Bribery and SMEs: what the figures reveal

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Figures matter when it comes to business. Most people in business look to the accountants to compile and interpret the figures. They, after all, are the professionals when it comes to the numbers game.

This is why a survey of accountants by the Association of Chartered Certified Accountants (ACCA) cannot be ignored by those running SMEs. The huge survey asked ACCA members what they thought of companies’ vulnerability to bribery.

The survey showed that 48% of accountants thought SMEs were definitely likely to face risk of bribery and corruption in their business dealings. Just 27% believed SMEs were unlikely to encounter bribery. Perhaps most alarmingly, only 17% of UK accountants believed the Bribery Act 2010 had given confidence to SMEs to tackle corrupt practices, 49% believed there was insufficient guidance about bribery and corruption available for SMEs and only 24% believed that SMEs understood the UK law regarding bribery.

ACCA’s report formed part of a global investigation into attitudes to bribery in a number of countries. It was not exclusively about SMEs and it came out a couple of years ago. But the accountants’ responses regarding SMEs were the most striking. And the main issue is unlikely to have changed – that if you are an SME, you are regarded as being at risk of bribery and corruption and yet under-equipped to prevent, identify or tackle it.

Under the Bribery Act, any company with a UK connection can be prosecuted for bribery that was perpetrated on its behalf anywhere in the world by its staff, an intermediary, third party or trading partner acting on its behalf. ACCA, however, seems to indicate that SMEs have not taken an interest in the Act’s powers. This could prove to be a massive mistake.

Any company investigated under the Act has to be able to show that it had “adequate procedures” in place to identify the risks of bribery and to prevent it happening. If it cannot show this, it will face prosecution under the Act, with punishments that can include unlimited fines. Any senior figure in a company who can be shown to have turned a blind eye to bribery can be prosecuted personally, with jail sentences of up to ten years possible under the Act. Not attempting to prevent bribery is, therefore, a very dangerous approach.

Some in the SME lobby may well argue that their limited resources prevent them developing and maintaining anti-bribery procedures. But if the Act makes anything abundantly clear it is that companies small and large have to make sure they are fully aware of the bribery risk in whichever business sectors and locations they trade in. Their staff, business associates and potential or existing trading partners have to be assessed as potential bribery risks.

As a legal firm that has advised corporations and organisations of all sizes on issues relating to legal compliance, we feel we can safely say that SMEs require detailed, on-going and continually monitored anti-bribery procedures. We are writing this at a time when national and international agencies are cooperating more than ever and have technological resources that make information sharing quicker than could ever have been imagined a decade or so ago.

Drawing up procedures to ensure legal compliance does not often seem the sexy option for companies; especially SMEs that already have enough demands placed on them. But, unfortunately, without such procedures, SMEs may only realise the benefit of taking decisive, proactive action to prevent bribery when it is too late. That is when the authorities have uncovered the wrongdoing and are considering bringing charges – when the SME is facing prosecution for something that could have been prevented, identified or eradicated with a little forethought and compliance.

Expert legal advice minimises the risk of prosecution. And the earlier it is sought the more effective it will be – far more effective than trying to hide wrongdoing or being ignorant of its risks.

SMEs may feel that they can ill afford to seek the legal advice and assistance to design out the risk of bribery in their business. But each SME needs to ask itself whether it can afford the much greater cost that a prosecution under the Bribery Act would entail.

Aziz Rahman is founder of Rahman Ravelli.

www.rahmanravelli.co.uk