Corruption: "Not Just an Envelope Filled With Money"
Although who wouldn’t perk up at the prospect of being handed an envelope filled with money? But let’s get serious here…
Corruption is a problem around the world, but just how bad is it?
The Corruption Perceptions Index has been widely credited with placing the issue of corruption at the top of the international corruption policy agenda. (source)
The 2014 Corruption Perceptions Index measured the perceived levels of public sector corruption in 175 countries and territories. It’s a score that ranks countries and territories based on how corrupt that country’s public sector is perceived to be. Created combining surveys and assessments of corruption, collected by a variety of reputable institutions, it’s the most widely used indicator of corruption worldwide.
2014 saw 175 countries and territories included in the index, compared to 177 in 2013. The most improved countries were Afghanistan, Ivory Coast, Egypt, Jordan, Mali, Saint Vincent and the Grenadines, and Swaziland. The biggest decliners were Angola, China, Malawi, Rwanda, and Turkey.
Anti-Corruption Due Diligence
With the increasing frequency and expanding scope of enforcement globally, organizations need to devote plenty of attention to anti-corruption due-diligence of third-parties that they engage globally. Just because an existing attitude of ‘this is how we do things here’ exists, doesn’t mean that’s how business should be conducted between you and your third-party.
The risks stemming from bribes and corruption rank among the largest risks that organizations can face. Direct financial impact can be devastating when penalties reach into the hundreds of millions of dollars – not to mention the damage to brand and reputation.
Organizations can protect themselves from risks of bribery and corruption from their third-parties. Now more than ever, organizations need to look at their international compliance programs and assess whether those programs are sufficient enough to face real issues of bribery and corruption of their over-seas partners.
The value of due diligence is immense. It provides “red flags” that a particular third-party may be a source of risk. It also helps to satisfy an effective anti-corruption compliance program from the perspective of enforcement agencies. Additionally, effective due diligence may mitigate potential penalties.
The purpose of third-party due diligence against bribery and corruption is to determine whether your third-parties can be reasonably expected to comply with anti-corruption laws in the future after they are hired. By examining their experience, professional reputation, allegations of corrupt activity and the nature and frequency of contacts with potentially corrupt government officials, an assessment can be made and red flags can be identified.
The ability to monitor an organization’s third-parties engaging in bribes, corruption, and fraud, and the ability to monitor, internally, employees engaging in bribes, corruption, and fraud is powerful, and a smart proactive approach.
Download a whitepaper on the role of due diligence in anti-corruption compliance.