Five common myths in UK SMEs re international bribery risk…
1. “Only large corporates are prosecuted for a Bribery Act offence” – NOT TRUE: more SMEs and individuals than major corporates have been prosecuted. Generally, the evidence is easier to collect and an SME may not have deep enough pockets for a drawn out defence.
2. “A UK company which is not listed on the NYSE cannot be prosecuted by the USA for a Foreign Corrupt Practices Act [FCPA] offence” – NOT TRUE: While a UK company might not have an obvious presence in the USA, the FCPA could have jurisdiction if the international bribery was associated with various conditions, including:– an employee or business partner is a US citizen or Green Card holder; products are priced in US Dollars; business partners are paid in U.S. Dollars; a business meeting or customer entertainment is held in the USA.
3. “Entertaining customers, or giving them a bottle of wine at Christmas, is illegal” – NOT NECESSARILY TRUE: if the entertainment and/or gifts to a specific individual are modest, transparent and infrequent then the action will usually be construed as customer relationship-building rather than bribery.
4. “A small company only requires rudimentary anti-bribery procedures” – NOT NECESSARILY TRUE: if a SME exports its products globally it may need to appoint local in-country representatives such as “sales agents”. In higher risk of corruption markets a comprehensive and robust set of procedures from identification, due diligence through to management of those agents is well advised. These procedures form a key part of the SME’s “adequate procedures to prevent bribery”, the SME’s key defence in a Section 7 of The Bribery Act prosecution. Some 80% of bribery cases involve the use of a third party such as an agent.
5. “The introduction of an effective anti-bribery management system will reduce net profit by dramatically reducing export sales revenue” – UNLIKELY: The world is changing and bribery is not tolerated in many more countries. An effective embedded anti bribery management system (such as ISO37001) identifies both bribery and business risk which can then be managed; enhances company reputations and underpins long term profitability, turning risk into business value. Evidence of a robust anti-bribery approach is increasingly a positive competitive differentiator.