Show me the money

Show me the money! Bribery, corruption and business gifts David Harris Technical Consultant, CIMA Management Consultant

Who am I?
CIMA member
Management Consultant
Technical consultant to CIMA

Overview
What’s wrong with being nice?
When does normal business practice become abnormal?
Forms of corruption
The CIMA Code of Ethics
The law (in most countries)
The UK Bribery Act 2010
Conclusions

You take a potential client/customer to lunch. You pay.

A supplier or business contact takes you out for ‘a few drinks’. They insist on paying. It’s a ‘thank you’ for doing business with them.

You invite a Government minister to join you (with families) for a weekend on your company yacht.

It’s your birthday!
A gift arrives, from a business contact.
It’s an expensive piece of jewellery.

You invite a government official to join the board of directors. Obviously, they should have a few shares. You offer them shares at well below market price (or for free).

In order to win a big contract, you need to appoint an ‘agent’, and pay commission. The agent introduces you to ‘the right people’, and ‘makes life easy for you’. You don’t know what the agent spends your money on, and you don’t ask.

A client asks for a percentage of the contract value to be paid in cash. After all, we all hate paying tax, don’t we?

When does normal business practice become abnormal?
Business entertaining
The ‘end of contract’ celebration
Small value gifts
Large value gifts
The free holiday
The agency fee
The equity stake
The ‘bung’
We all have our own perception of what is ‘normal’ in business
Our perception is shaped by personal, professional, commercial and national cultures
However...

Forms of corruption
What is ‘corruption’?
The word corrupt (Middle English, from Latin corruptus , past participle of corrumpere , to destroy : com- , intensive pref. and rumpere , to break) when used as an adjective literally means "utterly broken". In modern English usage the words corruption and corrupt have many meanings.
(source: Wikipedia)
We can ‘corrupt’ many things:
Language
Data
People
Politics
Business

What is bribery?
Bribery , a form of corruption, is an act implying money or gift given that alters the behavior of the recipient. Bribery is defined by Black's Law Dictionary as the offering, giving, receiving, or soliciting of any item of value to influence the actions of an official or other person in charge of a public or legal duty . The bribe is the gift bestowed to influence the recipient's conduct.
(source: Wikipedia)

The CIMA Code of Ethics
Fundamental Principles
100.4 A professional accountant is required to comply with the following fundamental principles :
(a) Integrity: A professional accountant should be straightforward and honest in all professional and business relationships.
(b) Objectivity: A professional accountant should not allow bias, conflict of interest or undue influence of others to override professional or business judgments.

The Law (in most countries)...
...is surprisingly vague!
United States law is particularly strict in limiting the ability of businesses to pay for the awarding of contracts by foreign governments; however, the Foreign Corrupt Practices Act contains an exception for "grease payments“. This allows payments to officials in order to obtain the performance of ministerial acts which they are legally required to do, but may delay in the absence of such payment.
In some countries, this practice is the norm, often resulting from a developing nation not having the tax structure to pay civil servants an adequate salary.
A state where bribery has become a way of life is a kleptocracy.
(source: Wikipedia)

Applicability
Extra territorial jurisdiction
The failure to prevent bribery offence applies to any corporate or partnership ( wherever it is registered, incorporated or conducts its main activities ) as long as it carries on a business, or part of a business, in the UK . It also applies to conduct that takes place outside of the UK . This means that, as long as it carries on business in the UK, a foreign company can commit an offence in relation to conduct in a foreign country that is not connected with any business undertaken in the UK .
(source: Norton Rose LLP)

Offences
Bribing another person
Being bribed
Bribery of a Foreign Public Official
Corporate failure to prevent bribery

Defence (corporate)
The company can show that it has a process of training and instruction which should ensure that bribery will not take place
Sentences
Personal: Up to ten years imprisonment, and/or an unlimited fine
Corporate: An unlimited fine
Senior officer: see personal

Conclusions
“ Organisations operating in the UK now have to prepare thoroughly for the potential consequences of the UK taking bribery and corruption extremely seriously”
(source: CIMA)

Any Questions?

Show me the money! Bribery, corruption and business gifts David Harris Technical Consultant, CIMA Management Consultant

Show me the money

by David Harris

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Show me the money Presentation Transcript