{"id":5885,"date":"2015-12-04T16:40:47","date_gmt":"2015-12-04T16:40:47","guid":{"rendered":"https:\/\/www.highspeedtraining.co.uk\/hub\/?p=5885"},"modified":"2024-11-12T10:01:10","modified_gmt":"2024-11-12T10:01:10","slug":"effects-corruption-bribery-business","status":"publish","type":"post","link":"https:\/\/www.highspeedtraining.co.uk\/hub\/effects-corruption-bribery-business\/","title":{"rendered":"The Effects of Bribery and Corruption in Businesses"},"content":{"rendered":"

The introduction of the Bribery Act (2010) has been a strong step towards combatting unethical financial action in businesses. It has helped discourage criminal behaviour and raise people\u2019s awareness about corporate bribery, so that it can be more readily identified, reported, and properly prosecuted.<\/p>\n

Combatting unethical practices such as bribery is a matter of changing the way people think.\u00a0Considering bribery to simply be \u2018a necessary evil\u2019 or \u2018the way business is done\u2019 are attitudes that become deeply ingrained in people and are difficult to purge.\u00a0This is the toll corruption and bribery takes on a business: it pollutes people\u2019s perception of business practices. Unethical practices can become the norm.<\/p>\n

\"Corruption<\/p>\n

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How Widespread are Corruption and Bribery?<\/h2>\n

According to\u00a0Transparency International<\/a>, 68% of countries worldwide have a serious corruption problem, and not one single country is corruption-free.<\/p>\n

In 2016, the Institute of Business Ethics (IBE)<\/a> identified the most commonly reported business ethics issues as bribery, corruption, fraud and money laundering. These acts applied to a range of business sectors, with\u00a0unethical behaviour being most frequently recorded from the finance, retail and technology sectors.<\/p>\n

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Case Study: British American Tobacco<\/h2>\n

A noteworthy\u00a0BBC investigation<\/a>\u00a0in 2015 revealed that the British American Tobacco (BAT) company was involved in paying bribes to politicians and civil servants in countries in East Africa. Paul Hopkins, who worked for BAT for 13 years, has shared his experiences about the company\u2019s corrupt activities.<\/p>\n

\u201cThe reality is\u2026if they have to break the rules, they will break the rules.\u201d he said. \u201cMy job was to make sure the competition never got a breathing space.\u201d<\/p>\n

Secret documents he shared revealed illegal payments being made to two members and one former member of the World Health Organisation\u2019s (WHO) Framework Convention on Tobacco Control (FCTC): a campaign that aims to reduce deaths from tobacco-related illness. They also showed the company paying bribes to undermine anti-smoking legislation, as well as numerous other parties.<\/p>\n

Dr Vera da Costa e Silva from WHO stated that BAT \u201cis irresponsible to say the least. It is using bribery to profit at the cost of people\u2019s lives, simple as that.\u201d<\/p>\n

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What Impact does Bribery Have on a Company?<\/h2>\n

It can be difficult to quantify the damage bribery has on a company, particularly when it actually accelerates the growth of a business, albeit by shady practices. But research carried out by P.M. Healy and G. Serafeim<\/a> from Harvard Business School offers an insight into the impact of corporate bribery on organisations as a whole.<\/p>\n

Impacts on firms\u2019 reputation and on their financial standing (when they are faced with legal costs) depends on whether or not the company\u2019s illicit acts are ever brought to light. And the fact is: many instances will fail to ever be reported.<\/p>\n

Healy and Serafeim\u2019s research instead focused on the impact on corporate performance.\u00a0They discovered that bribery\u2019s most significant impact is its negative effect on employee morale.<\/p>\n

Respondents of their survey were asked how they believed the detection of bribery would impact their firm, and how it had done when discovered. Those whose company had genuinely encountered bribery reported that it was employee morale that was most affected than any other factor, even above reputation, relations with regulators, and financial standing.<\/p>\n

\"low<\/p>\n

If a company engages in bribery and corrupt business practices, they are endorsing it; they are suggesting it is positive.<\/p>\n

This “sends a strong message about what the organisation stands for”, as Serafeim stated. They are perpetuating the idea that bribery is a fair business practice. It says to employees that everything can be solved with money or incentives, rather than through hard work and building relationships.<\/p>\n

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How can Corruption and Bribery be Prevented?<\/h2>\n

Embedding an anti-corruption mind-set in place of unethical thought processes is not an overnight process. Creating a culture of integrity and openness requires the long-term commitment of leaders (the ones responsible for setting the workplace standards that employees will follow) to adopting an ethical approach to the way they do business.<\/p>\n

The Ministry of Justice has published 6 principles which companies should follow to prevent and deal with bribery and corruption:<\/p>\n

1. Proportionate Procedures<\/h3>\n

Procedures for preventing bribery should be in place which are proportionate to the size of the company. This includes an anti-bribery policy, anti-bribery training for staff, and anti-bribery rules by which people must abide.<\/p>\n

Anti-bribery rules and procedures include:<\/h4>\n