ways in 316 general counsel and senior in-house strong anti-corruption measures in which such punishments can be avoided? – 1 – www.rahmanravelli.co.uk To illustrate the point, let us consider must be able to prove that it took all corruption. But these claims will not carry the Bribery Act 2010 as an example of the possible steps to be legally compliant. any weight with investigators. risks that can be taken. The Act makes a Such steps must take into consideration So what exactly should a company be company liable for the corrupt actions of exactly which measures are appropriate doing? As well as examining all aspects of any staff, agents or third parties acting on to the way it operates and the bribery its business, a company has to assess the its behalf, either in the UK or abroad. It risks that exist in whichever business and legal obligations placed upon it. A policy of makes it an offence for anyone to pay, geographical area it trades. due diligence must include examination of receive or request a bribe, either directly If an investigation is underway, a all aspects of its business, especially or indirectly, at home or abroad, to company will be in a much stronger potentially troublesome aspects such as perform a relevant function improperly. position if it can produce proof that it took facilitation payments, hospitality and There is also an offence of using a bribe to steps to be legally compliant. In such referral fees. Clear reporting procedures infl uence a foreign offi cial to gain a cases, any punishment handed down is have to be devised, implemented and business advantage. Companies can unlikely to be anywhere near as big as it publicised to staff and associates. Whistle commit an offence where a bribe has would be if the company had done its blowing must be offi cially encouraged and been paid on their behalf by an associate business while fl outing - or being totally seen to be acted upon. If these steps are – an employee, agent or other party ignorant of - the risks of being embroiled taken, companies will be able to point to acting for it. A company’s liability under in business crime. Those who took the them as evidence of a clear anti-fraud the act is, therefore, a clear-cut issue. And time to be so honest in the survey would approach should they ever face allegations – it is worth bearing in mind the fi ndings do well to consider that a strong anti-fraud of workplace fraud and corruption. There of the survey, at this point - any company workplace culture can only be instilled is no other way of being able to facing prosecution under the Act will from the top down. The geographical demonstrate that a company had have to show that it carried out all areas, business sectors, agents and appropriate procedures in place and acted adequate procedures to prevent any of its business partners that a company is in accordance with the law. representatives acting improperly. involved with must be examined in detail The legislation is in place and the Without stating the obvious, those who to assess what potential risk they carry for authorities have more means to enforce it responded to the survey would do well to bribery or other business crime. Without at their disposal than ever before. consider that to have any possible doing this, a company can make whatever Companies can no longer afford to run defence against prosecution, a company claims it wants about cutting out the risks that the survey highlighted. – 2 – www.rahmanravelli.co.uk CHARGED ATMOSPHERE A number of A4E staff have been charged with forgery and fraud. At the same time, Serco has been referred to the Serious Fraud Office regarding overcharging for electronic tagging of offenders. Both incidents are a clear reminder that anyone, even a government, can fall victim to corporate wrongdoing. The issue is how you deal with it. It doesn’t look good. tagging offenders who were dead, back in they had their time again they still A recruitment agency contracted by prison, had had their tags removed or wouldn’t make the effort to put in place the government to place people in had even left the country. measures that could have prevented the work ends up with nine staff in the So how can such fraud be fraud being committed. Legislation such dock for forgery and fraud. committed? And what can be done to as the Bribery Act has forced companies to Another company hired by the prevent it or, at the very least, minimise look at the impact of their activities. government could face a similar its effect? Taking steps to introduce robust, anti- fate to the offenders it was The Fraud Act 2006 created a single fraud controls into a company’s day-to- electronically tagging and, offence of fraud. This could be committed day activities may seem like a pretty allegedly, overcharging the by false representation, by failure to joyless way of spending time and money taxpayer for. disclose information or by abuse of but as compliance experts we have seen In total, nine former A4E staff are position. It would need a detailed the value to organisations of recognising facing a total of 60 fraud and forgery examination of the goings on at A4E, the potential for fraud and acting to offences. They will all appear in court this Serco and G4S to determine exactly prevent it. Any company that comes under month. The Crown Prosecution Service which criteria are met when it comes to investigation for fraud is in a far stronger has said that the charges relate to the prosecuting each individual. But any position if it can show it acted to prevent forging of documentation to support investigation will look at the central issue – at least as much as it is possible to fraudulent claims to the Department of of honesty and just what the motivation prevent – fraud happening. In that way, Work and Pensions (DWP) for reward was of those under investigation. These, any fraud stands a much greater chance of payments. These payments were outlined however, are not simply issues for the being viewed as the actions of a rogue under the terms of the contract A4E had authorities carrying out the investigation.