Every Anti-Bribery and Corruption risk management plan Malkara has examined, ticks all the right boxes. The programs have been mapped against local and international law, particularly US and UK anti-bribery and corruption legislation. Advisors who drafted the ABC plan and the managers, have gone to great lengths to ensure that the organisation, their client, does not breach the law.
But missing from the plans, are measures designed to harden the organisation against corruption. And while no organisation can totally be protected from corruption, the implementing of an ABC program based on compliance with the law, only provides limited protection.
ABC laws are not effective. ABC programs are often based around assessing the risk that bribery and corruption will occur. Many ABC advisors are ill-equipped to offer advice to clients on external and internal risks because they have no experience in the investigation of bribery and corruption. They have no firsthand knowledge or experience in the threat posed by organised crime groups, who use “grooming techniques” to cultivate employees, contractors or third-party providers. Or techniques used by criminals to recruit from universities high preforming finance students and arrange for them to be placed into financial institutions where after they have been working for several years and become trusted, steal information and or funds.
Financial Crime advisors will design ABC plans for clients based around open source information, for example, quoting Transparency International country rating index. Countries with a low rating are regarded as being of low risk. But often forgotten is that the ratings are based on perceptions. A country that has a robust corruption prosecution framework can be adversely viewed as being corrupt when in fact, its ABC law enforcement strategy is exposing corruption and dealing with it effectively. While countries that are not even bothering to look, get a low rating. A low rating of corruption does not mean that corruption does not exist.
An example is Singapore. It has a low rating for corruption. But it is masked. Like almost every country, employees who are caught committing fraud are charged with fraud when their acts also amount to corruption. And large firms, fearing embarrassment if illegal actions committed by managers and employees are exposed are often simply sacked and no charges are brought. Meaning there is no public record of the issue occurring. And therefore, no effective way to assess corruption risk.
It is not uncommon in countries with a low corruption rating, to “recycle” corrupt managers and employees. Most internal fraud is committed by middle to senior managers. And if they are dismissed rather than charged criminally with a crime, poor vetting procedures by executive and non-executive recruitment firms, often results in those managers being re-employed in similar or higher roles in other organisations.
Malkara Consulting recently advertised an ABC Workshop to be held in Singapore on 16 and 17 October 2017. The focus of the workshop is people. Interestingly was the vast majority of emails received requesting they be unsubscribed from future emails, came from executive hire firms. And why? Because they make money on successful placements. And undertaking vetting of a candidate to expose past corrupt behaviour takes time and costs money. Resulting in less profit for the firm.
Corruption is a major risk even in countries with a low rating of corruption. Organisations with money and data to protect need to take the risk of corruption seriously and not wait until an incident happens to them. By then it’s too late.
Corruption undermines internal controls. It is important that employees, contractors and third parties undergo intensive training to ensure that they understand how criminals use grooming techniques, how bribes are paid and how organized crime operates. This will offer greater protection than any ABC program based on compliance with local and international law can.
Malkara Consulting is holding a 2 day workshop in Singapore on 16 and 17 of October 2017 to equip organisations and individuals in identifying and protecting their susceptibility to bribery and corruption. Go to our events page to find out more.