Bribery and corruption are two terms that are closely related. This is because corruption occurs when an individual in power uses their position for their own benefit and to achieve their personal interests. Bribery is a form of corruption, as the individual may accept something of value to act against the benefit of the company. Bribery and corruption not only affect businesses but governments and other organisations.
Bribery and corruption can have many long-lasting consequences for the business. They can affect:
Businesses that are managed by people that prioritise their own interests are more likely to fail. This occurs as the managers do not make the best decisions for the company. Policies may be broken and assessments may be skipped as they want to hide their actions. The deals the person in power makes on behalf of the company may not be beneficial or profitable, they could potentially cause costs to increase.
Bribery and corruption can affect distribution of resources. Money that was meant for research and development may end up going to the manager responsible for the task. Of course, this is not the only way they can hamper growth.
Society expects businesses to be ethical. If claims of bribery and corruption are leaked to the public then the company will suffer from a poor reputation that will affect many aspects of operation. Employees may feel betrayed as they previously thought they worked for an ethical organisation and morale can decrease. Sales will drop as customers are reluctant to give their money to a corrupt business and investors will be hesitant to get involved with the company.
The entity may also experience a drop in share price when the news of a corruption and bribery investigation goes public. This is because the organisation becomes less trustworthy to the community. In 2018, the share price of Airbus dropped significantly after allegations of corruption.
It can take a long time to recover from a ruined reputation, depending on the severity of the situation.
Businesses need to have good role models that can provide many benefits. They can be a great example, someone employees look up to, they can foster a better environment where communication is key and can lead their team towards achieving their goals. When leaders are corrupt, they do not prioritise the company or their team members.
They prioritise their personal benefit and this is reflected in their work. They might let things pass or make unprofitable decisions. Leaders may refuse to investigate issues or pretend they do when in reality they have not even considered starting an investigation. They could provide the business with wrong figures or data that could influence decision-making negatively.
When employees are mentored by corrupt leaders, even if not evidently, they will adopt the practices they are taught and could be asked to take unethical initiatives. Staff might start thinking that it is okay to not comply with the rules and a corrupt business environment will form.
Bribery and corruption is an example of non-compliance. When people within the organization focus on their own interests, compliance is not important for them. This can cause issues as injuries increase and complaints from employees about the business environment may also increase. Non-compliance can have many consequences for the business as it can lead to high staff turnover and legal issues.
Sometimes a whole company can get in trouble for the corrupt actions of its employees. Banking scandals are good examples of how employees can keep lending money for their own benefit rather than the client’s.
Signs of bribery and corruption
Bribery and corruption could go undetected for a long amount of time before the organisation starts questioning things. However, there are a few red flags that could indicate an investigation is needed:
-Conflict of interest
Conflict of interest
Conflict of interest occurs when an individual makes decisions for their personal benefit rather than the benefit of the company. It ties closely with bribery and corruption as conflict of interest is what starts unreliable behaviour. A person may have family with businesses and they choose to cooperate with them rather than better suited companies. They may give suppliers they are friends with a higher amount for materials as they want them to make a greater profit. They do not consider the company’s assets as something they are responsible for, rather as a way they can meet their personal goals and help out people close to them.
An employee might insist on using a certain supplier and present many benefits for doing so while not providing disadvantages of using them, or outlining similar advantages of using others. All these could indicate a conflict of interest.
Invoices for unnecessary purchases may start to appear. Products or services that are not needed could be purchased without notifying anyone. Some materials might not have invoices linked to them or be classified as ‘’cash payments’’ with lost receipts. A manager might also make purchases for items they deem necessary but they are not beneficial for the company. In other cases, paid supplies may never be delivered.
Another indication could be that the invoices are for items of poorer quality than initially requested. If the manager constantly accepts a lower quality material it could show that there is something influencing their decision making and there may be bribery behind their decisions as they are not logical.
There are also situations where a business partner or supplier may not exist. The accountants might not be able to find the business the manager has been purchasing from. Accountants could also see that while revenue remains the same, costs are greatly increasing
Contracts with suspicious businesses may be initiated and then extended with no clear reasoning. When looking at the terms of the contract, individuals may notice how they are not favourable for the company, only for the business partner. As part of this contract a person in power might make strange requests that are not included in the document. They may describe them as verbal agreements that they have to follow.
When looking at the description of the business partner, there could be ambiguous statements as to what their business’s operations are focused on, their reputation may not be positive and they might have a low credit score.
These are all indications that the decision to cooperate with this organisation was not made for the benefit of the company.
Bribery and corruption could be detected through the behaviour of an employee. Employees may notice a different attitude between their manager and the suppliers or very vague statements about what they have to offer. It could be that the manager insists that they are the only person responsible for this deal and they do not want anyone else involved for unknown reasons. Their behaviour may also change if higher-ups want to offer a better alternative.
Unexpectedly, an employee might appear to have more money than before and contractors insist on working with that specific employee. Another indication is that an employee refuses to take time off or let someone else take over their tasks. They might appear as dismissive of rules or claim that they were unaware a certain policy was in place.
How to prevent bribery and corruption
The factors that drive individuals to bribery and corruption may be too complicated to address. The only steps a business can take is to try to prevent such actions and lower the consequences on the organisation.
An entity will need to do research into the people they hire and their business partners to avoid situations where bribery and corruption can flourish. They can require employees to report whether they have any relations with suppliers, contractors or business partners.
Anti-bribery and anti-corruption policies should also be implemented so employees can avoid unconscious bias and recognise when hospitality and gifts could be considered bribery. These policies should highlight how consequences for wrongful actions will be enforced. Employees need to be aware of the risk of losing their job and potentially damaging their career if they act unethically. It should be clear that bribery and corruption do not only influence the success of the business but the individuals as well.
Employees should also be encouraged to report activities that they deem suspicious and not stay silent. They should recognise that harm to the company could also harm their job as resources will be limited and the organisation will struggle to survive. They should also be trained on how to recognised signs of bribery and corruption and how to approach a complicated situation.
A company can also encourage group decision-making that involves two or more individuals. This will decrease the chance of an employee trying to benefit from choosing a contractor they favour. That way there is also more monitoring of employee’s activities without invading their privacy.
When signing off invoices, it is wise to also have a second person checking the purchases before authorising them to ensure that all expenses are reasonable. Employees should also be required to provide explanation as to why they need to make a purchase and why they chose that contractor over others.
Bribery and corruption are the result of many factors that guide individuals towards personal benefit rather than company interest. They can have consequences for both the individuals and the company and they should be viewed as harmful as they are unlawful and unethical. There are many signs that could indicate something suspicious is happening within the business so the company needs to respond quickly to minimise the impact. Bribery and corruption can be difficult to prevent but with the right preparation businesses can minimise the possibility of unethical activities.
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