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Anti-Corruption Compliance Blog - Published: 01 November 2017
Philippe Montigny
President, ETHIC Intelligence Certification Committee
The logic behind passive corruption is completely different from that of active corruption and requires specific tools

Although incidents of passive corruption often originate within the purchasing department, it is not an activity exclusive to this branch. Passive corruption can also occur with employees responsible for product specifications, or managers occasionally needing to use emergency or exceptional purchasing procedures.

To minimize the risk of passive corruption in purchasing, four different but complementary actions are necessary: regulation of purchasing procedures, traceability of decisions, regular but random controls and support for employee integrity.

Regulation of purchasing procedures

Any company with a significant sourcing activity has specific procedures for regulating procurement: supplier databases, calls for tender, group decision-making, etc.… In addition, purchasing officers must follow strict rules and abide by strict principles. Their relationships with suppliers are frequently monitored: no gifts, no tête-à-tête invitations, the annual signing of a declaration concerning the absence of conflicts of interest, etc.….

On occasion, however, purchases must be made exceptionally and expeditiously, and regular procedures cannot be respected if the urgent demand is to be met. The risk of corruption at this point shifts from purchasing to operations. This shift triggers the need for the second action: the traceability of decisions.

Traceability of decisions

A department can have a legitimate reason for bypassing standard purchasing procedures. In these instances, it is vital that the decision to bypass standard procedures, as well as the choice of a specific supplier, be fully justified. It is possible to have employees sign a declaration of absence of conflict of interest, that includes relationships in their private life i.e. memberships in the same tennis club, member of the same association, etc.
If corruption prevention through standard procedures and controls cannot be assured before the transaction, then it is imperative to ensure that these controls will be possible after the fact.

Controls: regular but random 

Monitoring staff’s respect for purchasing procedures, including that of personnel who did not or could not follow standard practices, is a measure usually included in the company’s regular controls; whether these are internal or external. The role of control in fraud and corruption prevention is increasingly considered as essential, especially since controls are random.

Publicizing the existence of regular, but random controls, particularly on purchases for which standard procedures were, for any number of reasons, disregarded, is fundamental in preventing acts of passive corruption, but additional steps must be taken…

Support of employee’s integrity

While committing acts of passive corruption, the employee puts his personal interests above those of the company and abuses the business’ confidence. His decision demonstrates a lack of personal integrity.

When a company publicizes or communicates on the importance of personal integrity, of loyalty towards the company and of respect for the company’s ethical heritage, it reinforces and supports ethical behavior. There is no way to definitively prevent corrupt behavior by an individual whose desire for personal gain - illegal or immoral - is so strong that ethical considerations hold no weight. But public support of ethical business practices throughout the company will encourage other staff to blow the whistle if they witness dubious behavior.

Support for personal integrity acts as a daily reminder of the company’s zero tolerance for corruption as well as a warning for employees regarding the risks they run if they decide to ignore this policy.

Procedure to avoid conflicts of interest

Many employees have an unclear understanding of what represents a conflict of interest and could – inadvertently – find themselves in a conflict between their interest and that of the company. A procedure on the concept which illustrates potential scenarios and includes recommendations for employees who find themselves in such situations underlines the importance that the company gives to the personal integrity of its staff.

By indicating clearly how and why conflicts of interest should be declared, Top Management demonstrates, albeit indirectly, its intolerance for passive corruption…. as all acts of passive corruption are aggravated forms of conflict of interest.

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About Philippe Montigny

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Philippe Montigny is the founder of ETHIC Intelligence, a leading anti-corruption certification agency that has been certifying companies since 2006. He is currently the Chairman of the Technical and Impartiality committees and has over 20 years of experience in anti-corruption compliance, beginning at the Office of the OECD Secretary-General, for which he was involved in the ministerial negotiations that led to the OECD Anti-Bribery Convention in 1997. Philippe Montigny was also a co-drafter of the compliance management system standard (ISO 19600) published in 2014 and of the anti-bribery management system standard (ISO 37001) published in 2016 and served as ISO liaison officer between the two.

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