Implementing anti-bribery and corruption policies can help build more sustainable businesses, says KPMG

Ensuring that companies have anti-bribery and corruption compliance programmes in place can assist them in turning this risk into advantage by helping them to build a sustainable business, according to KPMG.

This is particularly the case where ethics is a factor in investment decisions, making good anti- bribery programmes an important aspect of brand value. It can also encourage substantial savings, even when firms have long behaved in an ethical manner, said KPMG, which published a guide to compliance.

The guide helps companies prepare themselves for the introduction of the UK Bribery Act 2010, which is due to come into force later this year or in early 2011.

In addition, KPMG considers that anti-bribery programmes can also help companies by:

• Improved understanding of operational realities: Corrupt practises can only be prevented by firms with a high level of self-knowledge and transparency. Effective anti-bribery policies lead to tougher risk assessments and sharper justification of new projects, improved awareness of how managers actually operate and identification of weaknesses in internal controls.

• Strengthened central direction and control: By improving information about, and awareness of, operations, processes and structures, not least by putting an onus on individual employees to understand and comply with company policies.

• Creation of a more cohesive culture: anti-bribery programmes encourage staff to focus on the needs of the whole organisation and leads to more careful treatment of integrity related issues. Obliging employees to justify key actions breeds rigorous thinking, clearer explanations and robust decision making.

Brent McDaniel, UK Head of Anti-bribery and Corruption at KPMG, said:

“For firms to gain an advantage, such as building a sustainable and ethical business, undertaking an initial risk assessment is absolutely fundamental. Nothing thwarts good anti-bribery compliance as much as adopting off-the-shelf programmes. Firms need to know their own unique risks before devising their policy and procedures.”

Under the Bribery Act, commercial organisations are liable for the activities of associated third parties as well as those of its own staff. It will be guilty of an offence when one of them bribes another person intending to obtain or retain business, or a business advantage, for the organisation. Corporate ignorance offers no protection from prosecution – the only defence is that it ‘had in place adequate procedures designed to prevent a person associated with it from undertaking such conduct’.

Alex Plavisc, UK Head of KPMG Forensic explained: “The Bribery Act is not prescriptive about ‘adequate procedures’. Prosecutors will not tell you to do X, Y and Z in order to create a defensible position. It is incumbent upon each firm to understand its risk and look for issues. Our advice is for businesses to treat bribery and corruption as business risks and to realise that they can be turned into long-term advantages for corporate culture and control.

“However, this Act is far easier to fall foul of than previous laws – even when a company has had no corrupt intent – so having adequate procedures in place, is essential for peace of mind.”