Jeremy Newman's CEO Insights

It has been suggested to me that on occasion I might post a ‘guest’ blog and this is the first such contribution....

– a comment from Andrew Maclay, a Director in the Forensic Accounting Group of BDO’s UK firm, on the OECD Recommendation for further combating bribery of foreign public officials in international business transactions. Andrew has specialised in all aspects of Forensic Accounting for the last 11 years and has worked on a large variety of disputes involving fraud and corruption investigations, contractual claims and quantifying losses and is thus well qualified to comment on this.

“Wednesday 9 December, as well as being international anti-corruption day, saw the publication of an interesting recommendation by the OECD working group on bribery. In the ten years since it was agreed, the OECD Convention on combating bribery of foreign public officials in international business transactions and the working group that supports it has become the most effective anti-corruption body outside the US. It is not easy to cajole 38 of the leading industrial nations in the world to promulgate laws banning bribery, but the OECD working group has put in place an effective process of monitoring its member states and does not shirk from publicly criticising them, for example, for a lack of bribery prosecutions.

The latest recommendation, whilst not mandating anything new, clearly recognises the evolving nature of anti-corruption law and urges member states to keep their laws and enforcement under constant review. BDO played a part, along with the other large accountancy networks, in helping the OECD understand the role of external auditors, which is not as the first line of defence against corruption. Corruption, however, is something that undermines the rule of law and contributes to poverty and so affects us all, whichever country we are based in.

The recommendation, for example, stops short of banning facilitation payments, but clearly the working group does not like them and companies are mandated to at least record them clearly in their accounts if they are paid. The working group promises Good Practice Guidance by June 2010, and companies are likely to be at risk if they do not implement some anti-corruption controls and then get investigated.

The US has long had an effective Foreign Corrupt Practices Act, but the OECD recommendation, together with evolution in national laws and practices such as the Corruption Bill and the recruitment of a team of 100 corruption investigators by the Serious Fraud Office in the UK, indicates that companies need to think seriously about their anti bribery policies, if they have not already done so. Perhaps the next big step in the world of anti-corruption is for the BRIC countries to take corruption seriously; Brazil has joined the OECD working group and Russia has applied to join – if China and India were to act as well, the field of international tendering could be seriously levelled."

Andrew Maclay