As the Director of The Institute of Business Ethics, I regularly hear stories about the operational risks companies face when doing business in frontier markets, in particular the impacts of bribery and corruption, and by the same token, how these same companies avoid the pitfalls when they embed strong values and integrity at the heart of their business strategies and operations.
As more and more UK companies seek out new opportunities in frontier markets, taking the necessary steps to prepare for the potential bribery and corruption risks is essential – especially for SMEs, which are often less equipped than large companies to manage these challenging situations. Implementing integrity policies that ensure compliance with the UK Bribery Act, embedding them into day to day operational activities and ensuring continuous reinforcement by senior leadership through staff training will deliver tangible business benefits.
Leaving aside the additional cost to doing business and the risk of prosecution that arises as a result of bribery and corruption, it is becoming clear that people prefer to do business with other companies – whether they be customers or suppliers – that share the same values and commitment to doing business with integrity. Not only are you seen to be less risky, a shared commitment to doing business with integrity helps to build the trust that is the foundation for long-term successful commercial relationships.
For SMEs, putting business integrity policies in place and implementing them can be a daunting task, but investing time and resources up-front to prevent incidents arising in the first place is greatly preferable to having to manage a bribery and corruption issue after it has happened. It is welcome therefore that the UK Government’s Business Integrity Hub is making available a range of guidance and support services to help SMEs operating in frontier markets to do business with integrity. The guidance encompasses information relevant to SMEs about anti-bribery and corruption legislation, direct, affordable support from a consultant for companies doing business in Africa and Asia, and sign posts to further online resources.
If your company is exploring opportunities in frontier markets it pays to prepare your business and colleagues to anticipate and manage the bribery and corruption risks – here’s some additional advice on how to minimise the risks and maximise the opportunities:
1. Be clear about how your business operates: When exploring an opportunity in a frontier market and establishing relationships with customers, suppliers or agents, my advice is to be absolutely clear about how your business operates, don’t leave anything open or vague – a naïve approach may leave you exposed.
If you need support there are many training resources. Next year there will be an Institute of Business Ethics toolkit specifically for SMEs working in this space. Organisations such as the FSB, IoD and your trade bodies can help you too.
2. Plan ahead: The best companies contingency plan, give themselves time and know when not to do a piece of business. My advice is to plan the work and build in time that enables you to avoid a bribe. Importantly, think through at what point you might walk away and have a sense of what business you might refuse. If you aren’t prepared to one-day walk away you might be the one in jail for a bribe inadvertently paid.
3. Use your business integrity to sell your product: Doing business with integrity can and should be a sales point. If a sales pitch begins with how you integrate integrity in to making a product, managing your employees and suppliers, the result is a trusted, quality and good value product and a foundation for building strong relationships.
4. Put the effort into due diligence: Choose your customers, suppliers and agents carefully. Know who they are, spend some time doing internet searches, Government source checks, for example, with your in country representatives, and gather Bank references etc. Knowing who you are doing business with is a vital part to avoiding bribery and corruption, ensuring you get paid for your services and being a successful company.
5. If you find yourself in a difficult situation: Firstly our IBE Say No Toolkit, could be really useful for you and your people in the field. It is a simple mobile app and website designed to help employees to make the right decision in difficult circumstances, especially situations which could lead to accusations of bribery.
My advice is also to explain to those who are trying to compromise you that you cannot do business in this manner, and that you will need to escalate it. If this does not work, do seek out support from your in country embassy or commercial attaché. A lawyer’s letter can also be effective.
My final piece of advice to anyone seeking to do business in frontier markets is to think in advance about how you will operate with integrity and what your expectations are of your business partners. Be clear on your red lines and apply them across your business and ensure everyone in your organisation is doing the same.
Philippa’s experience:
In 2008 she was a member of the Woolf Committee looking at business practices at BAE Systems.
She currently sits on the Stakeholder Panel Group of the Financial Reporting Council
And is a member of the BEIS/FRC Coalition group looking at Corporate Governance in Large Unlisted Companies.
In 2006 she was awarded the OBE for services to the Ministry of Defence in her capacity as NED and Chair of the Defence Audit Committee.
She won the M&S/BITC Sieff Award in 2008.
In January 2014 she was awarded the CBE for services to UK Antarctic Heritage.
In 2018 she was awarded an Honorary Doctor of Law from University of Warwick.
The IBE is a registered charity funded by corporate and individual subscriptions. www.ibe.org.uk @ibeuk
