E5-Conflicts of interest

Ethical threats
Bribery and corruption

Ethical threats
You are an ASS IF you get caught doing any of these ;-)
A dvocacy
S elf-interest
S elf-review
I ntimidation
F amiliarity

Safeguards against these threats:

1. Be professional
CPD; Corporate governance regulations; professional monitoring and
discipline
2. Create the right environment
Internal controls, reviews, ethics codes, discipline and reward systems
3. Individual ethics
comply with profession standards; mentoring, contact ACCA if in doubt,
whistle-blowing

Bribery and corruption

Bribery

"the offering, giving, receiving or soliciting of any item of value to influence

the actions of an official or other person in charge of a public or legal duty."

Bribing another person

You are guilty of this if you:
1. Offer
2. Promise or
3. Give an advantage

... to someone who you want to act improperly.

Being bribed

The recipient is also guilty.

If a person in your business bribes another personal to give your business an

advantage - the business is guilty then too.

How the business can avoid conviction

Must demonstrate that it had adequate procedures (see later) in place designed to
prevent bribery.

Practical steps to take

Small and medium-sized enterprises will inevitably have fewer resources to

counter bribery than larger companies.
Director-level and senior management support.
Make sure that all senior managers and directors understand that they
could be personally liable.
It is important that senior management lead the anti-bribery culture of the
business, especially if it wants to take advantage of the adequate
procedures defence to the offence of failing to prevent bribery.

Risk assessment
1. Make sure the risks that the business may be exposed to, are understood.
For example, certain industry sectors (such as construction, energy, oil and
gas, defence and aerospace, mining and financial services) and countries
present a greater risk as employees are more likely to engage in bribery in
these areas.
2. Review how potential customers are entertained, especially those from
government agencies or state-owned enterprises or charitable organisations.
Routine or inexpensive corporate hospitality is unlikely to be a problem, but
have clear guidelines in place that everybody understands.
3. If the business operates in foreign jurisdictions, always check local laws.
4. Think about the types of transactions that the business engages in; who the
transactions are with and how they are undertaken.

High- risk transactions include:

procurement and supply chain management;

involvement with regulatory relationships (for example, licences or permits);
and
charitable and political contributions.

Dealing with third parties

Review all relationships with any partners, suppliers and customers.

For example, if an agent or distributor uses a bribe to win a contract for the
business, the business could be liable.
Ensure background checks are carried out on any agents or distributors
before engaging them.

Policies and procedures

Review any existing policies and procedures that the business has on
preventing bribery and corruption and decide whether they need to be
updated.
If the business operates in a high-risk industry sector or country, consider
introducing a compulsory training programme for all staff.

Corruption

= "the abuse of entrusted power for private gain".