Every year, trillions of dollars are lost through bribery and corruption. The highest bribery risk firms face comes from third parties. So, how can you spot it?
Bribery and corruption can devastate organisations, undermining their reputation, financial stability, and workplace culture. In the UK, laws such as the Bribery Act 2010 make organisations legally accountable for preventing these unethical practices.
This guide outlines effective strategies to identify and mitigate bribery and corruption risks in the workplace.
Understanding bribery and corruption
Bribery involves offering, giving, receiving, or soliciting something of value to influence an outcome. Corruption refers to dishonest or fraudulent conduct by those in power, often for personal gain. Examples include:
- Bribes: Gifts, hospitality, or payments to secure a business deal.
- Kickbacks: Payment for favourable treatment or access.
- Nepotism: Hiring or promoting based on personal connections rather than merit.
The Bribery Act 2010 outlines four main offences:
- Bribing another person
- Being bribed
- Bribery of foreign officials
- Failure of a commercial organisation to prevent bribery
Businesses must take reasonable steps to prevent these activities or face significant penalties.
Six red flags of bribery and corruption
Identifying potential risks is the first step in prevention. Common red flags include:
- Unusual payment structures: Large or irregular payments, particularly to offshore accounts.
- Excessive hospitality or gifts: Lavish or disproportionate gestures designed to influence decisions.
- Opaque contracts: Vague agreements lacking clarity on terms or deliverables.
- Conflict of interest: Undisclosed personal relationships influencing business dealings.
- Pressure for quick decisions: Push to bypass due diligence for immediate approvals.
- Third-party involvement: Use of intermediaries to obscure unethical transactions.
Steps to reduce bribery and corruption risks
Develop robust policies and procedures
Clear anti-bribery and corruption policies set the tone for ethical behaviour. Include guidelines on:
- Acceptable gifts and hospitality
- Reporting suspicious activity
- Zero tolerance for unethical practices
Ensure employees are aware of these policies through regular training and visible communication. Developing robust policies and procedures helps to establish clear guidelines, promote ethical decision-making, and ensure accountability.
Well-defined policies set expectations, while enforcement mechanisms deter misconduct and protect organisational integrity.
Conduct risk assessments
Identify and evaluate areas most vulnerable to bribery and corruption, such as:
- High-risk regions or industries
- Transactions involving intermediaries
- Large-scale procurement processes
Implement due diligence measures
Thoroughly vet third parties, including suppliers, contractors, and agents. Review their:
- Ownership structure
- Financial records
- Past compliance history
A robust due diligence process ensures partnerships align with organisational values. Implementing due diligence measures helps to thoroughly vet business partners, suppliers, and third parties to ensure compliance with ethical and legal standards.
Foster a speak-up culture
Encourage employees to report unethical practices by:
- Providing anonymous reporting channels
- Protecting whistleblowers from retaliation
- Actively responding to reports
Transparency and accountability build trust and deter unethical behaviour. A strong speak-up culture empowers employees and encourages open communication and prompt action on reports to enhance transparency, accountability, and ethical business practices.
Monitor and audit activities
Regular audits can identify irregularities or weaknesses in internal controls. Focus on areas such as:
- Financial transactions
- Contract approvals
- Employee expense claims
Use monitoring tools to flag unusual patterns and address them promptly to ensure compliance with policies. Regular oversight reinforces accountability and deters unethical behaviour.
Ensure leadership commitment
Management must lead by example, promoting ethical practices and prioritising compliance. Regularly communicating the importance of anti-corruption efforts reinforces organisational values.
Ensuring leadership commitment helps to set a strong ethical tone from the top, demonstrating accountability, and fostering a culture of integrity. When leaders actively support anti-corruption initiatives, employees are more likely to follow ethical standards.
Training and awareness programmes
Employee education is critical in reducing bribery risks. Effective training should include:
- Case studies of real-life corruption scenarios
- Role-playing exercises to practice ethical decision-making
- Guidelines for recognising and reporting unethical behaviour
Interactive workshops and e-learning modules can help reinforce these principles regularly.
Legal and reputational consequences
Failure to address bribery and corruption can result in:
- Legal penalties: Fines, sanctions, or imprisonment under the Bribery Act 2010.
- Reputational damage: Loss of stakeholder trust and public credibility.
- Operational disruptions: Internal investigations divert resources and affect productivity.
A strong compliance framework mitigates these risks and reinforces trust among stakeholders.
Reducing bribery and corruption risks requires a proactive and comprehensive approach. By implementing clear policies, conducting risk assessments, and fostering an ethical culture, organisations can safeguard their operations and reputation.
Employees, leadership, and third parties must work collaboratively to uphold integrity and transparency in every aspect of the business.
Want to learn more about anti-bribery compliance?
We have created a comprehensive bribery & corruption roadmap to help you navigate the compliance landscape, supported by several financial crime prevention courses in our FCA Compliance library.
We also have additional free resources such as e-learning modules, microlearning modules, and more.
Written by: Vivek Dodd
Vivek Dodd MS, CFA is a Director of Skillcast. He has helped hundreds of companies to meet their mandatory compliance training requirement using e-learning courses and tools. His special interest is instructional design and the use of asynchronous learner interactions to effect behavioural change. He is a speaker on compliance training conferences, writes articles on compliance training and e-learning in various journals.
