Offering bribes and incentives is commonplace, it occurs at all levels of an organization and across all entities. In Omega’s experience, the issue is prevalent across Asia with all countries at risk. Challenges continually evolve with incentives becoming more nuanced. While cash is still most common, offers of soft loans, for example, are increasingly frequent.
The risk to business is clear. Purchase orders awarded to poorly qualified suppliers, factories with egregious ethical issues becoming part of your supply chain or defective shipments being passed. Not only are there commercial risks but legal ones, particularly with regard to the FCPA and the UK Bribery Act. Consequently, within corporations, supplier corruption is often viewed through a legal prism with the immediate termination of business relationships the standard response. While this approach is understandable, it is not always commercially practical. The issue is deep routed, pervasive and, to an extent, cultural. There is an incompatibility between the requirements of the foreign company and business practices on the ground.
Given the complexity of the challenge it is crucial that all parties, from sourcing entities, auditing bodies and 3rd party inspectors adopt a preventative, collaborative and transparent approach to bribery in the supply chain.
First and foremost, policies and procedures must be clearly communicated, internally and externally, making clear that bribery is unacceptable. Omega advocates separate employee and supplier ethics training sessions with real life case studies and scenarios. These should be delivered in person to all associates with different combinations of classroom and e-learning used in refresher courses. As the program matures, targeted management and non-management training may be incorporated.
A culture of transparency and honesty throughout an organization is, without doubt, the best bastion though. Fundamental to any success is the reporting of any incidents of bribery, even if not accepted, to management. To facilitate this, reporting channels must be established, with formal incident reporting procedures, and management must create time to receive reports and follow-up on issues. Reports of bribery not only identify where problems lie, but also, by analyzing inter-office, or cross-office, trends they show where problems, purportedly, do not lie. The ‘absence’ of bribery is often very revealing in itself. It is also important that auditors understand that reporting bribery protects them from reprisal. Omega has encountered scenarios where associates have refused a bribe, failed to report it, then suppliers have preemptively lodged complaints against them instead.
Fostering the correct environment is challenging, requiring patience and pressure from all levels. In our experience, associates are often, initially, reluctant to report bribery for a myriad of reasons. It is commonly perceived as a means of creating more work for themselves, drawing unwanted attention, as well as risking reprisal from suppliers and even colleagues. Countering these issues is a challenge. It is important that the message remains consistent and incident reporting remains a cornerstone of an anti-corruption program. It is important to implement a no-retaliation policy and to remind employees and suppliers frequently. Dedicated monthly calls should be held from Corporate Office with the country teams to discuss incident reports, follow-up on specific cases, discuss trends and, as necessary, ask searching questions. Further, effective reporting of bribery should be built into employee performance appraisals.
Bribery in supply chains is a complex, ongoing challenge and best combatted by a preventative, collaborative approach with pressure from all levels. Omega has vast, practical experience in this field. Should you be interested to learn more about our services please contact us.