The Network GRC Blog

Learning Your ABCs

April 24 2012

Clark Bosley, EVP Global Account Management, The Network

The UK Bribery Act has been in enforcement going on nine months, but signs are that there is still confusion and lack of commitment on the part of corporations with British interests when it comes to protecting themselves against financial crimes (the ABCs, or anti-bribery controls). It’s no time to claim ignorance. It IS time to get on board.

The UK’s Financial Services Authority just released a report called “Anti-bribery and corruption systems and controls in investment banks” that provides some startling facts. The FSA, which set down guidance for financial firms operating in the UK and therefore subject to the Bribery Act, found that firms just weren’t taking to heart the seriousness of the new legislation and the requirements for corporations to stave off risks of bribery and corruption.

Four areas highlighted in the report jumped out at me. First, while overall firms are still working to apply adequate risk assessments to their business models, there was serious lack when it comes to how well these corporations are able to monitor and analyze the effectiveness of their anti-bribery controls. Second, some training had been done, but not specific anti-bribery training for high-risk situations, and the ability to assess the effectiveness of training was little to none.

The report also specifically pointed out the importance of codes of conduct toward protection against bribery and corruption. From their research, the FSA found that 40% of the firms had recently updated their codes to reflect bribery concerns, but 13% had not seen fit to align their code for the new regs. One firm’s senior management even admitted that they didn’t know whether the firm even had a code of conduct!

Lastly, the policies required for adequate ABCs really pull it all together. Look at this passage from the report, guidance from the FSA on good practices: “ABC policies and procedures will vary depending on a firm’s exposure to bribery and corruption risk. But in most cases, firms should have policies and procedures which cover expected standards of behaviour; escalation processes; conflicts of interest; expenses, gifts and hospitality; the use of third parties to win business; whistleblowing; monitoring and review mechanisms and disciplinary sanctions for breaches. These policies need not be in a single
‘ABC policy’ document and may be contained in separate policies.”

There’s plenty of proof that the UK’s Serious Fraud Office (SFO) is just that – serious. The SFO says its enforcement efforts are very much successful. If you need an example, look no further than global defense and security provider BAE Systems, which will pay out £30 million to Tanzania to settle a corruption case.

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RELATED LINKS:

BLOG: Top Ways to Fight Corruption Include Training and Communications. Dec. 19, 2011
ARTICLE: FSA Scolds Financial Firms for Lacking Anti-Bribery Controls, Jaclyn Jaeger, Compliance Week, March 29, 2012
ARTICLE: BAE pays fine to settle Tanzania corruption probe, Jonathon Russell, The Telegraph, Dec. 21, 2010