- How Compliance can effectively prevent corruption
- The right way to handle gifts
- Countries in which corruption poses a particular risk
- Corruption risks in purchasing and sales
- What are the liability risks? More info
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Prevent corruption in your company
Corruption always occurs when employees of companies want to enrich themselves, or when companies hope to be favoured in orders or to settle fraudulent sham payments. These cases of fraud are usually only possible through the bribery of decision-makers. It starts with "feeding" through gifts. The correct handling of gifts is therefore an important component of any anti-corruption compliance.
Purchasing departments and sales departments are therefore particularly at risk. The awarding of public contracts, especially in the construction and real estate sectors, is also regularly affected. Corruption is also an issue when it comes to official approvals. Here, too, individual companies use bribery to gain economic advantages.
The number of uncovered cases of corruption is constantly increasing and leads to more and more court rulings with fines, liability of the company and compensation payments. Without sufficient anti-corruption compliance, the risks for companies of becoming liable increase rapidly. Even the smallest companies can be involved in corruption.
Companies often have to operate in corrupt markets. For fear of losing business or not winning, employees of a company can quickly adapt to local customs. This is where international regulation and legislation comes in that no longer tolerates corruption. This is at the expense of local society, prevents economic development and distorts international trade. Money that could benefit businesses, the economy and society is diverted and disappears into dark channels. Money laundering and terrorist financing are other dark sides of this issue. In addition, corruption is an area in which various parties with a high level of criminal energy come together and make joint agreements to outwit control systems and divert funds. A classic, for example, is when sellers issue fictitious invoices that approve criminal contacts from purchasing and controlling in order to divert and divide the income thus gained. The calculation of construction services that have never been performed or are billed twice is also such a classic. Transparency and effective anti-corruption compliance control systems are the most effective counter-strategies. Practical experience shows that corruption can be combated easily and effectively with appropriate compliance measures. What is important is the appropriateness of the measures, their continuous implementation and the monitoring of their effectiveness.
Corruption distorts competition and can lead to high liability and compensation costs. The reputation of affected companies is also severely threatened. In countries with high levels of corruption, the economy and society stagnate. Corruption regularly has a negative impact on the environment and often leads to embezzlement, fraud or a lower quality of products and services. In the case of tender fraud (corruption in tender procedures), companies can be excluded from further participation in tenders. In public sector procurement procedures this is usually the case for a longer period. Missing or inadequate compliance processes for effective prevention and prevention of corruption regularly lead to liability and higher fines. Companies competing in third countries can sue your company if they suspect corruption, even if they are not active in the competitor's home market, due to the increasingly stringent international regulations. You can therefore find yourself very quickly and abruptly in legal proceedings, the costs of which can be considerable, especially in international trade. Effective anti-corruption measures are therefore also essential for small and medium-sized enterprises.
The most important building blocks of a functioning compliance system include, for example..:
- Training of employees, creation of awareness, also about the signs of corruption.
- Analysis of risk markets and their susceptibility to corruption
- Creation of transparency and traceability
- Development of appropriate guidelines and policies, e.g. for dealing with invitations and gifts
- Compliance requirements for purchasing and sales
- Four-eyes principle in critical areas
- Audits and controls
- Structural, process-specific and person-related compliance processes
- Introduction of whistleblowing systems
Corruption thrives best in uncontrolled, undocumented and complex structures that are not given much attention. The less transparency there is in processes or business areas, the easier it is to carry out corrupt actions. Even corrupt executives are masters at sealing off their areas and actions. The creation of transparency right up to the customer side through clear rules, comprehensible actions, open discussion of procedures, 4-eye principles and verifiable documentation therefore make corruption considerably more difficult. The criminal energy to trick the control systems, e.g. in order to divert money through fictitious billing, is increasing more and more. Multi-stage, transparent approval systems and controls are therefore becoming increasingly important.