New corruption laws: beating back-handers

At long last, that the UK is getting a new corruption law. The government has
decided that since it was last reformed in 1916, it was due for a spot of

Businesses, unusually, are clamouring for more rules – those that behave with
integrity should not be disadvantaged by those who do not.

But what do we need to see in the law to achieve this? At GoodCorporation we
will be looking for five key things in the new rules.

First, companies need to know that, if they operate best practice in
minimising the scope for corruption, the courts will punish individual employees
who err, rather than the company.

Best practice does not mean just sending out a code of ethics and getting
everyone to sign it. It means a stiff regime of checks and balances to ensure
decision-making is shared.

The law should set out the principles but avoid prescription about the
details or we will finish up with another Sarbanes-Oxley.

Second, we should banish the odd (US) notion that corruption only applies if
a public official is on the receiving end. Business-to-government corruption
clearly has an insidious effect in poor countries but business-to-business
corruption is also corrosive and prevents suppliers who are too honest – or too
poor – to bribe from getting a fair shot.

Third, let’s also leap-frog the US by outlawing ‘facilitation payments’.
Facilitation payment is a posh term for passing envelopes to officials to ensure
that they do their job. The best businesses should not be outflanked by those
with more flexible ethics.

Fourth, how about some decent sanctions? Many of those imposed currently
resemble a £10,000 fine for Wayne Rooney when he would take more notice of a
two-month ban. Black-listing offending companies from tenders will concentrate
minds. Only when the penalties got serious did business get its act together to
stamp out anti-competitive practices.

Finally, companies should be expected to have effective whistle-blowing –
including reporting to management when other parties make solicitations.
Currently, much of this is bottled up by those in the front-line dealing with
suppliers, customers or officials. They should know they are expected to speak
up – and who to – so that the issue can be confronted by senior management.

Let us hope the UK grabs the opportunity to smarten up its image.

Michael Littlechild is a director of GoodCorporation,
auditors of responsible business practice

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