New business principles for countering bribery

New business principles for countering bribery

Integrity is good for business, and business integrity is good for society. For 10 years, Transparency International has sought to set a high standard for business integrity through Business Principles for Countering Bribery, which have become a reference for enterprises worldwide as they strive to develop stronger and more effective anti-bribery programmes.

In 2002, as Transparency International was seeking public comment on the first edition of its ground-breaking Business Principles for Countering Bribery, one business person told us:

"In theory we welcome the concept of an anti-bribery code, which we believe would send a clear message to staff, the market and public officials that we have a standard set of ethics by which we operate.  In practice, however, we feel the application of any such policy needs to be sufficiently flexible to accommodate the differences in culture and society worldwide."

How times have changed. Although it may not yet be universally adopted, there is now consensus on what constitutes an effective anti-bribery programme and guidance on this topic has multiplied, whether it is issued by governments, international organisations or business initiatives. 

Transparency International’s Business Principles for Countering Bribery are developed and revised by a unique multi-stakeholder process. They are also distinctive for the high, yet achievable, standard of anti-bribery practice they set for companies.

How have the business principles been used since 2003?

Since 2003, the Business Principles for Countering Bribery have been used by companies and anti-bribery experts to develop anti-bribery programmes or benchmark existing ones. They have also influenced a wide range of other anti-bribery standards and corporate responsibility initiatives. In the past decade, the business principles have been translated into more than 10 languages and used extensively by the Transparency International network in its work with the business community. They have also informed a number of Transparency International’s key research tools.

Transparency International’s report on Transparency in Corporate Reporting assesses company disclosure of the steps they are taking to fight corruption, including the measures called for in the Business Principles for Countering Bribery. In 2012, the report found that of the world’s 105 biggest companies:

  • 75 companies have a publicly stated commitment to anti-corruption.
  • 86 companies' leadership have demonstrated support for anti-corruption measures, through reports or public statements.
  • 97 companies have publicly committed to complying with anti-corruption and other laws.

What’s new in the Third Edition of the Business Principles?

In the latest round of revisions, we have tried to maintain previous good practice recommendations while adding clauses that reflect more advanced practice.

The major additions and changes are:

Owing to the growing recognition of the importance of risk assessment in the development of an effective anti-bribery programme and the emphasis on the topic in the UK Bribery Act, a new, separate clause highlights the importance for enterprises to consider the risks particular to its business in developing an anti-bribery programme.

In view of the importance of monitoring and managing conflicts of interests and their potential connection to corrupt behaviour, the topic has been introduced into the third edition. 

A section on cooperation with authorities was introduced to align the business principles with provisions of United Nations Convention against Corruption (UNCAC) and calls on enterprise to cooperate with relevant authorities in connection with bribery investigations and prosecutions.

In the 2009 edition of the business principles it was recognised that facilitation payments were bribes and that the enterprise “should work to identify and eliminate them" but it stopped short of a blanket prohibition. In light of changing corporate practice and the absence of exceptions for facilitation payments in new bribery legislation such as the UK Bribery Act, the language of the business principles has been amended to advocate the full prohibition of facilitation payments by enterprises.

Business Principles – Clause 5.5.1

Recognising that facilitation payments are bribes, the enterprise should prohibit them.

The business relationships section has been re-organised and enhanced to highlight the steps an enterprise should take with respect to business partners.  The clauses now provide clearer guidance on managing relationships with business partners when the enterprise has effective control over the partner and in cases where it does not.

In view of the risks lobbyists pose to enterprises, specific references to lobbyists have been added in clauses referring to intermediaries. 

The business principles now include a specific reference to "reporting" in section six that encourages enterprises to report publicly on their anti-bribery programmes as well as on payments to governments on a country-by-country basis.

Standards of corporate transparency are evolving and greater emphasis is now being placed on public reporting by enterprises. A number of initiatives and laws such as the Extractive Industries Transparency Initiative (EITI), the Dodd-Frank Wall Street Reform Act in the US and the EU Directives on Transparency and Accounting are requiring more comprehensive reporting by multinationals in certain sectors.

A commentary on the third edition will be developed in the coming months to provide background and understanding of the document’s provisions, with an emphasis on the new clauses. 

What remains unchanged in the Third Edition?

The business principles make it a fundamental requirement for companies to implement a programme to counter bribery. This programme should be tailored to the special needs and risks of a company and it should at the very least cover areas such as bribes, political contributions, charitable contributions and sponsorships, facilitation payments, gifts and hospitality.

Special emphasis is placed on the leadership role of the board of directors and senior management, the development of a culture of anti-bribery among employees, effective communication of the Programme as well as the provision of appropriate training, maintenance and audit of effective internal controls and regular monitoring, internal and external.

Looking ahead

Consultations, field-testing and workshops have enriched the business principles over the years. There is more understanding today than ever before of what constitutes an effective anti-bribery programme, but bribery and corruption remain a major challenge.

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