Another one of my favorite sessions at Compliance Week featured Lonnie Keene from Kroll and Matt Kelly of Compliance Week presenting the 2014 Anti-Bribery and Corruption Benchmarking Report. It’s a very thorough report and well worth a read; you can download it here.
Kroll and Compliance Week team up to produce this survey each year, which is convenient since bribery and corruption are, sadly, still top risks for many organizations, and therefore, top priorities for ethics and compliance departments (check out our Anti-Bribery Checklist for tips on designing and implementing an anti-bribery program). I liked the session because there were some pretty startling, interesting statistics and some actionable data, rather more of the same old, same old.
The first thing I found startling:
Do you anticipate the bribery and corruption risks to your company will increase, remain the same, or decrease over the next two to three years?
Wow, so even after all of that hard work building the ethical culture, rolling out the anti-bribery training, refreshing the Code of Conduct, implementing compliance management systems , distributing anti-bribery policies and robust anti-bribery awareness programs… only 5.3% of respondents think that their risk will decrease, even slightly? No one else feels they can even move the needle a little bit? Are we wasting our time? Or is bribery and anti-corruption just too difficult to overcome? Are we putting together the programs to appease the DOJ and SEC when they come knocking, to show that yes, we rolled out the anti-bribery policy and yes, we implemented the anti-bribery training to relevant employees and yes, our Code of Conduct states plainly that we do not tolerate corrupt behavior… but the realities of business in some areas of the world are too great to overcome, so, well it’s on paper but we really can’t reduce any risk?
I did think that was fascinating… or well, depressing.
Third parties is always a hot topic at the ethics and compliance shows and we heard a lot on this topic at Compliance Week. This report reveals some interesting – and disturbing – things. In fact, the first sentence in the Third Parties section of the report reads “Third parties continue to be the bane of anti-corruption programs.” Here’s the disturbing part. Survey respondents this year reported an average of 3,868 third parties, and yet 58% – FIFTY EIGHT PERCENT! – of respondents said they do not give anti-bribery training to their vendors. There was actually an audible gasp in the auditorium when that statistic was revealed. The sad thing is it’s even higher than last year (the number was 47% in 2013). Even with those of us in the ethics and compliance industry carrying the torch the number is climbing. I’m still scratching my head on that one.
Of those who do train their third party vendors, more than 25% fail to do so in local languages, which really decreases the effectiveness. The survey notes that respondents indicate doing more due diligence (ostensibly because they have a policy in place) but they aren’t implementing anti-bribery training or any follow-up with their supply chain. That is scary because that is where their risk is. Another interesting point on the anti-bribery training: the 42% of respondents who do educate third parties tended to favor methods that require less time and energy. Here are the methods used and by how many respondents:
including an anti-bribery statement in the company’s Code of Conduct (70%)
having the third party certify its awareness of anti-corruption efforts in contracts (59%)
online or web-based training (53%)
part of an on-boarding questionnaire and process (58%)
posting printed materials (45%)
in-person training (42%)
When it comes to technology, 48.7% of respondents said they somehow automate part of their anti-corruption program, while 51.3% do not. The report indicates that this could be one reason – the lack of a solid technology system that lets CCOs manage a “far-flung network of third parties in a cost-effective way” – that more companies do not train their third parties. They should call us; we can help with that.
While we’re on the topic of training, the survey also asked about how confident the CCOs are that their anti-corruption messages are being heard and absorbed; certainly anti-bribery training and awareness programs are two vehicles by which those messages are delivered. The survey indicates that CCOs are more confident the closer the employees are to the main headquarters. As employees become more remote, their confidence drops and with third parties it drops even more. I suppose intuitively, that makes sense, however, global companies will have to learn to embrace all of the tools and vehicles available, as well as a compliance organizational structure, that facilitates strong communication across all geographies.
If you have a few minutes, glance through the report. It is interesting reading. Here’s to hoping that more companies begin to implement anti-bribery training to third parties as a way to mitigate that risk in their organizations.