A new survey by business ethics consultancy GoodCorporation has found that up to half of the UK's global logistics companies are compliant with the new UK bribery laws, reports the Financial Times.
GoodCorporation are a leader in corporate responsibility and business ethics and has developed an anti-bribery and corruption framework to help businesses test their compliance with the new Bribery Act 2010 which came into force fully last July.
Their investigation into logistics companies has revealed that one third of companies has failed to publicly outline their approach to fighting bribery, in accordance with the law, and almost half have no statement published on illegal 'facilitation payments' which are paid to speed the passage of goods through customs.
Michael Littlechild is a founder and director of GoodCorporation.
"You have to do due diligence on partners, and logistics companies often don't have the very basic documents," he told The Financial Times.
UK anti-bribery law in brief
The UK is at the forefront of global efforts to develop a coordinated and cohesive anti-bribery law. Under the Bribery Act 2010 directors can face significant fines and even prison sentences if their companies fall foul of the law.
The Bribery Act 2010 creates an offence under section seven if a commercial organisation fails to prevent a person associated with them from bribing another person on their behalf.
In order to avoid an offence under section seven businesses have to prove that they have adequate procedures in place to prevent a bribe being made on their behalf. If an employee or agent gives a bribe there is a full defence under the act if you can show that your business has adequate anti-bribery procedures in place.
What does a business have to do?
Adequate procedures against bribery are sufficient to avoid prosecution in most circumstances. However, what qualifies as adequate procedures will vary depending on the bribery risks which a business faces. For example, small and medium-sized firms with low risk would be expected to have fewer provisions in place than a large firm which operates in overseas markets where bribery is known to be commonplace.
The Ministry of Justice has published six principles which businesses can use to help guide them when developing anti-bribery policies:
1. Proportionality - actions against bribery should be proportionate to risk in each business
2. Top-level commitment - action should be taken from the board down, all staff should be aware that bribery is not tolerated
3. Risk assessment - conduct a thorough risk assessment of existing and new business areas
4. Due diligence - conduct appropriate due diligence on anyone who will do things on your behalf (companies who simply supply goods need not be included)
5. Communication - all policies must be adequately communicated to all appropriate staff
6. Monitoring and review - keep monitoring your business, especially when you enter new markets
The UK anti-bribery law is particularly strong on facilitation payments. These are payments made to public officials in order to expedite a service to which the business is already entitled. The logistics business is particularly susceptible here, as payments to customs officials directly can help to speed up the passage of certain goods through customs.
"The payments (in logistics) are common practice if you don't want your package sitting on the hot quayside collecting dust," said Mr Littlechild of GoodCorporation to The Financial Times.
"(Logistics companies) have daily interactions with customs officials, port authorities and individual representatives of government agencies of one sort or another whose influence far outweighs their salaries - they are obvious sources of risk," Will Kenyon, partner in forensic services at PwC told the Financial Times.
The Serious Fraud Office (SFO) accepts that in some parts of the world facilitation payments are still the norm and it has a series of criteria which it would look to see implemented for a business to avoid prosecution:
· Does the company have a clear policy on facilitation payments?
· Do company employees have access to written guidance on what to do if a facilitation payment is sought?
· Do employees follow the guidance?
· Does the company record all facilitation payments paid?
· Is the company taking action to inform authorities in the countries concerned that facilitation payments are being demanded?
· Is the company taking practical steps to curtail facilitation payments?
According to SFO guidelines businesses who can answer these questions satisfactorily will avoid prosecution under the Bribery Act.
Logistics groups at risk from bribery law (The Financial Times)
The Bribery Act 2010 (Ministry of Justice)
Facilitation payments (The Serious Fraud Office)