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The Bribery Act 2010 is one of the most robust pieces of anti-bribery legislation anywhere in the world, creating offences for those directly involved in acts of bribery, and for the corporate failure to prevent bribery. Although everyone agrees that corruption is a scourge on business and inclusive economic development, until now there has been little support specifically for small and medium sized enterprises that are trying to do business in frontier markets. The new Business Integrity Initiative - launching this month is shaping up to provide some of this missing support.
It would be an unnecessary tragedy if corruption concerns deterred SMEs from international trade. International work was an important factor in MLM’s resilience throughout the period of slow economic growth of the last decade, and key component in our strategy for growing an exciting, sustainable business. When the last recession started, MLM Group was a mid-sized company providing multidisciplinary consultancy, primarily targeted towards the UK construction industry. Faced with a difficult UK market, and with a desire to be a more outward-looking organisation, we opened our first branch office in the United Arab Emirates in 2008. A joint venture in Brazil followed in 2011, focusing on sustainability services. MLM Group now delivers services on projects across Europe, where we specialise in Mission Critical data-storage facilities infrastructure, and we also provide our expertise to clients around the world. Over the last decade, we have become one of the largest privately-owned engineering, environmental and building control consultancies in the UK, having doubled in size to 14 UK offices and over 475 employees.
It is important not to down-play the risk of corruption for SMEs, who often lack expertise and resources to manage corruption risks. SMEs usually rely on local agents who are not under their day-to-day control, and may have fewer practical alternatives to paying a bribe when compared with larger multinational corporations. SMEs do not generally hold large cash reserves, so bribery is a particular financial burden on smaller businesses trying to get established overseas. If prosecuted, the financial and reputational impact of an investigation will be severe, and if convicted, the penalties of unlimited fines or even imprisonment of company personnel could cause an SME’s demise.
Managing these real risks of corruption should not involve unnecessary red tape. Done the right way, it can boost an SME’s chances of export success by helping businesses anticipate, mitigate and manage the various risks which arise from international trade. The Ministry of Justice, in its Guidance on the Bribery Act 2010, presents six principles for implementing adequate procedures to prevent bribery. These are: Proportionality; Top-Level Commitment; Risk Assessment; Due Diligence; Communication; and Monitoring and Review. These are indispensable foundations for any SME planning to start an international venture.
Due diligence was a central part of MLM’s strategic and cost-effective approach to entering the complex Brazilian construction sector. Before establishing MLM Brasil, we undertook extensive on-the-ground research to determine our entry point and unique selling points as well as seeking a reliable joint-venture partner who shared our values. The local knowledge and initial business contacts which MLM gained by visiting Brazil on a Trade Mission with the UKTI (now the Department for International Trade) was invaluable to this process. Risk assessment provides a prompt for businesses to think about how to handle difficult situations in advance, rather than having to respond in the moment. This leads to better decision making and better management of commercial risk. Through our due diligence and risk assessment, MLM avoided bribery and reaped other benefits, as we established a joint-venture partnership based on trust and shared values, and work only for reputable clients who operate good payment practices. Avoiding potentially corrupt tender processes saved us from wasting time on bids which were likely to fail.
Top-level commitment to business integrity benefits the whole business. MLM’s rapid growth over the last decade is a result of a deliberate, Director-led driveto fulfil our Purpose of ‘shaping a better built and natural environment for people to live work learn and play’. We champion company values of a positive attitude, delivering on promises, communicating well, and collaboration. These guiding principles follow through into all aspects of how we interact with clients, staff and the local communities. Taking a stance against corruption, and embedding adequate procedures to prevent bribery, is simply a part of our wider commitment to “Make it Count”, as we strive to deliver outcomes that make a difference economically, socially and environmentally. As a result of this company mind-set, MLM has become a Sunday Times One-Star Best Company . Viewed from this perspective, Bribery Act compliance is simply another opportunity to put our company values into practice.
A culture of good communication is also vital. Frank communication between senior and front-line staff ensures that the management team have a good understanding of the pressures on their international projects, and can proactively respond to new challenges as they arise. Employees feel better supported if they can communicate their concerns, leading to better staff morale and a more productive workforce. Working internationally can raise new communication challenges, but mastering this skill will pay dividends not just internally, but in forging relationships with partners and new international clients. In the context of the Bribery Act, we ensure clear communication by having written policies, but this is no substitute for face-to-face discussion of the issues.
Regular Monitoring and Review of corruption risks provides an opportunity to reflect on processes and direction as the international business develops. Businesses that strive for continuous improvement will always maintain an advantage, and this is an important part of MLM’s growth strategy. SMEs can constructively engage with their professional advisers, such as accountants and insurance brokers, to continuously improve their systems and mitigate risk across the business.
Perhaps most crucial to SMEs, is the principle of proportionality. This means that SMEs need only to take steps to prevent bribery which are in line with their business risk. In his Foreword to the Ministry of Justice’s Guidance on the Act, Kenneth Clarke - then Secretary of State for Justice – stated that “combating the risks of bribery is largely about common sense, not burdensome procedures.” This is particularly true if a company already values the principles discussed above as part of its growth strategy. Existing procedures can be used to integrate anti-bribery policies with ‘business as usual’ – for example contract negotiations, financial record-keeping, and board-level and team meetings are all useful avenues for raising awareness about bribery issues, ensuring standards are set, and keeping appropriate records. Free guidance is available online, for example in the Ministry of Justice’s concise “Quick Start Guide” aimed at smaller businesses, and the toolkits and online training offered by Transparency International. SMEs who intend to export to higher risk markets in Africa and Asia, and who may therefore have more complex challenges to address, can also apply for the Business Integrity Initiative’s matched funding for expert anti-corruption advice.
Acting with integrity is not always easy and sometimes, acting in accordance with the Ministry of Justice’s six principles for bribery prevention will require businesses to say ‘no’ to the wrong opportunities. This is perhaps one of the most difficult decisions for staff and directors to make, however ‘no’ can be a positive outcome – businesses that cannot say ‘no’ are arguably the most likely to fall prey to corruption risks. Far from being a hindrance, the Ministry of Justice’s six principles can be integrated with normal business processes and will help SMEs manage corruption risks whilst growing resilient businesses that are well-placed to take full advantage of the benefits of international trade.
Chris Neeves is Managing Director for MLM Group’s Building Services and Sustainability teams, and is Director of Technical Operations for MLM Brasil.
Annabel Beales is a copywriter focusing on international business and social impact. She formerly worked for MLM Group as Administrative Director and Executive of Legal & Administrative Operations for MLM Brasil.
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