Small bribes can amount to big problems for companies, according to the U.K. arm of the anti-corruption group Transparency International, which published a guide on combating the issue this summer.
The watchdog’s “Countering Small Bribes: Principles and good practice guidance for dealing with small bribes including facilitation payments” contains practical advice for companies on how to comply with anti-bribery laws, protect their reputations, better prepare their employees, and assess risks within their organizations. It also contains case studies and negotiation strategies for employees faced with a demand to pay a bribe.
The 46-page guide, released last month, was prepared with support from DLA Piper and FTI Consulting. TI-U.K. said the guide also is designed to assist regulators, prosecutors, and professional consultants.
Calling small bribes a complex challenge, TI said its own research showed that worldwide 1 in 4 surveyed had paid a bribe in the past 12 months. It said the problem is especially pronounced for employees overseas if they are traveling alone or need to get goods released from customs. The report also noted that declining to pay a bribe can have real business costs, with demands often made during “operational vulnerability,” such as needing to clear goods from customs. The report covers small bribes such as cash, alcohol, or other gifts, and facilitation payments.
“When a company pays a bribe of any size, it reinforces a culture of graft which is exceptionally damaging to the economies and societies in which they are paid,” Robert Barrington, executive director of TI-U.K., said in a statement, noting that if a British company paid regular bribes to government officials in the U.K., it would be “vilified.”
“These bribes are not so small when added together – in a single year, a company might be paying out millions of dollars around the world,” Barrington said. “But nobody doubts that there are parts of the world in which it is hard to do business without facing sometimes frequent demands for small bribes. This is one of the most difficult corruption problems for companies to eliminate in their operations.”
The guide includes 10 principles to counter small bribes, including a top-down corporate culture committed to ethics and integrity, a corporate policy and strategy to tackle the issue of small bribes using internal controls, and a thorough risk assessment throughout a company’s activities and operations. The principles also include the need for a formal, detailed program against small bribes which includes training of employees, including practical advice and instructions on how to report concerns or instances of bribery; minimizing third party risks through due diligence, contract terms, training, and monitoring; extending internal accounting controls to counter small bribes; and upon detection of a small bribe, appropriate investigation, disciplinary action, or reporting of the incident to authorities. The report also advocates regular monitoring of the program as well as efforts by the company to combat “entrenched factors” that trigger bribery demands in areas where it conducts business.
“Although some companies ask how they can be expected to operate in certain markets without paying small bribes, more and more companies have in place a global no-bribes policy and are rigorous about enforcing it,” the guide said. “They are starting to find that their reputation for not paying bribes means they are no longer asked; whereas those that pay small bribes can be subject to an ever-increasing spiral of demands.”
On training employees, the guide recommends warning employees in advance of likely bribery demands they may face, and ensuring they know they won’t get in trouble if business is delayed because they refused to pay a bribe. It also gives specific strategies employees can use, including videotaping interactions with officials and demanding receipts for any payments.
Simon Airey, head of investigations for DLA Piper, said he hoped the guidance will help companies reduce their exposure.
“There are very few multinational companies that aren’t at risk of extortion or aren’t affected by small bribes and facilitation payments to some extent,” Airey said in a statement. “Often those payments are concealed from the company by its employees or they are paid covertly by agents and intermediaries. However, that isn’t a defense under the legislation and it doesn’t matter that individual payments are low in value.”
Anti-bribery experts Barry Vitou and Richard Kovalevsky, authors of thebriberyact.com blog, commended TI’s work, calling it a big help and a “must read.”
“The guidance is focused on compliance and zero tolerance strategy and provides some very practical advice on addressing the challenge of countering small bribes, including ‘grease payments,’ starting with a lengthy table which identifies some of them,” the blog said. “In fact there are a bunch of tables which are very helpful in identifying small bribes, suggesting some really practical ways of finding out what exposure there is in your business, right up to some very, very practical tips to give employees the wherewithal to avoid paying them.”