Bribery Act

Chandrashekhar Krishnan, Executive Director of Transparency International (UK), joins Pharma IQ to discuss the Bribery Act, which is currently under review by the UK Government. The government has delayed the implementation of the Act to allow for clearer guidelines.

Transparency International, which is a global non-governmental organisation that is committed to combating corruption. Their approach to fighting corruption is to build constructive partnerships with companies, with governments, and with other civil society organisations, with a view to trying to change policies, attitudes and values, which will help us to achieve reductions in corruption over time.

Pharma IQ: Why is anti-corruption legislation so important? C Krishnan: I think we have to accept that bribery and corruption are extremely serious crimes, and they have victims. Sadly, the victims are mainly in poor countries, in the poorest countries all over the world, and I think it’s very important that UK companies and companies from other OECD countries should not be complicit in making the problem of corruption worse in these countries by paying bribes to foreign public officials. That requires that there be strong laws in these jurisdictions to prosecute companies and individuals who pay bribes.

Pharma IQ: How do you think the UK Bribery Act will change the way companies do business in the future?

C Krishnan: I think it is being increasingly realised that the UK law is actually one of the toughest internationally, and it is actually tougher than the US Foreign Corrupt Practices Act in several respects. For instance, it outlaws facilitation payments and it also covers private-to-private bribery. Under the Act – and this is what has, I think, changed the corporate landscape – a company and its directors could be liable if they failed to prevent bribery by any person associated with the company. That definition of associated is very broad, because it includes business partners, joint venture partners, agents, sales representatives and so forth.

Under the Act, a company could defend itself against liability for failure to prevent bribery if it can show that it had adequate procedures to prevent bribery. This means that it is vital for companies to ensure that they have robust anti-bribery systems in place that would be compliant with the new law. I think that particular attention needs to be given to certain areas, and what are they: I’d say joint venture and other business partners, agents and representatives. I think hospitality and gifts is an area which requires particular attention, especially in the industries that we’re talking about.

I’d also like to say that compliance, in the ultimate analysis, is more than just about complying with the law; it also requires a change in corporate culture. That means that an anti-bribery culture needs to permeate all aspects and areas of a company’s operations.

Pharma IQ: Why is it important to revise compliance policy even in advance of the UK Bribery Act enforcement?

C Krishnan: I think it’s essential if companies want to ensure that they’re conducting their business ethically. We need to remember that bribery in the UK has actually been a criminal offence for more than 100 years now, and, technically, the bribery of foreign public officials has been outlawed since February 2002, so it’s not as if bribery has suddenly become a criminal offence overnight. Having said that, I think that companies who don’t have anti-bribery systems in place or who have very weak systems in place obviously need to act swiftly to ensure that they put in proper systems. But this, obviously, is going to take time, to make the necessary changes in both operations and in corporate culture. So the emphasis, really, should be on acting quickly, without having to wait until the government issues its guidance. I think companies who already have their systems in place need to be reviewing those systems to ensure that they are fully compliant with the new law.

Can I just say that TI itself, which has for many years now been looking at practical ways in which companies can benchmark their anti-bribery systems against good practice, has recently published its own guidance to help companies to put in place robust anti-bribery systems, which could be considered as constituting adequate procedures in terms of compliance with the UK Bribery Act.

Pharma IQ: Thank you for informing us about that. What are the most important things to keep in mind when developing and monitoring a compliance policy?

C Krishnan: I think that the actual policy of a company would, of course, depend upon the company itself: what its business is and where it operates. But at a general level, it’s essential that companies undertake a proper risk assessment; in other words, looking at what it is they operate in, what their products are, how they do their business and in which markets.

A second essential requirement is that if an anti-bribery system is to succeed, then the tone from the top, and that means leadership – from the CEO and from the Board – is absolutely vital. In addition to that, it’s also important that all staff in the company, both at the headquarters level and at all locations where a company operates, receive training so that they fully understand what the anti-bribery policy is about and how it should be implemented.

There should be no room for doubt at all in any employee’s mind as to what the policy demands of employees. It’s essential that companies do enhanced due diligence on business partners and agents; it’s very important that companies engage in continuous monitoring and evaluation of their systems; you can never be complacent, because corruption business changes over time. It’s also very important to report to shareholders and stakeholders on the efficacy of the company’s anti-bribery system.

And, finally, I think I’d also add that, increasingly, we feel it’s important for companies to seek external assurance that their anti-bribery systems are working as they’re expected to work.

Pharma IQ: What unique challenges does the life science industry face?

C Krishnan: TI undertakes surveys from time to time and one of our surveys, it was called the Bribe Payers Index, showed that among 19 industry sectors globally, life sciences is perceived to be the sixth most corrupt sector in terms of the propensity of companies to pay bribes. So, clearly, this is a high-risk sector; the major markets tend to be in countries where corruption risks are very high. There’s a lot of business which tends to be done through agents, representatives and intermediaries; there’s often a high degree of interaction required with government officials, and that tends to increase corruption risks. There’s also a relatively high reliance on business promotional activities and hospitality. So these are all areas where I think particular attention needs to be paid.

IQPC

Please note that we do all we can to ensure accuracy within the translation to word of audio interviews but that errors may still understandably occur in some cases. If you believe that a serious inaccuracy has been made within the text, please contact +44 (0) 207 368 9425 or email helen.winsor@iqpc.co.uk .

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