How to Evaluate Risks in the Private Sector

By Jermyn P Brooks

Chair of the Business Advisory Board of Transparency International

July 8, 2015 Vilnius TI School of Integrity 1

Public Sector

Bribe recipients

- influence

- solicitation

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Individuals

petty corruption

Private Sector

Legal Entities

Grand Corruption

- Kickbacks, active bribery

- „cost of doing business“

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Why are companies corrupt?

• Companies represent the supply side of corruption

• They know that bribery is illegal

• So why do they continue to bribe?

Let’s discuss some of the reasons

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Corporate Bribery – some of the Reasons

• Sanctions don’t work – very weak law enforcement

• Fines against companies don’t hurt corrupt managers

• Managers are afraid to say no to extortion

• They hide behind unclear laws, cultural differences and ambiguities

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Write anti-corruption policies Provide policies for “grey areas”

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RESIST: Resisting Extortion and Solicitation in International Transactions (available in Arabic)

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Case #1 – The last-minute “closure fee” 6

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Case #2 – The „special“ customs fee

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Would your answer have been different if the customs official had demanded $ 50,000?

Case #3 – The evaluation trip

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Case #4 – The expensive dinner

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Case #5 – Charity or corruption?

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Case #6 – Hiring a family relative

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Case #7 – Ignoring red flags

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A Swedish telecoms operator was keen to expand its business into countries without a modern mobile phone network. It learned that a young women in Uzbekistan, who was reputed to have the highest political connections in the country, owned the mobile licences via a Gibraltar company. The Swedish company conducted legal due diligence and confirmed: a) That the lady in question was the rightful owner of Gibraltar

company, and b) that the company in fact owned the Uzbek mobile licenses. They agreed to pay the sum of $ 300m for the licences.

Do you see any corruption related problems with the transaction?

What could or should the company have done before purchasing the licences?

Write anti-corruption policies Examples of a Code of Conduct (2/2)

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How to get started with an anti-corruption ethics & compliance program

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New UNODC Guide for business

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THANK YOU!

For more information go to:

www.transparency.org

TI‘s website for private sector work:

http://www.transparency.org/topic/detail/private_sector

July 8, 2015