Dealing with Corruption

Actions by organisations

This section suggests actions which an organisation could take when confronted with corruption which affects the organisation or its employees. It may also be used by an organisation as part of its anti-corruption training for its employees.

Separate web-pages provide information on:

Dealing with Corruption: Actions by individuals: This web-page suggests actions which an individual could take if he/she personally encounters corruption in his/her employment, or in a project in which he/she is involved, or generally (for example, in obtaining a work permit).)
Dealing with corruption: Actions by the public: This web-page suggests actions which a member of the public could take if he/she suspects that there is corrupt activity in relation to a project, and that this corruption could have some adverse impact on a matter of public concern such as public health, safety, the environment, historic buildings, the landscape, breach of building regulations or planning restrictions, or inflated project cost for which the public will ultimately pay.

Actions by organisations

As explained in What is corruption, GIACC uses the term "corruption" in the wider sense to include bribery, extortion, fraud, deception, collusion, cartels, abuse of power, embezzlement, trading in influence and money laundering. Consequently, the discussion in this section applies to all such criminal activity.

The risks of being involved in corruption far outweigh the potential corporate benefits that may flow from such corruption. If convicted of corruption, organisations may suffer fines, criminal conviction, debarment, financial loss and reputational damage. Its officers and employees who were involved in the corruption may suffer fines, imprisonment, and loss of employment. Consequently, organisations should avoid involvement in any corrupt situation and, if they have unintentionally become involved in a corrupt situation, they should withdraw from it as soon as they become aware that it is corrupt.

This section should be read in conjunction with Dealing with Corruption: Actions by Individuals which provides advice on what steps an individual employee should take when confronted with corruption.

This section does not deal with corruption prevention measures, such as corporate codes and due diligence (for which see Anti-Corruption Tools in index on left of page). It looks only at suggested actions for an organisation when actually confronted with corruption.

The two parts of this Section are as follows:

Part 1: Dealing with corruption – Preparatory steps by organisations: These are the suggested steps that an organisation should take prior to commencing work in a particular jurisdiction in order to ensure that the organisation and its officers and employees are suitably equipped to deal with corrupt situations.
Part 2: Dealing with corruption – Possible actions by organisations: This part briefly lists the situations in which an organisation may encounter corruption and then discusses the actions which an organisation should consider when dealing with corrupt situations.

These suggested actions should be considered in the context of the following advice:

These actions are only those actions which the organisation might take. Any actions which may require action or decision by an individual officer or employee are set out in Dealing with Corruption: Individuals.
The actions are only suggested actions. The actions an organisation actually takes in a corrupt situation should be guided by the organisation's own assessment of the situation and how other persons involved may respond.
The reports are only suggested reports. The decision by an organisation as to whether to report a corrupt situation and, if so, to whom, must depend on the organisation’s assessment as to how that report will be received and whether making such a report may have an adverse impact on any person or the organisation. For example, an organisation will have to assess whether making a report to the authorities may place any employee or other person in danger.
Common sense and discretion need to be used on every occasion.
Legal advice may need to be taken.

Part 1: Dealing with corruption:

Preparatory steps by organisations

In order to be able to deal effectively with corrupt situations, the steps below should ideally be taken by an organisation prior to commencement of work in a particular jurisdiction. If not taken prior to commencement, then they should be taken as soon as possible after commencement.

Reporting and advice framework: The organisation should ensure that it has a system in place for officers and employees to report corruption, and to advise and assist officers and employees who are confronted with a corrupt situation. This system should enable officers and employees to make reports of corruption and receive advice confidentially and without fear of adverse discrimination. (See Reporting corruption.)

Legal framework: The organisation should ensure that it is informed as to corruption law in both the foreign country where it is working and in its home country. This should include information as to the law on particular corruption offences, the applicable penalties, legal reporting obligations, mitigation, and evidence. (See Due Diligence- Due diligence on the law.)

Informing officers and employees: The organisation should ensure that its officers and employees are made aware, in writing, of the reporting and advice system and all the information acquired in relation to corruption law. It should also provide Anti-corruption training to those officers and employees who may be in situations where they could encounter corruption. This should include specific advice as to how they should deal with corrupt situations (see Dealing with Corruption: Individuals).

Part 2: Dealing with corruption:

Possible actions by organisations

How an organisation deals with a particular situation involving suspected or actual corruption will depend on the circumstances. Every situation is different. The procedures set out below are for guidance only and should not be taken as prescriptive. Common sense and discretion need to be used on every occasion.

Situations

An organisation may become involved in corruption or may need to report corruption where:

An officer or employee of the organisation reports that someone has demanded a bribe from him which he has not paid.
An officer or employee of the organisation reports that he has paid a bribe under threat of personal harm.
An officer or employee of the organisation, in the course of his employment, commits bribery or fraud which has not been authorised by the organisation.
An officer or employee of the organisation, in the course of his employment, commits bribery or fraud which has been authorised by the organisation.
A related company or business partner of the organisation pays a bribe or commits fraud in relation to which the organisation could be implicated.
The organisation is involved in a cartel.
The organisation discovers that it has been the victim of bribery or fraud committed by another organisation.

Actions

Prompt action: An organisation should, at board level (or equivalent senior level), promptly determine how to respond to a corrupt situation. Regardless of the persons involved or the importance of the relevant business transactions, the board should not condone the corruption, aid or abet the concealment of the corruption, or fail to address the corruption. Any such action could result in criminal liability for the organisation and the individual board members.
Responsible director: A director (or equivalent senior officer) should be appointed as responsible for dealing with the corrupt situation.
Cautions: In determining how to deal with a corrupt situation, an organisation should keep in mind that there are risks inherent in taking action in response to corruption. All steps listed in this Part should be considered in the light of the possible risks. These risks include:
1. Risk of personal harm to those reporting the corruption or seeking to remedy it.
2. Risk of discrimination against individuals and companies who speak out against the corruption.
3. Risk of incurring liability for defamation if accusations of corruption cannot be substantiated.
4. Risk of financial loss if reports of corruption are made against an organisation or individual which owes money to or has some other financial hold over the organisation reporting the corruption.
5. Risk of financial or commercial harm if reports are made against an influential organisation or individual.
6. Risk of prosecution of the individuals and organisation(s) concerned.
7. Risk of debarment from future work for the organisation(s) concerned.
Safety: If an officer or employee is at personal risk as a result of reporting corruption or being involved in a corrupt situation, the organisation should take reasonable steps to protect the individual. This could include making the appropriate payment to avoid the individual being harmed, removing the individual from the dangerous situation, and/or requesting police protection.
Making proper enquiries and collecting evidence: The organisation should promptly establish the facts and collect all necessary evidence by:
1. Where possible and reasonable, requesting reports of corruption to be made in writing and signed by the individuals making them.
2. Making enquiries to establish the facts.
3. Collecting together all relevant documents and other evidence.
4. Obtaining legally valid witness statements.
5. Preserving all evidence for a period of at least 20 years. (This is because, in many jurisdictions, there is no limitation period for criminal prosecutions.)
Not prejudicing any investigation: The organisation should ensure that nothing is done which might prejudice the investigation. (See Obtaining legal advice below.)
Protecting whistle-blowers: If the organisation does not have in place a reporting system whereby reports can be made anonymously by employees, then it should ensure that officers or employees who have reported corruption are protected by:
- Keeping their identity confidential.
- Keeping details of the incident confidential, save for the need to make further reports, as suggested below.
- Ensuring that they do not suffer adverse discrimination from other officers or employees within the organisation.
Obtaining legal advice: The organisation should obtain legal advice as to its position under local law and under the law of its home country as to:
- Which individuals and organisations may have incurred liability for the corruption offences in question.
- The penalties that might apply to each individual and organisation implicated.
- Whether failure to report the corruption to the criminal authorities would be an offence.
- Whether the law provides protection from self-incrimination.
- In the case of corruption perpetrated by the organisation, whether the corruption can be remedied or other steps taken so as to mitigate or avoid liability.
- In circumstances where the organisation is part of a cartel, whether the organisation would receive immunity from prosecution, or some mitigation of liability, if it reported the cartel.
- The nature of evidence that would be legally valid in a court of law.
- What civil action may be taken against the organisation (in situations where the organisation has perpetrated bribery or fraud).
- What civil action may be taken by the organisation (in situations where the organisation may have been the victim of bribery or fraud).
- What other steps should be taken to protect the interests of the organisation and its relevant officers and employees
- How to assist in any investigation and ensure that no steps are taken which might prejudice an investigation.
Undoing or remedying corruption: If the organisation discovers that one or more of its officers or employees is involved in corruption which has or may result in the organisation receiving some illicit benefit, then the organisation should consider how to undo or remedy the situation. This may involve:
1. Taking legal advice as to how to remedy the corruption without self-incrimination.
2. Withdrawing from any procurement process, or resultant contract, where the organisation has been or may be awarded the contract through corruption.
3. Repaying any benefit obtained as a result of fraud.
4. Considering any other consequences of the initial corruption which may themselves constitute criminal offences. Such offences may include false accounting which may occur where a bribe is falsely described as an agency commission in the accounts, a tax offence where a bribe is wrongly deducted from income, or money-laundering where the proceeds of the crime are dealt with.
Seeking a remedy for corruption: If the organisation has been or may be a victim of corruption (for example, where it may lose or has lost a tender because of bribery by a competitor, or where it has paid out money on the basis of a fraudulent claim), the organisation should consider:
1. Requiring the corrupt party to take remedial action. (For example, to withdraw from the procurement process or repay the money obtained through the claims fraud.)
2. Requesting other parties who are in a position to do so to take remedial action. (For example, a project owner could be requested to disqualify the corrupt party from the procurement process or to terminate the contract which has been corruptly awarded to the party.)
3. Informing all other parties who may be affected by the bribery or fraud (such as other bidders) of the corruption.
4. Taking legal action against the corrupt company and any other party who participated in the bribery or fraud (for example, officers of the project owner in relation to the corrupt procurement process, or corrupt consultants who prepared the fraudulent claim).
5. Reporting the matter to the criminal authorities (as to which see 12 below).
Disciplining officers or employees: Officers and employees who have engaged in corrupt activity during the course of their employment should be appropriately dealt with by the organisation. Disciplinary action would range from a warning for a minor offence to dismissal for a serious offence.
Reporting corruption to the authorities: The organisation should decide whether to report the matter to the authorities. This decision will be affected by the following situations:
1. Reporting corruption - where failure to report corruption is a criminal offence, but the organisation and its employees are not implicated in the corruption: In this situation, the organisation should make such reports as are necessary to comply with the law.
- Reporting corruption - where failure to report corruption is a criminal offence, and the organisation and its employees are implicated in the corruption: In this situation, the organisation is in a difficult position as, if it reports the corruption, it risks incriminating itself and/or its employee(s). Alternatively, if it does not report the corruption it will be committing a further criminal offence. It is not possible in this situation to provide advice as to the action that should be taken. However, in deciding whether or not to make a report, the organisation should consider, and take legal advice regarding, the following factors:
  - What are the risks of being prosecuted for failing to report the corruption and the likely penalties?
  - What are the risks of being prosecuted for the corruption offence(s) in question and the likely penalties?
  - Is there any protection against self-incrimination under the relevant law?
  - Would reporting the corruption:
    - result in immunity from prosecution for the corruption in question?
    - mitigate any criminal penalty that may be imposed for the corruption in question?
- Reporting corruption – where failure to report corruption is not a criminal offence, and the organisation and its employees are not implicated in the corruption: In this situation, the organisation should consider the following factors in deciding whether or not to make a report:
- Reporting corruption – where failure to report corruption is not a criminal offence, but the organisation and/or its employees are implicated in the corruption: In this situation, the organisation would probably incriminate itself and/or its employees if it reported the corruption. In considering whether or not to make a report, it should inter alia consider whether reporting the corruption would:
  - result in immunity from prosecution for the corruption in question;
  - mitigate any criminal penalty that may be imposed for the corruption in question;
  - mitigate any other penalty (such as debarment) that may be imposed for the corruption in question;
  - mitigate any criminal penalty that may be imposed for any other corruption for which the organisation is or might be liable;
  - mitigate any other penalty (such as debarment) that may be imposed for any other corruption for which the organisation is or might be liable.
Reviewing organisation policy and procedures: Both where the organisation has perpetrated corruption and where the organisation has been a victim of corruption, the organisation should examine whether the situation arose because of some inadequacy in its procedures and, if so, it should take immediate steps to improve its procedures.
Reviewing response and assistance provided by governments, funders, embassies and the criminal authorities: Where the organisation has sought the assistance or advice of or otherwise had dealings with government departments, funders, embassies or the criminal authorities in relation to suspected or actual corruption, the organisation should:
1. Assess the quality and speed of the response and assistance, if any, provided by those bodies.
2. Make reports to those bodies as to their response and assistance, stating how such response should be improved (if necessary).
3. Make reports to other authoritative bodies where response and assistance has been inadequate and request them to take action to require the relevant bodies to improve their response.

Other Resources

If you have published guidance which is relevant to the above recommendations, and if you are willing to provide a link to your website, please send details to GIACC for listing on this page. Only services and tools which are available free of charge will be listed.

Page updated on 23rd October 2008.

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Dealing with Corruption Actions by organisations

Dealing with Corruption

Actions by organisations