Anti-Bribery Cases Bring Growing Risk to Light

A recent spate of investigations and charges in global anti-bribery cases are bringing the need for specific anti-bribery policies and programs front of mind for executives.

A unit of Deutsche Bank AG is under investigation in Japan for alleged compliance violations involving entertainment spending with clients. Deutsche Bank is also conducting an “internal investigation,” according to The Wall Street Journal Online.

J.P. Morgan Chase and others are under investigation by the Securities and Exchange Commission for hiring relatives of officials in China, which the SEC could find has violated anti-corruption and anti-bribery rules. Chinese officials may also become involved, looking into other possible violations of Chinese law, as the investigation proceeds (the hiring of officials’ children is not illegal in China).

Expansions of legislation, like Brazil’s new anti-bribery law, set to go into effect in January 2014 and add liability for corporations and their agents, where once only individuals could be charged with corruption, will bring fresh requirements, as well.

In a fascinating interview on Live Mint, British Standards Institution Global Chief Executive Officer Howard Kerr talks about his recent work implementing an anti-bribery management system in India meant to address the UK Bribery Act of 2010.

Kerr says that bribery is increasing in a number of countries, and a few specific cultural and economic changes are the precursors:

“I have been coming to India for 30 years, so I have seen India evolving and liberalizing and many things have changed. Bribery, at one level, is about human nature, so that never changes. So the issue of suitcases I think, is always there. More subtle bribery now, which is perhaps more around political relations, lobbying the use of technology and cyber influence, for example, is there. So definitely, there are more opportunities for bribery, there’s more wealth in India, so there is more temptation. As people become richer and stakes become higher, that increases the possibility of bribery, and it brings potentially more people into the sphere of influence.”

The anti-bribery management system discussed by Kerr, built using a standard “created by a group of international experts who work in the area of anti-bribery and risk management,” is too new to have metrics showing whether it is effective, but Kerr says anti-bribery risk management strategies should be approached with media exposure, financial fines, and imprisonment of involved employees and executives as risks to mitigate. Needless to say, loss of business joins that list. “Good companies who run good governance will recognize that it’s a bomb waiting to explode,” says Kerr.

As more companies come to find that financial controls and ethics policies will not necessarily unearth potential bribery or corruption violations before disaster strikes, services providers are offering updated technology and consulting solutions targeting this specific area of risk. ACL’s Anti-Bribery and Anti-Corruption solution, as one example, combines analytics with consulting services to address the key areas of fines, brand damage and incarceration.