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What are Adequate Procedures?

ACFEMarch 1st 2011

Robert BarringtonDirector of External Affairs, Transparency International UK

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Key features of the UK Bribery Act

• Result of external pressure on UK government• ‘By no means stricter than …other OECD member states’• Extra-territorial• Corporate liability

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Adequate Procedures

• A legal defence for ‘failure to prevent bribery’ [Bribery Act, section 7]

• Outlined in UK Government Guidance• Not a defence for a company that has knowingly paid a bribe

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What is adequate?

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1. The Six PrinciplesTransparency International’s view

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Six Principles

1. Tone from the Top

2. Risk assessment

3. Detailed Policies & Procedures

4. Implementation

5. Due diligence

6. Monitoring & Review

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2. Corruption risk-mapping

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Corruption Perceptions Index

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Corruption Perceptions Index

• Ranks countries 1-180

• Scores countries 0-10

• Measures perceptions of public sector corruption

• 133 countries score less than 5 out of 10

• 2010 best performers: NZ, Denmark, Singapore, Finland, Sweden

• 2010 worst performers: Somalia, Myanmar, Afghanistan

• Undertaken annually

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Bribe Payers Index 2008

Country’s companies least likely to pay bribes

Country’s companies most likely to pay bribes

•22 countries ranked representing 75% of global exports of goods and services and outflows of foreign direct investment in 2006.

• Based on responses of 2,742 senior business executives from companies in 26 developed and developing countries, chosen by the volume of imports and inflows of foreign direct investment.

• Conducted every two years

Rank Country Score

1 Belgium 8.8

1 Canada 8.8

3 NL/Switzerland 8.7

Rank Country Score

20 Mexico 6.2

21 China 6.1

22 Russia 5.2

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Bribe Payers Index: high-risk sectors

Bribery of Public Officials by Sectors 2008•Worst performers

• Public works contracts & construction 5.2• Real estate & property development 5.7• Oil & gas 5.9• Heavy manufacturing 6.0• Mining 6.0

•Best performers• Banking & finance 7.1• Fisheries 7.1

likelihood of companies in each sector to bribe public officials [possible scores range from 0 to 10. 0 represents the view that ‘bribes are almost always paid’ and 10 that ‘bribes are never paid’ by a sector] – extract below of best and worst performers. Source? TI Bribe Payers Index 2008

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Global Corruption Barometer• Citizen’s view of corruption in their own countries

• Opinion survey of 77,000 citizens conducted in c.75 countries

• Every two years

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Where are bribes paid? [source: Global Corruption Barometer 2010]

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Perceptions and reality: CPI vs GCB?[source: Corruption Perceptions Index & Global Corruption Barometer 2010]

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Other risk areas

• Country risk

• Sectoral risk

• Transaction risk – eg licences, permits, procurement

• Opportunity risk – eg high-value contracts

• Partnership risk – eg joint ventures, local agents

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3. Adequate Procedures tools

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Business Principles for Countering Bribery

• High-level principles

• Developed by TI

• Multi-stakeholder process

• Similar to PACI and ICC

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Definitions

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Adequate Procedures Guidance

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20-point ABC checklist

• Board member’s airport

checklist

Global comparison score in your sector [Materials]:

number of companies reviewed: 46

highest score: 45 points; 5 stars

lowest score: 0 points; 0 stars

median average score: 18

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4. Conclusions

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Conclusions• Don’t pay bribes

• Tone from the top– corporate culture

– zero tolerance approach

• Fully analyse and understand the risks

• Put in place a robust anti-corruption system

• Don’t rely solely on the government guidance

• Don’t pay bribes

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Documents and links available at:

www.transparency.org www.transparency.org.ukwww.adequateprocedures.

org.uk