Spotlight on Bribery and Corruption in Business: Employees Still Believe It Pays to Improperly Incentivise Third Parties | White & Case LLP International Law Firm, Global Law Practice
Spotlight on Bribery and Corruption in Business: Employees Still Believe It Pays to Improperly Incentivise Third Parties

Spotlight on Bribery and Corruption in Business: Employees Still Believe It Pays to Improperly Incentivise Third Parties

• White & Case and University of Manchester launch 2018 Global White Collar Crime Survey

• Companies make progress on anti-bribery and corruption strategies but there is still more work to do

• Almost a fifth of respondents say their company still has no formal anti-bribery and corruption policy in place

• Third party risk: 40% of legal and compliance staff feel pressure to approve engagement with third parties despite bribery and corruption risks

• Middle management and internal compliance teams key to combating wrong-doing: internal reporting structures preferred – 88% most inclined to raise an issue internally

 

While progress has been made, improvements to companies' anti-bribery and corruption (ABC) strategies are still needed, according to the 2018 Global White Collar Crime Survey, launched today by global law firm White & Case LLP, in conjunction with the University of Manchester.

The survey gathered views anonymously from employees at businesses operating across a variety of sectors and jurisdictions. It explores a range of themes surrounding bribery and corruption, building a comprehensive picture of the risks currently faced, as well as the steps being taken to mitigate them.

 

Companies need to close gaps in compliance

When asked whether their company has a formal ABC policy in place, 29% of employees answered 'no' or 'don't know' (19% of respondents reported that it did not), indicating that there was either no policy, or no effective communication strategy around it.

Furthermore, respondents openly agreed that opportunities for bribery and corruption, as well as pressure to overlook risks, exist day-to-day:

  • 39% of respondents in non-legal/compliance roles, such as sales and marketing, thought it would be possible for someone in their position or company to offer a bribe to a public official for preferential treatment
  • 40% of employees from legal/compliance departments said that they had felt under pressure to approve the engagement of a third party despite bribery and corruption red flags (5% always, 14% often, 21% sometimes)

Darryl Lew, Global Head of White & Case's White Collar practice, comments: "The results around the existence of formal ABC policies are noteworthy. Having a written policy known by and accessible to employees is a core component of an effective anti-corruption compliance program."

"The fact that the survey shows that a significant percentage of employees are aware of opportunities to engage in bribery and corruption only underscores the need for written polices, training and the creation of a strong compliance culture, so that employees make the right decisions."

"Engagement with third parties is a known risk area, and something that is firmly on the radar of regulators and law enforcement authorities worldwide. Companies are expected to assess and address this risk. The survey results showing almost 40% of legal/compliance personnel felt some form of pressure to approve third parties, despite potential red flags, emphasizes the need for strong management support for any compliance program to be truly effective".

 

Tackling perceptions

The research revealed that perceptions around the benefits of bribery are still a key issue. 48% of respondents feel that people who pay bribes on behalf of their company are rewarded internally, and/or able to enjoy substantial personal benefit. Of those who indicated this is the case, 64% felt that the employee concerned would be awarded 'special status' and 60% indicated they felt promotion would likely follow, for helping to meet company targets.

Jonathan Pickworth, Partner at White & Case, comments: "Companies need to do more to tackle this idea that wrong-doing will result in substantial personal gain. Taking a closer look at how employees in high risk positions and jurisdictions are incentivised, and how their success and performance is measured, is key. Meeting compliance objectives and maintaining high standards of behaviour should be firmly linked to progression and financial reward, in a much more tangible way."

"Companies might also consider adding clawback provisions in company policies or individual employment contracts, allowing them to recoup performance payments to employees if it is later determined that they were awarded for success in relation to improper conduct."

"The consequences of bribery and corruption are severe, and law enforcement agencies' powers to investigate and prosecute have grown substantially over the last few years. Employers need to make sure their staff are aware of the legal implications, and severity of penalties."

 

Reporting instances of bribery and corruption

In terms of where employees turn when they suspect or identify bribery and corruption by a co-worker, internal channels were preferred. In the first instance, the majority (88%) would be inclined to raise the issue internally, rather than externally. 33% said they would contact their direct manager, and 24% both their direct manager and the legal/compliance team. Just 3% said they would make use of a whistleblowing hotline, and only 2% said they would go to a regulator or authority. 6% said they wouldn't notify anyone.

Darryl Lew comments: "A preference for internal reporting structures indicates a faith in them, which is promising. Given this trend, companies need to work hard to maintain internal reporting systems and processes, and ensure employees are aware of them."

"It also highlights the importance of middle management. Support and tone from the top is key, but the fact that most employees would turn immediately to their direct manager makes sense, and companies need to ensure that an understanding of anti-bribery and anti-corruption policies has permeated down."

On the study, Dr Nicholas Lord, Reader in Criminology in the School of Law at the University of Manchester, comments: "The 2018 Global White Collar Crime survey offers a comprehensive overview of the attitudes and approaches of companies and their employees towards bribery and corruption."

"With a raft of new legislation designed to tackle white collar crime and extended powers awarded to regulators and law enforcement agencies globally over recent years, companies need to pay more attention than ever to ensuring internal compliance and ABC systems are robust."

"The study indicates that there is still a way to go – in terms of the development of internal compliance programmes and structure, and also in changing perceptions around the benefits and consequences of bribery and corruption."

The full report can be viewed here.

 

About the survey
The survey was carried out through an online questionnaire, consisting of 82 questions in total. The survey was developed through collaboration between White & Case and researchers from the University of Manchester. It was distributed to potential respondents via a number of different methods, including social media, direct email contact with relevant companies and a panel data company. Data was collected over a period of three months, from September to December 2017. In total, 252 respondents completed the survey, from a range of industry sectors, with different roles, positions and responsibilities within their organization, and based and operating in various parts of the world.

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