From conversations I’ve had with CEOs and owners of UK SMEs, it’s apparent that many are misinterpreting Principle 1 (“Proportionality”) of the UK Bribery Act 2010 guidance.
While the Ministry of Justice’s explanation of adequate procedures is very helpful in general, it is possible to conclude from the Quick Start Guide that the company’s response should be proportional to its size rather than to the risks involved in its business transactions. Perhaps this is wishful thinking for a CEO determined not to spend money and/or resistant to change? But in some cases, their external lawyers have even confirmed this view!
Risks to SMEs pursuing export sales
The SMEs I am thinking of are trying to sell their wares globally without recruiting sales managers. They cover the world with a network of ‘sales agents’, and will pursue almost any sales opportunity that comes their way. Given that 80% of UK and US enforcement actions involve a sales intermediary of some kind, it is clear that SMEs require a far more comprehensive set of procedures.
The SMEs’ drive for greater revenue from export sales and the relative ease with which the law enforcement agencies can gather evidence of wrongdoing on the part of the sales agents is a perfect storm. There is an existential risk for SMEs that may not apply to a large corporate. An SME may not be able to survive an aggressive investigation and subsequent prosecution because, unlike the large corporate, it cannot afford to engage the specialist law firms.
Turn risk into value
If you are the owner of an SME and you’re gradually realising that you and your company are exposed to bribery risk, there is no need to lose sleep! If you can implement adequate procedures in a straightforward and cost-effective way, this will not only reduce your risk but also help you refine your business strategy and enhance your company’s reputation to ensure long-term profitability. You will turn risk into business value and concern into confidence.