You Are Responsible For Your Supply-Chain corrupt actions, But ISO 37001 ABMS Can Help!

Bribery in many regions is too often regarded as a standard operating procedure – a necessary evil to move business along. However, the past decade has seen a dramatic rise of organisations accused of bribery schemes. The practice of bribery is fast becoming the focal point for governments and global watchdogs intent on levying hefty fines and penalties for companies involved in the practice. And regional and international regulations become stricter, particularly for companies part of the supply chain, i.e. importers, exporters, third-party service providers or indenters for foreign companies. As an organisation and part of the senior personnel team you are officially responsible for your supply-chain corrupt actions.

Foreign companies are now forced to take responsibility for companies’ corrupt practices within their supply chain, so they are increasingly complying with international laws such as the Foreign Corrupt Practices Act (FCPA), Section 17A Malaysian Anti-Corruption. Commission (Amendment) Act 2018 introduced a new far-reaching corporate liability provision, the U.K. Bribery Act, Brazilian Clean Company Act. This progress intends to eliminate corruption from supply chains and third-party working relationships of foreign companies. Companies that are not complying with these laws are being penalised and prosecuted heavily. 

Some Notable Cases:

• Airbus set to pay €3.6bn to settle corruption probes to regulators in the UK, France and the U.S. to settle a long-running bribery and corruption probe into its use (intermediaries) middlemen to win international sales.y
• Rolls-Royce agreed to £497.2m — a British record penalty against a company for criminal conduct.
• An example of one of the U.K.’s pharmaceuticals firm GlaxoSmithKline punished with $490m (£297m) in fine after a court found it guilty of bribery, another largest computer equipment manufacturer and supplier company Hewlett-Packard or H.P. found guilty. The company will not be able to sell in Canada for ten years, which means $37 million (Rs. 37.6 Billion) loss per year H.P. has to face and Hewlett-Packard to pay $108m to settle scandal over bribery of public officials. This is a significant loss to this company as it has been barred from selling in Canada. This shows that eventually, non-compliant companies will be a considerable loss of business and reputation in the global marketplace. 
• Wal-Mart faces at least $600 million in fines for allegedly paying off officials in Mexico, India, and China to fast-track zoning and building permits and sidestep licensing and environmental permits. The company has already racked up nearly $800 million in legal fees and revamped compliance systems during the five-year investigation, which has yet to be settled.
• Amsterdam-based VimpelCom Ltd. agreed this year to pay $795 million to settle the U.S. and Dutch claims that it bribed officials in Uzbekistan to win business. 
• Siemens AG paid a record $800 million in a combined SEC- U.S. Justice Department penalty in 2008.
• U.S. asset manager, Och-Ziff Capital Management LP, will pay $412 million in penalties and fines to settle a U.S. investigation into bribes that were paid across Africa.

Billions of dollars are being forfeited by companies worldwide, unable to keep up with the maze of international regulations, laws, and rules that stipulate bribery boundaries. What to do? Since many foreign and local companies are importers, exporters, third-party services providers, or indenters, they should start looking at their anti-corruption compliance policies and standards.

Fortunately, the International Organization for Standardization (ISO) has undertaken the complex task of creating a globalised standard of measurements designed to identify, prevent and respond to bribery. 

Adopted in late 2016, “ISO 37001Anti-Bribery Management System” sets out to guide internationally recognised good anti-bribery practices. Written in easy-to-understand language, the standard can easily be applied to any public, private or not-for-profit organisation, regardless of type, size or nature of business or activity. That’s good news for companies’ intent on conducting global business that fosters transparency, integrity, openness, and compliance. Better yet, those organisations that can develop and implement reasonable and proportionate measures to prevent, detect and respond to bribery will stand a better chance defending against harmful prosecution if they become embroiled in an international bribery case.

The Global Definition of Bribery

The book definition for bribery defines the act of “offering, promising, giving, accepting or soliciting an undue advantage of any value (which could be financial or non-financial), directly or indirectly, and irrespective of location(s), in violation of applicable law, as an inducement or reward for a person acting (or refraining from acting) concerning the performance of that person’s duties.”

Put more directly in the context of international law; an offence occurs as a result of four key crimes:

1. Bribing 
2. Receiving a bribe 
3. Bribing a foreign public official
4. Failing to prevent bribery

International laws and regulations (including the FCPA and U.K. Bribery Act) make various forms of bribery a crime, punishable by unlimited fines, forfeiture of public contracts, and possible imprisonment of the organisation’s senior officials.

Those regulations define bribery, receiving a bribe, or failing to prevent a bribe in these terms:

• Bribery in the public, private and not-for-profit sectors
• Bribes made by the organisation, its personnel, or outside business associates
• Bribes made to the organisation, its personnel, or outside business associates
• All direct and indirect bribes, including those offered or accepted through or by a third party

And while many parts of the world regard bribery as a “normal cost of doing business,” there is a growing trend to make organisations, as well as individuals, liable for acts of corruption. Aside from the apparent arguments that regard bribery as a crime, there are long-lasting effects that the practice has on governments, economies, and societies, most notably:

• Bribery erodes trust in governments and public officials
• Bribery interferes with normal competitive practices in the global marketplace
• Bribery diminishes the quality of products and services
• Bribery puts societies at risk and imperils citizens through potential shoddy workmanship and inferior infrastructure

Your Company Is Liable For Bribery Committed By Third-Party Affiliates

The world is starting to notice the disastrous effects of bribery and corporate corruption and is going after businesses and officers within the corporation on a noticeably increasing scale. And frequently, those accused organisations surprisingly have to answer charges that outside third-party representatives of the business committed.

According to industry reports, more than 90% of reported FCPA cases have involved third-party intermediaries acting on behalf of organisations. This astounding fact confirms the need for corporations to develop and implement anti-bribery measures that ensure compliance with the myriad legal prohibitions on foreign bribery, clearly outlines steps to safeguard against this behaviour on a multi-jurisdictional level and provides protection for the organisation from the costly litigation that can result from corrupt practices.

The Need for ISO 37001 

ISO 37001 sets the standard for such measures by specifying steps that an organisation must implement to develop a management system that prevents, detects and responds to bribery while complying with anti-bribery laws within the organisation’s operations and by outside affiliated business partners (such as agents, consultants, suppliers, distributors and other third-parties).

In summary, those best-practice measures include:

• Implementing an anti-bribery policy and program.
• Is adequately communicating the policy and program to all relevant personnel and business associates.
• Appointing a compliance manager to oversee the program.
• Providing appropriate anti-bribery training for personnel.
• Assessing bribery risks, including appropriate due diligence.
• Taking reasonable and proportionate steps ensures that outside organisations and third-party business associates have implemented appropriate anti-bribery controls.
• Verifying that personnel will comply with the anti-bribery policy.
• Controlling non-monetary outflows, such as gifts, hospitality, donations, and similar benefits, ensures that they do not have a corrupt purpose.
• Implementing appropriate financial, procurement and other commercial controls to help prevent the risk of bribery.
• Implementing effective whistle-blowing and other internal and external reporting procedures.
• Investigating and dealing appropriately with any actual or suspected bribery occurrence.

In a nutshell, ISO 37001 considers a compendium of international best practices, enabling global organisations to apply and implement uniform anti-bribery measures irrespective of the various countries in which they operate.

Becoming Compliant with ISO 37001 Certification

Because ISO 37001 is built around a set of generally accepted requirements, global organisations can become certified in the standard, utilising the services of an accredited third-party certifying body. Certification will add a distinct level of credibility to the organisation’s management systems and must be completed by a qualified, independent third-party specifically versed in ISO 37001:2016 certification.

Becoming certified in ISO 37001 enables the organisation to demonstrate adequate procedures to detect and prevent bribery on a multi-national level. Additionally, such certification:

• Ensures that the organisation is implementing a viable anti-bribery management program utilising widely accepted controls and systems.
• Provides assurance to management, investors, business associates, personnel and other stakeholders that the organisation actively pursues internationally recognised and accepted processes to prevent bribery and corruption.
• Protects the organisation, its assets, shareholders and directors from the effects of bribery.
• Provides acceptable evidence to prosecutors or courts that the organisation has taken reasonable steps to prevent bribery and corruption.

Bribery continues to be a significant problem worldwide, and conforming to an internationally recognised standard to combat the practice while promoting ethics in business will help organisations succeed in the ever-expanding global marketplace.

ABAC® programs protect your organisation from damaging litigation & safeguard your business in the global marketplace by providing certification & training in internationally recognised ISO standards, such as ISO 37001 Anti-Bribery Management Systems, ISO 37301 Compliance Management Systems and ISO 31000 Risk Management Systems.