International Anti-Corruption Day 2019
09 Dec 2019 12:23 pm
December 9th marks the International Anti-Corruption Day, a reminder that bribery and corruption remain a severe threat to the United Nations Sustainable Development Goals (SDGs). The private sector plays a crucial role in fighting corruption in order to support the rule of law and civil society around the world. And it has been increasingly clear that leaders in this area realize benefits—from reducing third-party risk that could cause reputational or financial damage to supporting sustainable, long-term growth. How do you build an effective process for compliance that compliments global anti-bribery and corruption legislation?
Corruption risk can happen anywhere
No country or industry is immune to corrupt activities like bribery, embezzlement and extortion. Such practices threaten the rule of law and undermine civil society. As UN Secretary General António Guterres has noted, “Corruption robs societies of schools, hospitals and other vital services, drives away foreign investment and strips nations of their natural resources. It is an assault on the values of the United Nations.”
According to recent estimates by the World Economic Forum the global cost of corruption is at least $2.6 trillion—or 5 per cent of the global GDP. This economic loss and the subsequent social damage further blocks the already challenging implementation of the Sustainable Development Goals.
Effective compliance demands effective due diligence
The loss of resources, investments and the consequential human tragedies linked to corruption are omnipresent for governments and the private sector worldwide. In the face of mounting costs, countries have enacted a wide range of laws and guidance for mitigating corruption risk. And one unsung hero in the effort is a comprehensive risk management process that tackles corrupt business practices while mitigating financial, social and political risks.
An effective compliance program enables companies to mitigate risks and prevent legal liabilities under laws with extraterritorial reach like the Foreign Corrupt Practices Act (FCPA) and the UK Bribery Act, as well local laws in areas where they conduct business. For this to succeed, awareness for the importance of compliance has to be raised throughout every level of a company and has to be implemented into the core of it’s corporate culture.
Whether your company is thinking about expanding its business operations to a sector or region with an increased risk in or a corrupt past or you just want to strengthen your risk management program, due diligence remains a must. And these five steps can help you develop and promote accountability and transparency through a robust compliance strategy.
1. Enforce a culture of zero-tolerance policy on corruption & bribery towards your employees, customers and suppliers.
2. Recognize and assess your company’s risks and opportunities for improvement.
3. Implement policies and programs aimed at preventing and mitigating corruption throughout your company and in particular with third parties you do business with.
4. Monitor and measure the implementation of your policies in order to further improve them.
5. Communicate your efforts, your progress and your achievements internally and externally.
While these steps constitute a comprehensive framework for building an effective compliance program, certain aspects require a more detailed consideration. In particular third-party due diligence has to be a given a crucial role in any anti-corruption program. Unanimously, corporate compliance experts identify third parties to be the root of most corruption and bribery conflicts for private entities today.
In particular in industries and regions were governmental oversight is less effective, and a history of legislative breaches concerning corruption, bribery and forced labor is evident strong and sound third-party due diligence is a must. These include in particular industries linked to the extraction and processing of natural resources but also the global financial sector as recent cases have showcased.
Putting the spotlight on corruption
Beyond the corporate costs, corruption disproportionately affects the poor and constitutes a considerable obstacle in achieving the 2030 Agenda for Sustainable Development. It harms economic growth, escalates costs and poses serious reputational and legal risks for companies all around the world.
Nevertheless, we can see light at the end of the tunnel. The number of private sector representatives that are joining the global fight against corruption is growing day by day and an increasing number of policies addressing corrupt business methods are being implemented by national and international policy makers as we speak. Together, through a closing of ranks between the private sector, the public sector and civil society at large, corrupt and illicit schemes can be identified, reduced and mitigated. #UnitedAgainstCorruption.
Do you need help in preventing that you company is doing business with corrupt third parties? Check out Nexis Diligence, our screening tool for third parties.