Despite the giving and receiving of bribes being wholly illegal in the United Kingdom, such practices are considered commonplace in other nations across the world. The received wisdom is that paying bribes and going along with corrupt business practices makes trading easier and quicker, but are there long term consequences to engaging in such activities?
In the unlikely event you can find someone willing to talk about their experiences with bribery, they will point out that there are always two parties involved in backhanders. They will also point out that although illegal transactions can work initially, they also entail a number of risks.
Loss of Profit
Simply put, a bribe eats directly into profitability, both in terms of money paid out and in time spent arranging for the payment of the bribe. Diverting resources to arranging and paying bribes is inefficient and introduces bottlenecks into the supply chain.
Advocating questionable ethics by paying bribes adversely affects the attitudes and ideals of employees involved in the process. If your business thinks it is ok to act illegally, surely it is therefore ok for employees to act illegally in any other aspect of your business’ dealings?
Paying bribes is by definition, illegal. Businesses that pay or take bribes risk prosecution and imprisonment of personnel, both of which are extremely costly. Not to mention legal fees.
Brand Image Issues
The adverse publicity surrounding bribery trials also has the potential to irreparably damage your brand name. The wider fallout from a bribery scandal and prosecution has the potential to permanently damage a brand, potentially bankrupting your business and also those of your suppliers and customers.
The risks associated with bribery escalate in severity and should therefore be carefully mitigated by supply chain managers to prevent large problems for their business. Check out Corruption, Bribery and Your Supply Chain Part 2 to find out what you can do to root out fraudulence.
Bribery and corruption have a number of negative effects on a business and so should be avoided. Here are five tips to weed corruption out of your own supply chain.
1. Keep up to date with legislation
Stay in touch with corruption legislation domestically and abroad to ensure that your business remains compliant. You should also carefully monitor general business practices in low governance countries with whom you deal in order to be able to identify procedures designed to encourage fraudulent activity.
2. Encourage whistle blowing
Your employees are the eyes and ears of your business and will quickly be alerted to corrupt practices. Implement a system by which staff can report issues confidentially and make them aware of how the system works and the protection your business will offer them. Ensure you act on any information you receive.
3. Make staffing changes as required
If you have concerns about account managers or people dealing directly with suppliers, do not hesitate to replace them. Any issues caused by the transition will be temporary and far less costly than a criminal court case for bribery.
4. Train staff to say no
Provide employees with guidance and training in how to recognise corruption systems and how to avoid them. It is also a good idea to provide basic training in anti-trust law and ethics.
5. Adopt an Anti-Corruption Policy
Sign a code of conduct agreement or adopt an anti-corruption to demonstrate that your organisation is serious in its intent to root our fraudulent business practices. Doing so speaks volumes to your employees, your suppliers and your customers.
Corruption is not easy to fight, but the five ideas listed above will give you a head start on removing it from your supply chain. Feel free to let us know if you have any others