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UK companies taking risks with bribery & corruption

UK companies risk falling foul of anti-bribery and corruption rules, according to a new report by KPMG Forensic.

Two thirds of companies believe that there are countries in the world where it is not possible to do business without being involved in bribery and corruption, and yet only a third (35%) say they have stopped doing business in any countries due to the bribery and corruption risk. The majority of companies say they rely on enhanced controls and third party due diligence when doing business in such countries in order to minimise the dangers.

However, less than half of companies (42%) say they conduct regular audits of third party business partners and local country representatives as part of their anti-bribery and corruption compliance controls, despite the fact that it is often third party agents that represent the biggest threat of governance breakdown.

Over four in ten companies (43%) do not have an anti-bribery and corruption compliance programme in place, the majority of them believing that the issue is not relevant to their business.

Alex Plavsic, Head of Fraud Investigations at KPMG Forensic, said: “With the recession companies are having to fight harder than ever to win new contracts, and as a result there could be an increased pressure on those in the front line to over-ride anti-bribery and corruption laws. The signs are that many companies could be doing more to manage the risks.”

According to KPMG, many companies appear to remain sceptical as to whether the UK’s Anti-Terrorism, Crime and Security Act 2001, within which anti-bribery and corruption laws are enshrined, is effective. Half of respondents believe that difficulties in collecting evidence will mean the Act is unlikely to be effective despite the SFO’s increased activity in the area. Last month, the SFO brought its first successful prosecution for bribery overseas, in a case involving Mabey & Johnson, the bridge builder. In addition, the draft Bribery Bill currently being scrutinised by the Parliamentary Joint Select Committee is anticipated to come into force in 2010, creating a new offence of negligent failure of a commercial organisation to prevent bribery

Awareness of the extra-territorial nature of anti-bribery legislation has increased amongst companies over the last two years. However, KPMG’s research uncovered a continuing uncertainty about the United States’ Foreign Corrupt Practices Act (FCPA). The FCPA gives the US authorities far-reaching powers to prosecute companies that have any US footprint or even just any American employees for bribery committed anywhere in the world – powers which the Department of Justice has been very active in utilising. The signs are that many UK companies are hazy on the extent to which they could be caught up by the FCPA, as while 59% of companies said they conduct business in the US, only 31 percent thought that their company was subject to the Act.

Links

Bribery & Corruption Survey >>

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