Bribery and corruption pose some of the most significant threats to the integrity of global business operations in the modern day.
According to Moody’s, these unethical practices, influenced by stringent regulations like the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act, are a central concern for industries worldwide. For compliance, legal, and supply chain professionals, eliminating the risk of corruption, especially among third-party partners such as suppliers and distributors, is a crucial aspect of their roles.
Organisations face numerous risks at the entity or enterprise level, categorised under strategic, operational, financial, and compliance-related risks within Enterprise Risk Management frameworks.
Among these, the threat of bribery and corruption is often a top priority. Organisations must design robust third-party risk management frameworks, founded on thorough due diligence and sophisticated risk assessments, to mitigate these risks effectively.
Globally, bribery is a massive problem, with an estimated annual cost of around $3.6 trillion. According to Transparency International’s Corruption Perceptions Index, no country is immune to corruption risks. With over 50 countries enacting anti-corruption laws, the global commitment to combating this issue is evident.
The enforcement of anti-corruption measures remains vigorous. In 2023 alone, the U.S. Department of Justice and the Securities and Exchange Commission imposed fines exceeding $700m through various actions.
The introduction of the Foreign Extortion Prevention Act highlights a growing focus on combating the demand side of bribery, empowering the DOJ to prosecute foreign officials who solicit bribes.
To combat bribery and corruption effectively, organisations are advised to implement comprehensive third-party risk management programs. These programs should include clear business rationales for involving third parties, understanding potential risks, ensuring rigorous contract terms, and promoting ethical behaviour.
Continuous monitoring through due diligence, audits, and compliance training is essential to maintain integrity and legality in third-party engagements.
Chief compliance officers and their teams prioritise managing the risks associated with third-party engagements to prevent bribery and corruption. An integrated approach, where multiple risks are assessed simultaneously, can enhance the effectiveness of due diligence processes. Adopting advanced technology platforms and utilising global databases are recommended to streamline these efforts and ensure comprehensive risk coverage.
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