Blog : BOARD TALK
|Posted on November 14, 2011 at 2:25 AM|
Hot in pursuit on the UK Bribery Act and its implications, UK professional services firm Ernst & Young (E&Y) warns businesses they must do more to ensure they have adequate procedures to prevent corruption among external business partners . This comes against an analysis of background checks that suggests there is considerable cause for concern.
E&Y carried out 225 background checks on behalf of companies seeking to vet business partners and the findings are worth reporting. The top corruption risks were seen as evidence of potentially corrupt government links (50% of red flags), signs of litigation (11%), political connections (7%) and reports of illegal activities (4%).
I'm in New Delhi, India and The National reported that Anditmuthu Raja, a former Indian government minister went on trial the other day accused of playing a central role in a massive corruption scandal over the allocation of mobile phone licences.This is seven months after the indictment was presented to India's Supreme Court alleging a massive misappropriation of government funds during the allocation of the 2G mobile network spectrum.
And there was that wonderful programme on cable television on BBC World on Sunday morning about the media and morals, where someone pointed out an ethical and moral compass tends to be set from the top down..............
Trying to lead a day-to-day life iin New Delhi makes one realise very quickly that it's true. 'Simples', as they say - if you're at the bottom you had best follow the trend, in the middle it makes life a whole lot easier but at the top it's a different story. Everyone looks at you to set the pace, and very often that can mean you just set your own.
Perhaps that is what the professional services firms are aiming at, that top layer.
But I think they need to spell it out more - something more along the lines of 'Comply or Die' rather than 'Comply or Explain' when it comes to doing global business under the auspices of the Uk Bribery act, and prospering as well.
Yes, these firms ( see last blog post) may be 'cashing in' on the UK Bribery Act - but if you don't listen hard in this instance, you as a firm may be cashing well out.
Ernst & Young estimates that global companies with hundreds of third party partners now conduct around 10,000 and 20,000 background checks every year, with demand rising due to compliance requirements.
It has launched a major due diligencebackground checks service. It says that lack of effective checking, often compounded by language and cultural barriers in new markets, can mean that risks are not spotted until they have caused serious damage.
Paul Walker, EMEIA Head of Forensic Technology& eDiscovery Services at Ernst & Young, says: “The risks faced by companies related to third party customers, vendors, suppliers and staff have never been greater, with global expansion and ever more complex business relationships."
He adds : "Public commitments by enforcers against bribery and corruption mean it is now crucial for companies to adopt the same risk procedures for third parties that they would routinely enforce in other parts of their business. "
You have been warned. Don't even try saying : "But I had no idea.................."