A donation here, a $100 fee there; for some firms, a payment to a local official or customs officer is a small price to pay for “a ticket to play” in that market. But while the tide of acceptance around bribes is starting to turn, there are still many grey areas that firms can play in


Earlier this year, BHP Billiton was slapped with a $25m fine and charged by the US Securities and Exchange Commission (SEC) for violating anti-bribery laws at the 2008 Beijing Olympics.

BHP, a major sponsor of the games, invited 176 government officials to attend the Olympics at the company’s expense, including 98 who worked for state-owned enterprises that were customers or suppliers. The 60 officials who agreed to attend were mainly from Africa and Asia and enjoyed packages worth up to $16,000. In its ruling, the SEC said that the company recognised the heightened bribery risks associated with inviting the officials but had failed to “devise and maintain sufficient internal controls” to deal with it.

The huge fine and reputation battering that BHP Billiton suffered as a result of the breach and six-year investigation has caused other firms to reassess their own exposure when it comes to corporate hospitality and entertaining.

One risk manager told StrategicRISK that the main difficulty with anti-bribery and corruption laws was the lack of definition around what is considered “excessive” and what “adequate” mitigation procedures look like.

“How do you really draw a line between rewarding your loyal customers and clients, which people do all the time, and dealing with the potential for being struck down by a breach of anti-bribery laws? It’s a very blurry line,” he said.

The risk manager said his company had recently tightened its risk mitigation strategies around its corporate hospitality programme, but there were still “grey areas” causing concern.

“We’re looking at how we take extra steps to navigate any potential issues, with legal and risk now independently vetting hospitality applications that come through sales.”

The cost of corruption

For global corporates, the key pieces of legislation guiding anti-corruption practices are the US Foreign Corrupt Practices Act (FCPA), the UK Bribery Act and domestic legislation.

According to a recent survey by Control Risks, a security and political risk consultancy, 50% of western firms said the FCPA was what was driving their anti-corruption agenda.

And when the FCPA can fine a guilty party up to $2m per violation and a breach of the Bribery Act can result in an unlimited fine and up to 10 years’ imprisonment, it’s no wonder global corporates are taking the issue seriously.  

But are low level bribes simply an accepted ‘ticket to play’ in some markets?

Lend Lead group head of risk and insurance Kevin Bates argues that it depends on the culture and strategy of a company. “We have a zero tolerance for bribery and corruption,” he says. “We are a completely compliant business and we will absolutely not encourage, condone or authorise anything that is illegal.”

It’s a noble stance, particularly when corruption is a key issue in some of the markets that Lend Lease operates in.

China, for example, scored 36 out of 100 on the corruption index last year, where zero is highly corrupt and 100 is very clean. In Asia-Pacific, only North Korea, Cambodia, Myanmar, Vietnam and Indonesia scored worse.

“China is a core market for growth for sure but we’re not in the business of competing with local players there,” Bates says, adding that the group will only work for other multinationals in the country.

In fact, Lend Lease went from operating in 39 countries not so long ago to just 11 today. Safety and corruption were some of the reasons that the group pulled out of certain regions over the years.

Understanding the contextof your operating markets is essential, agrees Control Risks senior managing director, Australia Pacific, Jason Rance.

“It’s vital that businesses understand the politics, the regulatory environment, the culture – particularly with regards to bribery and corruption – and the enforcement regimes in place,” he says.

Rance is also an advocate for well managed whistle blowing lines.

“Having that whistle blowing line in place and clear mechanisms that employees and even partners can use is a great way of identifying problems. Issues are typically uncovered far earlier than they would have otherwise come to light [if a whistle blower programme is used] and the cost of the event is typically significantly less, particularly if the alternative is whistleblowers turning to aggressive local regulatory authorities” he says.

“In our discussions with Chinese regulatory authorities, for example, over 90% of their investigations come via whistleblowers, so better to capture and act on that information internally”.