What are Adequate Procedures ? ACFE March 1st 2011 Robert Barrington

1. What are Adequate Procedures? ACFE March 1st 2011 Robert Barrington Director of External Affairs, Transparency International UK

2. Key features of the UK Bribery Act • Result of external pressure on UK government • ‘By no means stricter than …other OECD member states’ • Extra-territorial • Corporate liability

3. Adequate Procedures • A legal defence for ‘failure to prevent bribery’ [Bribery Act, section 7] • Outlined in UK Government Guidance • Not a defence for a company that has knowingly paid a bribe

4. What is adequate?

5. 1. The Six PrinciplesTransparency International’s view

6. Six Principles • Tone from the Top • Risk assessment • Detailed Policies & Procedures • Implementation • Due diligence • Monitoring & Review

7. 2. Corruption risk-mapping

8. Corruption Perceptions Index

9. Corruption Perceptions Index • Ranks countries 1-180 • Scores countries 0-10 • Measures perceptions of public sector corruption • 133 countries score less than 5 out of 10 • 2010 best performers: NZ, Denmark, Singapore, Finland, Sweden • 2010 worst performers: Somalia, Myanmar, Afghanistan • Undertaken annually

10. Bribe Payers Index 2008 Country’s companies least likely to pay bribes • 22 countries ranked representing 75% of global exports of goods and services and outflows of foreign direct investment in 2006. • Based on responses of 2,742 senior business executives from companies in 26 developed and developing countries, chosen by the volume of imports and inflows of foreign direct investment. • Conducted every two years Country’s companies most likely to pay bribes

11. Bribe Payers Index: high-risk sectors Bribery of Public Officials by Sectors 2008 • Worst performers • Public works contracts & construction 5.2 • Real estate & property development 5.7 • Oil & gas 5.9 • Heavy manufacturing 6.0 • Mining 6.0 • Best performers • Banking & finance 7.1 • Fisheries 7.1 likelihood of companies in each sector to bribe public officials [possible scores range from 0 to 10. 0 represents the view that ‘bribes are almost always paid’ and 10 that ‘bribes are never paid’ by a sector] – extract below of best and worst performers. Source? TI Bribe Payers Index 2008

12. Global Corruption Barometer • Citizen’s view of corruption in their own countries • Opinion survey of 77,000 citizens conducted in c.75 countries • Every two years

13. Where are bribes paid? [source: Global Corruption Barometer 2010]

14. Perceptions and reality: CPI vs GCB?[source: Corruption Perceptions Index & Global Corruption Barometer 2010]

15. Other risk areas • Country risk • Sectoral risk • Transaction risk – eg licences, permits, procurement • Opportunity risk – eg high-value contracts • Partnership risk – eg joint ventures, local agents

16. 3. Adequate Procedures tools

17. Business Principles for Countering Bribery • High-level principles • Developed by TI • Multi-stakeholder process • Similar to PACI and ICC

18. Definitions

19. Adequate Procedures Guidance

20. 20-point ABC checklist • Board member’s airport checklist • Global comparison score in your sector [Materials]: • number of companies reviewed: 46 • highest score: 45 points; 5 stars • lowest score: 0 points; 0 stars • median average score: 18

21. 4. Conclusions

22. Conclusions • Don’t pay bribes • Tone from the top • corporate culture • zero tolerance approach • Fully analyse and understand the risks • Put in place a robust anti-corruption system • Don’t rely solely on the government guidance • Don’t pay bribes

23. Documents and links available at: www.transparency.org www.transparency.org.uk www.adequateprocedures.org.uk