Four Ways to Reduce Corruption in a Company
The compliance service is called upon to fight corruption risks in the company. But there are four other ways to do it - risk map, anti-corruption clause, gift-giving policy and artificial intelligence. Nuances know the magazine “Corporate Lawyer”
Despite the deal with the investigation, participants in the corruption scheme may be held criminally liable. The reason is that such behavior in state bodies and business is unacceptable.
Example: Boris Shpigel, the head of Biotek, who was accused of giving a bribe to the governor of the Penza region, said in the Moscow City Court that he would actively cooperate with the investigation. However, the court refused to leave him under house arrest and placed him in custody. Even the prisoner’s complaints about his health were not softened - right during the meeting he had to give an injection. The arrest of Spiegel’s wife and ex-governor of the Penza region Belozertsev was also recognized by the court as legal.
Government officials, commercial and non-profit organizations, entrepreneurs and even middle managers enter into corrupt relations. There are dozens, if not hundreds of elements in corruption chains. Obviously, the system of prevention and combating corruption should cover all potential bribe-takers, and an effective mechanism has already been invented for this. Large companies are aware of the possible risks, so they are gradually introducing anti-corruption compliance as a mechanism to protect the fight against bribes.
Preventing corruption crimes is easier and cheaper than responding to a situation where the company has already become a victim of such crimes or is involved in an investigation in connection with the illegal acts of its employees or partners. Russian legislation contains more than 3,000 legal acts that regulate corruption issues. Regulatory regulation is constantly being improved. Tracking all the changes is difficult. A new structural unit in the company will help - the compliance service. Employees of this department will ensure that the business processes of the entire company comply with laws and regulations, monitor operations and work processes so that they comply with internal and external standards of business ethics and corporate rules.
If you do not want to form a new structure for yourself, you can use the experience of a third-party expert organization that will help you establish the compliance function of your company.
The compliance service is not the only way to deal with corruption risks. We will analyze other four ways, including the risk map, anti-corruption clause, gift-giving policy and artificial intelligence.
Corruption risk map
It is necessary to consciously identify and calculate all kinds of risks that can lead to profit minimization, sanctions from regulatory authorities, as well as reduce the efficiency of a business process or enterprise. This is the essence of the risk-based approach to risk management, which is now the basis of state control and supervision.
General requirements . The procedure for assessing corruption risks includes several stages, including the preparation of a risk map. This is a visual document in which you need to reflect the directions of inspections, requirements, the current state of affairs, as well as describe critical points and possible corruption offenses. Since we are talking about offenses, legal support will also be required in this area of the fight against corruption. With the help of such a compliance program, the time frame is determined when the company’s affairs will come in line with the requirements that apply to it.
Risks and indicators . In the risk map, it is important to prescribe risks and indicators that will show the level of probability of how each of the risks will work. It is also necessary to describe how the severity of the consequences will be assessed and how to reduce their impact.
Entrepreneurial risks are usually divided into catastrophic, critical, acceptable and unconscious. If situations from the category of acceptable risks occur, the enterprise should expect that it will not be possible to fulfill the plans, and as a result, it will not receive the planned profit. As a result of situations from the category of critical risks, profits may drop to zero or losses may appear.
As for the catastrophic state of the risk zone, here the company risks losing all invested funds, risks its own capital, and also becomes close to bankruptcy.
Prevention measures . All organizations are required to take and develop measures to prevent corruption, regardless of ownership, organizational and legal forms, industry affiliation and other circumstances. In the risk map, it is necessary to indicate measures that are aimed at preventing the true causes of corruption. In the mitigation section, a company may include commitments that it:
- determine the unit or official responsible for the prevention of corruption and other offenses;
- organizes cooperation with law enforcement agencies;
- develop and implement standards and procedures to ensure the integrity of the organization;
- adopt a code of ethics and official behavior of employees of the organization;
- prevent and resolve conflicts of interest;
- will not allow employees to make false reports and use fake documents.
Anti-corruption clause
One of the ways to prevent corruption is an anti-corruption clause. This is a condition that must be included in a civil law contract in order to prevent corrupt practices, such as commercial bribery. With the help of such a clause, the parties will be able to maintain trust between themselves and prevent corruption both in the conclusion and in the execution of contracts. The fact that it is necessary to prescribe a clause in contracts should be indicated in the anti-corruption policy or other local regulatory act of the organization. The organization is obliged to adopt such acts in order to comply with Art. 13.3 of the Federal Law of December 25, 2008 No. 273-FZ “On Combating Corruption”.
The content of the anti-corruption clause can also be approved in the local regulatory act. Small or medium enterprises use an anti-corruption clause with general provisions. Under such conditions, the parties prescribe the obligation to report in a timely manner that they have identified possible corruption risks, undertake to comply with anti-corruption rules and carry out appropriate checks and preventive measures.
Gift Policy
The rash actions of employees can lead to the fact that they will be charged with receiving or giving a bribe, mediation in bribery. Therefore, each organization must develop and approve regulations that govern the practice of relations with business partners and the policy of giving gifts. All employees must be made aware of these regulations.
The gift-giving policy should include a duty to avoid any action that may have or give the appearance of undue influence or create a conflict of interest with the activities of the organization. Also, such a document prescribes the allowable or unacceptable value of a gift, in which cases it can be accepted, as well as the boundaries of an acceptable form of its expression, for example, a material gift, a service or an invitation to an event. Gifts and hospitality must not influence business decisions, give the appearance of such an influence, or give rise to actual or perceived conflicts of interest.
Artificial intelligence and bribes
Digitalization and automation technologies for the compliance system will help reduce the impact of human error. Of course, this mechanism shows high efficiency with the integrated compliance system in place, but in relation to a separate area - anti-corruption - it can give good results.
To automate anti-corruption compliance in a company, you first need to define the modules for this, and then translate them into a “digit”. Further, all local regulations should be transferred to electronic form and placed on the electronic resources of the company with access mode. This is where the interaction will take place.
Then it is necessary to implement automatic notification for employees in situations where the legislation changes and new local regulations have appeared. After that, the process is set up in order to automatically accept and send applications that come to the compliance service hotline from employees.
Automation also needs to be implemented for the verification procedure for transactions that an organization enters into, and for dossiers of counterparties and employees.
Artificial intelligence as a tool in the fight against corruption is also used by government agencies. On April 25, 2022, the President signed a decree on the creation of the Poseidon state information system in the field of combating corruption, which will identify bribe-takers. It will store information from various sources: official databases, social networks, declarations, internal documents. Artificial intelligence must look for all intersections and matches. This will allow not only to identify a potential bribe, but also to predict and prevent the development of corruption. Programs help to find in documents and reports information about persons who are associated with corruption crimes, or about corruption facts and illegal actions of persons. This will expand the opportunities for the timely prevention of toxic contacts and criminogenic relationships.