6 Red Flags for Workplace Bribery & Corruption

Posted by

Lynne Callister

on 02 Feb 2023


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?

Red Flags for Workplace Bribery & Corruption

The Foreign Corrupt Practices Act and UK Bribery Act 2010 threaten severe penalties. However, a recent statistic from Transparency International UK shows that the international cost of corruption amounts to a staggering $3.6 trillion annually.

According to PwC's most recent Global Economic Crime Survey, fraud or some type of economic crime has affected 46% of UK companies over the past 24 months. Among the 19 categories of economic crime, cybercrime stands out and significantly affects all industries.

Workplace bribery & corruption red flags

  1. Unnecessary or inappropriate purchases
  2. Questionable invoices
  3. Continued acceptance of poorer quality
  4. Conflicts of interest
  5. Unqualified third parties
  6. Incomplete travel & expenses

In its Global Fraud and Risk Report 2021/2022, Kroll reported that the biggest threat related to bribery and corruption in the UK comes from a lack of visibility over third parties, with a further 24% of the threat stemming from employees' actions.

So how can companies prevent bribery and corruption in their business, especially involving third parties and employees? Top of your list should be spotting the red flags that suggest that bribery or corruption could be taking place...

Free Anti-Bribery E-learning Module

1. Unnecessary or inappropriate purchases

Corrupt payments can sometimes be concealed as bona fide expenditure. If an employee purchases unnecessary or inappropriate items from a supplier or contractor with no obvious business need, this could indicate a potentially corrupt relationship.

Watch out for frequent low-level orders or purchases of large quantities, particularly if there is no visible need for such items or those goods never seem to materialise.

Preventive measures

  • Insist on double sign-off of purchase orders and verification checks on goods received.
  • Ensure there is a genuine business need for all purchases over a designated threshold.

2. Questionable invoices

Corrupt payments and bribes may be concealed in invoices. For example, invoices may be submitted without any actual work being done and no supporting documentation, haemorrhaging funds away from the business. Invoices may also conceal corrupt payments, which appear as extra fees, expenses or charges.

Look out for over-inflated invoices or invoices that cannot be matched to any discernible output. Alarm bells should ring if fees, commissions or expenses are listed without supporting documentation. Always look for a pattern of questionable invoices, as this can indicate that the invoices are being used to fund bribe payments.

How to reduce this risk...

  • Conduct due diligence on any suppliers, contractors and consultants before engagement. Ensure they have a proven track record and the necessary resources/experience required to deliver the goods and services offered.
  • Watch out for over-inflated invoices well above market rates.
  • Ensure adequate oversight and monitoring of all business relationships.
  • Ask questions if you see any unexplained costs or charges before signing off.

Free Anti-Bribery Training Tips

3. Continued acceptance of poorer quality

If an employee continues to work with or accept sub-standard goods or services despite complaints, this could be a strong indicator of possible corruption.

You'll need to consider whether they may be getting a kickback from the supplier or contractor for continued business.

How to reduce this risk...

  • Insist on group decision-making for procurement contracts - no single person should have overall control over who is appointed; ensure a senior manager authorises all decisions.
  • Arrange adequate oversight and monitoring of supplier relationships - with regular performance audits.
  • Conduct due diligence on all suppliers to ensure they have a proven track record and have the necessary resources/experience required to deliver the goods and services being offered.

4. Conflicts of interest

The risk of bribery and corruption can increase with close connections or links between an employee and a supplier or contractor. At worst, nepotism and cronyism can cloud your judgement and lead to bad decisions which are not in the company's best interests. At best, this can give a perception of corruption.

Consider whether an employee has a personal or economic interest in a particular transaction or appointment. What is their personal relationship with them? Are there close links? Does their behaviour change when certain suppliers are mentioned? Are they acting differently or suspiciously? Is there an insistence that they alone deal with a certain supplier? All this could indicate a conflict of interest.

How to reduce this risk...

  • Implement a system for employees to register potential conflicts of interest - be sure to check this before appointments and decisions are made
  • Conduct due diligence on all suppliers, contractors and consultants before engagement - make sure you know exactly whom you are dealing with
  • Only make appointments and procurement decisions based on merit
  • Remove any employee with a close personal relationship or connection to the supplier from the decision-making process
  • Be aware of biases (e.g. halo effect, affinity bias, unconscious bias) and how they may impact decisions. Bias and stereotyping can be reduced by involving more people in decision-making, but watch out for groupthink.

Bribery Prevention Training Presentation

5. Unqualified third parties

Bribery and corruption can occur via intermediaries and agents, who may appear to do no more than facilitate the deal.

Be suspicious if the third party your company is dealing with seems unqualified for the job they are contracted to perform, if they have no track record in the industry in which they operate if they lack facilities or resources required to perform the work if they come highly recommended by a foreign public official and seem able to bypass legal or bureaucratic hurdles effortlessly.

How to reduce this risk...

  • Conduct due diligence on all suppliers, contractors and consultants before engagement - ensure you know exactly whom you are dealing with.
  • Ask questions if something doesn't add up - wilful blindness is no defence.

6. Incomplete travel & expenses

Finally, bribes and corrupt payments may be concealed as travel expenses or hospitality. Expenses should only be reimbursed for legitimate business expenditure, backed up with supporting documentation.

Look out for travel and expense forms with missing receipts or that don't add up - e.g. a reported trip to a supplier's site that didn't happen. Sharp practices could signify something bigger, like internal fraud or business money being used for improper payments.

How to reduce this risk...

  • Ensure that claims for travel and expenses are backed up with necessary documentation and authorised by a local manager first.
  • Implement an expenses policy and threshold - and regularly raise awareness of the rules.
  • Ask questions - particularly for unjustified expenses or repeat costs.

By being aware of the potential signs of bribery and corruption, you can help to protect your company from penalties and safeguard the company's reputation. Not only will people know the signs to look out for, but the raised awareness could help put people off and prevent corruption from happening in the first place.

Anti-Bribery E-learning Module

Want to learn more about anti-bribery compliance?

We have created a comprehensive bribery & corruption roadmap to help you plan and execute compliance in your organisation.

Our best-selling Compliance Essentials Library and award-winning LMS provide a one-stop compliance training solution, including anti-bribery training.

And our searchable compliance glossaries explain key terms and regularly report on learnings from the largest compliance fines resulting from regulatory breaches.

We also have 100+ free compliance training aids, including assessments, best practice guides, checklists, desk aids, eBooks, games, posters, training presentations and even e-learning modules!

If you'd like to stay up to date with bribery & corruption best practices, industry insights and key trends across regulatory compliance, digital learning, EdTech and RegTech news, subscribe to the Skillcast Compliance Bulletin.

Last but not least, you can interact in person with thought leaders and your peers at one of our popular live webinars and face-to-face events.

If you've any questions or concerns about compliance or e-learning, please get in touch.

We're happy to help!

Compliance Essentials

Compliance Essentials Library is our best-selling comprehensive corporate training solution.

100+ e-learning and microlearning courses that help companies from SMEs to multinationals achieve compliance success.

Start a Free Trial

cta-banner-placeholder