Mind Your Own Business: Combating Bribery & Corruption Blindspots in Your Supply Chain

Mind Your Own Business: Combating Bribery & Corruption Blindspots in Your Supply Chain

There’s no doubt about it: bribery and corruption are bad news for business. This has been demonstrated in a recent string of high-profile enforcement actions, including the imprisonment of Lee Jae-yong, billionaire heir to electronics giant Samsung on charges of corruption.

In a globalized business world, it can be easy for even the most vigilant companies to fall prey to bribery and corruption due to the emergence of blind spots in supply chains. These blind spots often linger in the complex web of subsidiaries, joint ventures, distributors and partners that make up a business, highlighting the need to be mindful of all business activities, key personnel and major relationships at all times. In essence, minding your own business is key to avoiding damaging enforcement actions.

Major Enforcement Actions on the Rise

The Samsung case is just one of many bribery and corruption cases that have made headlines this year. In the United States (U.S.), the Securities and Exchange Commission (SEC) has launched major enforcement actions against at least six multinational companies under the Foreign Corrupt Practices Act (FCPA). For example, Halliburton, an oilfield services company, was forced to pay $29.2 million in settlement funds for circumventing internal accounting controls and falsifying records. The penalties also flowed down from the company to the individual criminal level, with one former vice-president ordered to pay $75,000 for his involvement. Other notable SEC settlements this year have included medical device manufacturers Biomet ($30+ million) and Orthofix International ($14 million), Cadbury ($13 million), and Chilean-based mining company Sociedad Quimica y Minera de Chile S.A (SQM) ($30 million).

Learn how to manage bribery and corruption risks in your supply chain. Download the ‘Combating Bribery & Corruption in the Supply Chain’ whitepaper here.

Understanding Your Supply Chain, Detecting Your Blind Spots

For most of these companies, an anti-bribery and anti-corruption (ABAC) compliance program was likely already in place when these incidents happened. So how did these incidents go undetected during due diligence efforts? While it is well understood that the use of a third-party organization for ABAC compliance programming is best practice, vendors do not always have the supply chain expertise required to properly manage and flow down program requirements to third-party intermediaries and partners. This creates blind spots in supply chains where bribery and corruption can take hold without company executives — or even compliance managers — knowing. As seen in recent cases, this can result in major and recurring fines.

Learning How to Mind Your Own Business

Minding your own business when it comes to ABAC issues is key to complying with regulations and standards such as the U.S. FCPA and the ISO 37001 anti-bribery management system. In practice, modern enforcement actions, industry standards, and Department of Justice guidance documents have expanded the concept of one’s business to include the partners, third party intermediaries, subsidiaries, and suppliers they engage. This entails an in-depth understanding of how your business brings its products into global markets in order to identify where significant points of risk exist.

Organizations seeking to implement ABAC programs must look outside the walls of the organization and choose sound compliance practices that mirror those implemented internally. This means training programs, policy flowdowns, due diligence surveys and even the intake of third party whistleblower claims all need to be considered as essential program requirements rather than an afterthought.   

How does your ABAC due diligence program measure up? Find out in our guide to managing Global Compliance Risk. Download it here.

Choosing the Right Software Vendor

When it comes to ABAC compliance, recent enforcement case studies show us the stakes are high. Managing compliance activities using internal programs can be time and resource intensive, exposing companies to greater risk due to the higher chance of oversights and blindspots.

Software vendors such as Assent Compliance are better equipped with the intricate supply chain knowledge, awareness of key risk factors, and analytic capability needed to ensure companies stay on the right side of ABAC legislation. The Assent Compliance Platform (ACP) achieves this by automating supplier outreach (surveying), risk analysis and communication down the supply chain to third parties.

To learn more about Assent’s ABAC module as part of our ACP, visit our website. Looking for more detailed information on ABAC compliance programming? Download the whitepaper, ‘Combating Bribery & Corruption in the Supply Chain’, or contact us at info@assentcompliance.com.