What is Bribery and Corruption in Business?

Bribery and corruption at work can be a serious issue. The government can give out big anti-bribery and corruption fines.

This has the potential to damage your reputation alongside your finances.

This means it’s important to understand bribery and corruption in the workplace. It can apply to both internal and external business interactions.

Learning how to identify bribery and corruption is a key skill to have. Let’s look at what employment law defines bribery and corruption. We will examine some common red flags for bribery and corruption as well as how you can prevent them.

Corruption and bribery differences

Corruption is a broader term for misconduct in the workplace. There are many types of corruption in business, and bribery is a form of it.

This means bribery will always be corruption, but not all forms of corruption are bribery.

This is why we often mix up bribery and corruption in the UK.

Types of corruption in business

It takes on many faces and is not always blatant, but can be subtle to the outside observer. Some forms of corruption are common and are grudgingly accepted, becoming the price of doing business. The cost of corruption is often passed to consumers, and it stifles competition and subverts the free market. Here are the different type:

• Bribery: accepting items in return for a preferential treatment
• Fraud: dishonest and illegal activities perpetrated by individuals or companies in order to provide an advantageous financial outcome to those persons or establishments
• Embezzlement: taking the company's goods or funds for personal gain is called embezzlement
• Kickbacks: payments made to businesses by vendors in exchange for contracts that overinflate the cost of the work performed at the expense of those receiving the services, and paying for the contract

What is bribery?

Bribery is the offering or accepting of any gift, loan, payment, reward or advantage for personal gain.

It is an encouragement to do something which is dishonest, illegal or a breach of trust.

Bribing another person is a strict liability offence that can damage an employee's and a company’s reputation. If an employee accepts a gift in return for preferential treatment, this is bribery.

To be legally compliant, your business must have a zero-tolerance approach to bribery, both in and out of the workplace. If an employee offers or accepts a bribe, there must be action from senior management.

Gifts can range in size and value, but employment law still considers them bribes.

The Bribery Act 2010 details what counts as a bribery definition. Simple anti-corruption policies can prepare employees and companies for potential problems.

If in doubt, consult your HR and legal teams. If you have no dedicated support in that area, consider external help.

Peninsula offers outsourced HR, who can help you with anti-bribery and corruption procedures.

The impact of bribery at work

There are several consequences to bribes at work.

If guilty of bribery, penalties could include up to ten years in prison and/or an unlimited fine. The company could also face prosecution and be liable to pay a fine.

Luxury car manufacturer Rolls-Royce needed to pay a £671m settlement in January 2017 after paying bribes. This included millions of pounds in cash and luxury cars, to secure orders.

Even if the bribery isn’t found out by law, it has effects on employees and the workplace.

• Damaged reputation: businesses which have poor anti-bribery and corruption compliance attract less business. Commercial organisations will be wary and unlikely to do business with you.
• Damaged finances: the government can hand out an unlimited fine for bribery and corruption offences. This can significantly damage finances. Both fines and lost business can result from a damaged reputation.
• Lower employee morale: being guilty of bribery or having a workforce that knows it goes on leads to lower employee morale. This leads to lower productivity in the workplace. Coupling this with fines and damaged reputation, it can be a death blow to any business.

Examples of bribery

To understand examples of bribery, you must understand the two forms. You can break down bribery into two forms: active and passive.

Let’s look at what they are with some examples.

Active bribery

When a person offers, promises or gives a bribe, it is active bribery.

Examples of this include:

• Bribing a public official to circumvent local laws.
• Wanting to cover-up an employee or business mistake by offering gifts
• Bribing a member of staff of higher authority to gain a pay rise

Passive bribery

When a person requests, receives or accepts a bribe, it is passive bribery.

Examples of this include:

• A foreign public official requesting luxury accommodation in return for favourable treatment.
• An executive accepts a bribe to provide contract specifications in a tender ahead of time.
• A bank or security employee accepts a gift and gives the briber access to someone’s private details.

Difference between gifts and bribes with examples

A gift is something of value given without the expectation of return. A bribe is the same thing given in the hope of influence or benefit.

A gift can be to reward good performance, therefore the favourable business decision has already happened.

A bribe has the intended purpose of influencing someone to get a favourable business decision.

Some gifts can be acceptable business costs, such as taking a client to dinner. However, there is a line that you can’t cross.

If you reward an employee with champagne after sealing a big deal, this is a gift. There is no influence the champagne can provide, as the deal has already gone through.

For example, if an employee catches a flight to Berlin to meet with one of their business partners. There are contract negotiations going on. The Berlin business books them into a full five-star luxury stay.

This gift is a bribe because it occurs during contract negotiations. This means the stay can influence the proceedings and give them a more desirable outcome.

How to minimise bribery in the workplace

There is a defence for a company if it can show it took measures to prevent bribery taking place.

One such measure could include the implementation of an anti-bribery policy or internal auditors.

It is not a legal requirement for a company to have an anti-bribery policy. In very small companies, it may be enough for the employer to have a discussion with their employees.

This can include examples of bribery and making them aware that bribery is not accepted within the company.

What is corruption in the workplace?

Corruption is an illegal and dishonest way that people in positions of power engage in unethical and illegal activities. They will do so strictly for personal gain. 

This leads to them taking undue advantage of others. They will increase their ability to influence or cause harm to those not adhering to their requests.

Corruption can take place in many forms, including bribery. It is more of an umbrella term, with several acts counting as corrupt.

Effects of corruption in business

When corruption takes place in the workplace, it affects the perception of the business by the public and its employees.

This is because it breaks public trust.

Like bribery, corruption carries with it some big legal fines.

This will result in financial damage. Examples of such is a damaged reputation of the business, which causes fewer business opportunities.

Following this loss of finances, the damage to morale will affect employee productivity. A loss in productivity leads to further losses in profits.

How to identify corruption

To help avoid these effects, being able to identify corruption is essential. If you address the situation in time, you may still salvage it.

Corruption in all its forms is damaging and unfair.

The aim of corruption is to channel undue advantages to parties not entitled to them. This will inevitably lead to a situation where someone else suffers.

That is why we should never condone or ignore corruption.

Having anti-bribery and corruption audits in the workplace help to identify corruption. Because professionals running internal audits have appropriate training.

Examples of corruption

Corruption may wear many faces, from extortion and embezzlement to bribery.

The existence of this robs many businesses of many things. This includes their profits and their credibility in the eyes of their customers.

There are many adverse effects of corruption.

You can look out for a few examples in everyday working life though.

• Buying unnecessary or inappropriate goods and services
• Concealed invoices
• Employees accepting work that is normally unacceptable in quality
• Incomplete travel and expenses

How to tackle corruption at work

Make it part of your company culture and operations. Operate with a clear anti-bribery and corruption statement. Show that your company has a zero-tolerance policy on bribery and corruption.

Ensure you have professionals responsible for maintaining anti-bribery and corruption due diligence. Regularly carry out internal audits and have an anti-bribery and corruption certification.

Ensure that you measure everything. Track and measure the impact of your anti-corruption policies. This way you can identify what’s working and what still needs work. Always communicate your progress to stakeholders and strive for continuous improvement.

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