Imagine you are a small supplier to a £100m infrastructure project in Venezuela, say. The equipment you need is stuck in customs. The official at the Port Authority says he can expedite the paperwork you need. Only it will cost you. What do you do?
This is exactly the kind of scenario that engineering professionals will soon be able to access via a tailored online decision-making tool due to be rolled out by the Institution of Civil Engineers (ICE), which has 86,000 members worldwide. The Say No Toolkit also comes with a smartphone app that users can download and use in the field.
The solution comes as small businesses are becoming increasingly aware about the bribery and corruption issues that come with breaking into new markets overseas. Since the introduction of the UK Bribery Act in 2010, penalties associated with corrupt practices have become much stricter, with culprits potentially facing 10 years’ imprisonment and an unlimited fine.
The key section for businesses is Clause 7, which states that companies will be held liable if they fail to prevent “persons associated with them” from bribing another person on their behalf.
As well as their legal duty, companies have a moral obligation to reduce the risk of their staff being asked to “do something under the table”, says Philippa Foster Back, director of the Institute of Business Ethics (IBE), which co-developed the Say No Toolkit.
“Should that happen, the risks for not only the employee but for you as a small business owner under the terms of the Bribery Act are extremely harsh. It’s not worth the risk,” she states.
In practice, it’s not always so easy to go against what may well be entrenched local business culture. Hence, the tool’s app function, which has a “Help Now” tab that guides users through what to do when faced with a bribe request or similar corrupt practice.
“It’s something in your pocket that you can pull out and say, ‘I hear what you’re saying, but, sorry, I can’t do that. I will go to jail if I pay you this’,” says Foster Back.
Nathan Baker, director of engineering knowledge at the ICE, concurs. Although the engineering industry is “very alive” to corruption risks, he concedes that it’s not at the “forefront of SMEs’ minds”. “SMEs are time-poor and require the information when they need it and where they need it,” he says. Hence the value of the IBE tool.
His comments reflect a recent survey by the UK government, which finds that two-thirds (66%) of the SMEs surveyed are aware of the 2010 Act, but that three in five (59%) had not assessed the risk of being asked for a bribe.
While it’s important to provide solutions to staff who are already in the field, the thrust of advice from experts is to have sound policies and procedures in place before any of your staff ever gets near a plane.
There is certainly no lack of documentation to bring SMEs up to speed on their legal obligations. The Ministry of Justice is possibly the best place to start. It offers a 45-page guidance report on the 2010 Act [PDF], as well as a shorter Quick Start guide [PDF].
These help clarify what is and isn’t covered by the law. Facilitation payments (defined as “payments to induce officials to perform routine functions they are otherwise obligated to perform”) are included, for example. Hospitality, on the other hand, is not.
The government’s guidance will also make SMEs aware of the “adequate measures” they are expected to take. Most are straightforward and not overly prescriptive. So an SME’s senior leadership, for example, must make clear its zero tolerance for corruption.
Other steps include: undertaking a risk assessment of the bribery risks that you may face; doing thorough due diligence on agents, facilitators and others you may employ to act on your behalf in a foreign market; and communicating your policies on anti-bribery widely.
An abiding principle of the UK’s anti-bribery legislation is what the government’s guidance refers to as “proportionality”. Should an allegation arise, directors need to be able to show that the actions they took to prevent bribery were commensurate with the risks they faced and with the size of their business.
The proportionality principle has quietened initial concerns within the small business sector. Initially SMEs had feared that their liabilities under the 2010 Act would stretch to any corrupt act by someone acting on their behalf. This and other safeguards would have effectively made certain markets too risky to do business in, notes Adam Marshall, director of policy and external affairs at the British Chambers of Commerce.
“The reason they got concerned wasn’t because they didn’t agree with measures to prevent bribery,” says Marshall. “It was the extent to which the onus fell on them to demonstrate that they’d done absolutely everything in their powers to prevent it.”
Even if that onus isn’t as great as it was initially feared, small businesses shouldn’t skimp on assessing their risks prior to entering a new market, Marshall insists. Country rankings such as Transparency International’s Corruption Perceptions Index provide a useful starting point. Specialist country risk consultancies such as Kroll and Control Risks can provide additional background checks if required.
A cheaper and more direct method is to speak to business groups working in your target markets. The British Chambers of Commerce, for instance, now have accredited offices, from Mexico and Colombia to Thailand and Indonesia. “Either we have information about the markets in question or we have other companies that have done business there,” Marshall states.
It’s a message echoed by Chris Southworth, director of the UK arm of the International Chamber of Commerce (ICC). Companies “can’t beat” getting practical advice from in-country experts, he argues. As well as ICC’s local offices, SMEs should consider approaching British business groups and the relevant British embassy.
Yet SMEs should be wary about losing perspective, he insists. For starters, the obligations on small companies are less onerous than for large ones. Secondly, plenty of tools and guidance now exist. Just this summer, for example, the ICC released detailed guidelines specifically for SMEs on mitigating corruption risks when working with third parties overseas.
Finally, UK companies should see the country’s tough and well-publicised stance on combating corruption as a positive in the marketplace. Of course, refusing to pay a bribe may close the door to some business opportunities. It may also mean that your competitors steal a march on you.
But SMEs just need to “take that on the chin”, says Southworth. “Ultimately it’s about your reputation, your brand and your long-term growth and opportunity. And our advice would be, ‘Don’t do it’.”
Sign up to become a member of the Guardian Small Business Network here for more advice, insight and best practice direct to your inbox.
