ETHIC Intelligence is very pleased to host its third annual international conference on Standards and Guidelines in corruption prevention on September 10, 2018 at the OECD Conference Centre in Paris. Click below to view photos and videos from last year’s event where experts from business, civil society and government exchanged and debated issues related to the fight against corruption.
Many compliance officers have voiced frustration that their boards don’t take the anti-corruption compliance issue seriously; that is, that they treat it as a purely legal issue and not as a strategic concern that can have an important impact on business development.
For many boards, the sole purpose of an anti-corruption compliance program is to mitigate a (very real) legal risk. They espouse the point of view that, albeit justifiable in terms of legal protection, anti-corruption compliance programs represent a ‘non value generating’ cost center. They therefore seek to keep the functioning costs – travel, training, due diligence, number of team members, etc. – to a minimum.
In return, all they expect from their anti-corruption compliance program is that it minimizes the risks brought about by their sales operations. In short, it offers them a certain level of protection from a risk which they perceive to be purely legal.
But what if corruption was not just a legal risk? What if it were, above all, a business risk? This is where compliance officers have some serious board-level convincing to do.
Corruption poses a more serious threat in terms of business development than it does with regards to the threat of prosecution: this is the message that the top management of all companies would do well to integrate.
The reasoning is simple. If a sales person relies on bribes to sign a contract, he or she will never voluntarily inform the management of this. Perhaps because it is quite recognizably illegal to pay bribes; perhaps because the sales person would rather put emphasis on his or her sales talent. Either way, the management is lulled into believing that the company signed the contract because its products/services and pricing best fit the demands of the client.
Because it is lacking a crucial piece of information (the real reason the company won the contract), management is under the illusion that its offer meets market demands. Why call into question one’s prices, products or services when clients are visibly satisfied? Without question, bribes distort the market feedback crucial to making strategic decisions.
In time, bribes cover up the widening divide between a company’s product and the needs of the market. While losing contracts generally helps companies re-evaluate and re-adapt their offers to better meet market demands, winning contracts in exchange for bribes seriously threatens their competitiveness and, ultimately, could jeopardize their very existence.
To operate, companies must constantly take necessary measures to guard against a multitude of risks: stock market fluctuations, trademark protection, etc. But there is one risk that a company can never insure against: the risk of no longer being able to meet market demand. Only the lessons learned from repeated failures and from the difficulties encountered by sales operations can help management make the necessary strategic decisions, in terms of investment, R&D, restructuring production capacities, etc. to turn the ship before it is too late.
Corrupt sales practices represent more than a legal risk; they impose a major business risk by jeopardizing the quality of strategic decisions.
When trying to convince your board that anti-corruption compliance is important, talk first about its impact on strategy and business development. This is how I’ve seen many executive committees ultimately take the issue seriously.
Philippe Montigny is CEO of ETHIC Intelligence and Chairman of its Certification Committee. Philippe has over 20 years of experience in advising companies on strategies to prevent corruption and leverage business integrity.
The compliance community must navigate amidst an ever-changing landscape of laws, recommendations, emerging corruption risks, trends in investigations and the threat of prosecution. The ambition of this blog is to bring this landscape into focus while raising compliance effectiveness from both a business and legal perspective.
Anti-corruption compliance is a major asset to companies; ETHIC Intelligence Certification of compliance programs and Validation of business partner commitments leverage this asset in a concrete way to help business.