Memorandum submitted by Interchange Solutions
(BB 50)
I am aware of the work of the Scrutiny Committee
on the Draft Bribery Bill and the tight timescale, through our
input to the submissions of SBAC and DMA.
Interchange Solutions helps companies and organisations
to mitigate bribery and corruption risk, before not after the
event. Working with our clients we embed ethical compliance and
help them change their business culture by translating business
ethics into value adding business process. We are members of SBAC
and worked with SBAC, the DMA and others, to compile the guidance
booklet "Tools to Grow Your Business in a Changing Ethical
Environment". A copy has been submitted to your Committee
by SBAC/DMA.
I am aware of some of the issues around Clause
5 Failure of commercial organisations to prevent bribery
and would like to make some specific comments on sub section (4)
in relation to what might constitute adequate procedures.
The concept of adequate procedures and what
that means, seems to be fundamental to the case for both the prosecution
and the defence and yet nowhere in the draft Bill are those adequate
procedures defined or guidance given. Without definition or a
benchmark, it may be difficult to prosecute or defend a case brought
under Clause 5 if there is no basis to prove that adequate
procedures were/were not in place. This omission might lead to
costly and failed prosecutions thereby undermining the credibility
of the new law.
I also believe that evidence has been given
to the Committee, that the implementation of adequate procedures
may be a costly imposition on SMEs. From our own experience we
would not entirely support that view. A small company, with the
will to tackle the issue, can with minimal guidance, achieve much
using its internal resources to develop and implement policies
and working processes to mitigate bribery risk, especially if
it knows what those adequate procedures are. Smaller companies
are often more adaptable than larger ones in addressing such issues
and do not need to be so expansive in such areas of compliance.
There is plenty of best practice policy and
procedural guidance for business: from Transparency International,
the Institute of Business Ethics, the ICC etc. Much is crystallised
in reports such as that of the Woolf Committee (May 2008). There
are also international conventions and pacts which provide an
insight. However, to our knowledge, there are no recognised international
standards which companies might attain, although we understand
that one on "social responsibility" will be published
by the International Standards Organisation (ISO 26000) in 2010.
It will reportedly cover certain forms of ethical behaviour including
bribery and corruption. Smaller companies in particular, have
neither the time nor the resources to second guess what they should
be doing, hence the value of tools like the SBAC/DMA handbook
and the European wide Common Industry Standards.
Therefore to assist in this matter, I thought
it might be helpful to lay out what to us, to many of our clients
(large and small…SMEs) could be the basis of those adequate
procedures. The scale and depth of implementation of these adequate
procedures will vary according to the size of the business, where
in the world it operates and the nature of its goods and services.
We believe that the components of what would constitute adequate
procedures can be simplified under four headings, which could
be incorporated as guidance (in a form that is appropriate) to
the Bill. Once agreed, these practical steps would provide a basic
checklist to companies, the enforcement authorities and the courts,
as to whether the responsible persons were negligent or otherwise
in preventing bribery. We would view these as a guide rather than
prescriptive, as circumstances will differ from case to case:—
Policies—"the guidance"
— Business Ethics policy creating a sense
and culture of doing the "right thing" in all areas
of business*
— Code of Conduct including conflicts of
interest, donations
— Dealing with the giving and receiving
of gifts and hospitality*
— Disclosure mechanisms (whistle blowing)
— and where appropriate to the industry,
adherence to regulatory standards*
Process—"embedding policy in
normal business practice"
— Measurement and benchmarking through
audit (externally if necessary)
— Independent integrity due diligence of
third parties (supply and sales sides)*
— Process that extends into M&A, IPO,
JVs, Offset trading etc
— Embedded in company business strategy,
enmeshed with budgets and financial reporting*
— Review mechanisms for the management
of third party sales channels such as agents, advisors, consultants
and distributors*
— Ethical compliance/standards conditional
in trading Terms and Conditions, discussed with JV partners (even
if company has minority holding)
— Properly maintained and timely record
keeping of all transactions related to third parties especially
sales and supply sides*
People—"changing behaviours and corporate
culture"
— Zero tolerance "tone from the top"*
— Specifically nominated board/executive/management
responsibilities (responsible persons)*
— Appropriate oversight of adherence to
the processes, "checks and balances", from board downwards*
— Sanctions for inappropriate behaviour
and incentives for changing behaviours*
— Demonstrable training programmes*
Communication—"putting out the message"
— Message communicated across cultures
and languages
— Disclosure of policy, process and breaches
in Reports and Accounts
— To suppliers, customers and all third
parties*
Whilst all are important, those marked * are
in our view, key areas which smaller companies could cost effectively
implement and gain business benefit as a first step to implementing
best practice in mitigating bribery risk.
Should you feel that you and your Committee
would wish to discuss this further, I would be prepared to give
evidence on this particular aspect of the Bill.
June 2009
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