Implementing an effective Anti-Corruption compliance programme, the key drivers and pitfalls

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By Peter White – Peter.White@EthicalBoardroom.com

An effective anti-corruption compliance programme is more vital than ever when it comes to good governance of a corporation. Bribery and corruption have become top priorities when it comes to the challenges faced by today’s enterprises and these risks are posed to companies across the globe. The risks take different forms across varying companies, industries and geographies and therefore no one-size-fits-all anti-corruption compliance programme exists in solving this problem. Instead, global organisations must look towards developing customised programmes that specifically target the form of corruption and bribery at hand.

Bribery and corruption are significant barriers to economic and social stability in both developed and emerging markets. Therefore, basic risk mitigation structures have had to evolve into customised complex anti-corruption compliance programs. In many cases, however global enterprises remain vulnerable due to an organisational culture that does implement an anti-corruption compliance program effectively. In some cases the culture of the organisation is in a deeply ingrained habit of accepting or ignoring signs of bribery, corruption and fraud. This needs to be changed at the heart of the organisation.  Although there are no quick fixes for risks from bribery and corruption, there are several factors that help build a solid foundation for an effective anti-corruption compliance program. These factors should be designed to fundamentally change an enterprise’s culture at its core and throughout all levels, and should also identify and address potential issues in a timely manner. The programme should also detail how to discover and then contain instances of bribery and corruption, so that the impact to the business is minimised.

Unfortunately, and posing an even greater challenge for some companies, bribery and corruption are considered a culturally normal phenomenon of doing business – especially in some emerging markets. These attitudes need to be directly addressed and redirected as part of the anti-corruption compliance programme. Fraud can manifest itself in what may seem innocuous and minor transactions within an organisation but they are fraudulent nonetheless and in cases like these the tone set by senior management is crucially important in driving employees towards fostering a vigilant and low tolerance attitude to such instances.

No company can be completely immune to bribery, fraud and corruption. An impacting reactive factor is therefore fundamental to the success of a compliance programme. A fixed and well-defined process needs to be in place and executed in a timely fashion that implements an internal investigation when a red flag is raised. Furthermore, full cooperation with the appropriate regulatory authorities should be executed and encouraged in all cases.

Anti-corruption compliance programmes can vary widely between companies. However, over the last five years, an industry consensus of best practices has emerged and has been increasingly adopted. The framework of these anti-corruption compliance programmes is based around a structure that specifically involves a combination of people, processes, and technology. People refer to the individuals who are responsible for developing, implementing and monitoring a company’s anti-corruption compliance program. Processes refer to the working factors of the anti-corruption compliance program such as periodically conducting risk assessments, the practice of enhanced financial controls, audit and monitoring and anti-corruption employee training. Finally technology refers to the use of various tools to assist in execution of the compliance objectives and mandate. This can include the accounting system, the company’s training system, website, and payment and approval control mechanisms.

On a global scale anti-corruption compliance programs should furthermore include a specific code of conduct and detailed policies regarding gifts, training, political and charitable contributions, and delegation of authority, as well as accounting policies regarding the proper and full recording of transactions. An effective and successful anti-corruption compliance programme will need to be risk oriented to ensure that it is properly designed to target certain areas with custom designed strategies of implementation. Further to this, resources should be adequately allocated to properly mitigate the specific and most substantial risks of corruption and bribery facing an enterprise.

One of the most successful elements to date has been an incident response plan – one that is based on proactive steps. These kinds of features have saved companies significant sums of money over the last few years and can be expected to prevent potentially irreparable harm to the business brand and reputation over the long term.