09-07-2010

By Graham Buck

The 2010 Bribery Act is easier to fall foul of than previous laws. So says KPMG, which has just published a compliance guide to the new Act.

The business advisor is urging companies to put anti-bribery and corruption compliance programmes in place to turn this risk into advantage by building a sustainable business. It can also encourage substantial savings, even when firms have long behaved in an ethical manner, says KPMG.

Their compiance guide is designed to help 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.

KPMG considers that anti-bribery and corruption programmes can also help companies through:

•Improved understanding of operational realities: Corrupt practises can only be prevented by firms with a high level of self-knowledge and transparency. Effective AB&C 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: 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...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's forensic team explains: “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.

“But, as KPMG’s own survey found at the end of last year – nearly half of respondents had no anti-bribery and corruption programme in place – so it is clear that some businesses already had much to do and this has only become more pressing.”

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