APPENDIX 2
AGENTS
The ICC Rules of Conduct to Combat Extortion
and Bribery, which include the following provisions in respect
of agents (Article 3), are an excellent starting point:
"Enterprises should take measures reasonably
within their power to ensure:
(a) that any payment made to any agent represents
no more than an appropriate remuneration for legitimate services
rendered by such agent;
(b) that no part of any such payment is passed
on by the agent as a bribe or otherwise in contravention of these
Rules of Conduct; and
(c) that they maintain a record of the names
and terms of employment of all agents who are retained by them
in connection with transactions with public bodies or State enterprises.
This record should be available for inspection by auditors and,
upon specific request,
AGENTS, ADVISORS
AND OTHER
INTERMEDIARIES
The enterprise should undertake due diligence
before appointing an agent, advisor or other intermediary, and
on an on-going basis as circumstances warrant.
The [anti-bribery] Program should provide guidance
for conducting due diligence, entering into contractual relationships,
and supervising the conduct of an agent, advisor or other intermediary.
Due diligence review and other material aspects
of the relationship with the agent, advisor or other intermediary
should be documented.
All agreements with agents, advisors and other
intermediaries should require prior approval of senior management.
The agent, advisor or other intermediary should
contractually agree in writing to comply with the enterprise's
Programme and should be provided with materials explaining this
obligation.
Provision should be included in all contracts
with agents, advisors and other intermediaries relating to access
to records, co-operation in investigations and similar matters
pertaining to the contract.
Compensation paid to agents, advisors and other
intermediaries should be appropriate and justifiable remuneration
for legitimate services rendered and should be paid through bona
fide channels.
The enterprise should monitor the conduct of
its agents, advisors and other intermediaries and should have
a contractual right of termination in case of conduct inconsistent
with the Programme."
It is worth noting the ICC Rules of Conduct
to Combat Extortion and Bribery, which include the following provisions
in respect of agents (Article 3):
"Enterprises should take measures reasonably
within their power to ensure
(a) that any payment made to any agent represents
no more than an appropriate remuneration for legitimate services
rendered by such agent;"
Chapter Four of the ICC book "Fighting
Corruption—a corporate practices manual" reinforces
this by spelling out "red flags" and making detailed
practical recommendations.
"When evaluating a prospective agent, it
is very important to watch for "red flags" which could
serve as advance warnings of potential illegal activities or violations
of company policy. Specifically the company should be on guard
if a proposed sales representative:
(a) does not reside in the same country where
the customer or the project is located;
(b) does not have any significant business
presence within the country;
(c) represents any companies with a questionable
reputation;
(d) requests that commissions be paid in
a third country or to a numbered bank account or to some other
person;
(e) requires payment of the commission, or
a significant portion thereof, before or immediately upon award
of the contract by the customer to the company;
(f) claims that he can help secure the contract
because he knows all the right people;
(g) has a familial or other relationship
that could improperly influence the customer's decision;
(h) arrives on the scene just before the
contract is to be awarded.
Therefore, the new arms promotion body should
make clear its support for UK defence companies depends on companies
doing the following:
(a) write into their codes of conduct provisions
requiring responsible company personnel to hire only qualified
and reputable agents;
(b) make clear in the code that all agents
are bound by its anti-bribery provisions and by those of the OECD
Convention;
(c) before hiring an agent conduct a detailed
background check on his professional competence and personal integrity;
(d) require prospective agents to fill out
a detailed application form listing their business details, product
lines and references;
(e) discuss the company's "no bribery"
policy with the proposed agent and be satisfied that he will comply;
(f) establish specific compensation guidelines
to ensure that an agent's compensation is not excessive in relation
to the services he renders;
(g) require senior management's approval
of all sales representative appointments;
(h) pay all agents' commissions by cheque
and not in cash;
(i) require agents to sign a written agreement
containing, among other provisions, a commitment not to pay bribes;
(j) be alert to red flags which can signal
questionable integrity on the part of an agent;
(k) completely avoid, wherever possible,
the appointment of agents in high risk countries where bribery
is prevalent.
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