{"id":9896,"date":"2019-12-30T09:24:13","date_gmt":"2019-12-30T09:24:13","guid":{"rendered":"https:\/\/crigroup.com\/?p=9896"},"modified":"2021-10-09T04:47:35","modified_gmt":"2021-10-09T04:47:35","slug":"beating-bribery-leadership-and-culture","status":"publish","type":"post","link":"https:\/\/crigroup.com\/ar\/beating-bribery-leadership-and-culture\/","title":{"rendered":"Beating bribery leadership and culture, in risk and anti-bribery management systems"},"content":{"rendered":"

Beating bribery leadership and culture<\/strong><\/h3>\n

Beating bribery leadership and culture. Global corruption costs trillions in bribes. Samsung Group\u2019s third-generation leader, Lee Jae-Yong, has been accused of bribing Choi Soon-Sil, a friend of former President Park Geun-Hye. Following Lee Kun-hee\u2019s (Lee Jae-Yong\u2019s father) heart attack in 2014, it has been calculated that Lee Jae-Yong would need to pay $6 billion in tax bills to be able to inherit his father\u2019s shares and maintain control of Samsung. The Beating Bribery Leadership and culture in risk and anti-bribery management systems company\u2019s leaders have a long-standing history of alleged tax evasion but, up to now, the white-collar crimes have been pardoned by Park Geun-Hye and other South Korean presidents. The easier option was for Lee Jae-Yong to pay a bribe to orchestrate the merger of two divisions: Samsung C&T Corp., which is dedicated to construction and trading and Cheil Industries Inc., which owned several entertainment properties. Upon completion, the merger would have given the Lee family more power over the entire Samsung Group.<\/p>\n

Now that the plan was looking very\u00a0promising, Jay Y. Lee used a bribe\u00a0to execute it. According to Bloomberg in\u00a02017: \u201cThe form of the alleged bribe was\u00a0Vitana V, an $800,000 thoroughbred show\u00a0horse, plus $17million in donations to\u00a0foundations affiliated with the friend,\u00a0whose daughter was hoping to qualify for\u00a0the 2020 Olympics as an equestrienne.\u201d\u00a0(Bloomberg, 2017). Following the investigation, the situation\u00a0took a significant downturn and Jay Y. Lee\u00a0was sentenced to five years in prison. Chung\u00a0Sun-sup, chief executive of research firm\u00a0Chaebul.com said: \u201cThe five-year sentence\u00a0was low given that he was found guilty\u00a0of all the charges. I think the court gave\u00a0him a lighter sentence, taking into account\u00a0Samsung\u2019s importance to the economy.\u201d\u00a0It is, however, one of the longest given to\u00a0South Korean business leaders.<\/p>\n

As for stock prices, they fell more than one\u00a0per cent the day after Jay Y. Lee was arrested\u00a0and then a similar amount after the verdict.\u00a0Samsung Group\u2019s profit was not hurt but\u00a0South Korea\u2019s new liberal president, Moon\u00a0Jae-in, has pledged to rein in powerful,\u00a0family-owned firms, like Samsung, which are\u00a0known as chaebols in South Korea. He has\u00a0promised to empower minority shareholders\u00a0and end the practice of pardoning tycoons\u00a0convicted of a white-collar crime.\u00a0Another example of a company where\u00a0corruption could be said to be part of\u00a0company culture is (or was \u2013 more on that\u00a0later) Rolls-Royce plc. Between 2000 and\u00a02013, the company conspired to violate the\u00a0Foreign Corrupt Practices Act (FCPA) by\u00a0paying more than $35million in bribes\u00a0through a third party to foreign officials\u00a0to secure contracts. The US Department\u00a0of Justice (DOJ) reported that in Thailand,\u00a0Rolls-Royce admitted to using\u00a0intermediaries to pay approximately\u00a0$11 million in bribes to officials at Thai\u00a0state-owned and state-controlled oil\u00a0and gas companies that awarded seven\u00a0contracts to Rolls-Royce during the same\u00a0period. The way business was conducted\u00a0in Kazakhstan, Azerbaijan, Angola and\u00a0Iraq did not differ. The corrupt practices\u00a0were spread globally.<\/p>\n

In 2003, before the criminal activities\u00a0came to light, the company\u2019s chief executive,\u00a0John Rose, who had been appointed in 1996,\u00a0was honoured with a knighthood. After the\u00a0engineering giant admitted in a deal with the\u00a0US prosecutor that it had made corrupt\u00a0payments, the UK\u2019s Labour party called for\u00a0him to be stripped of his title. Sir John Rose\u00a0insists that he did not know of the corrupt\u00a0practices. Let\u2019s say that is the truth, but did\u00a0he not fail as a leader simply because of that?<\/p>\n

As a result of the scandal in 2016, Rolls-Royce has suffered the biggest financial loss in its history. Other factors include Brexit and the drop in the value of the pound, but the \u00a3671 million charges for the penalties the company paid to settle bribery and corruption charges with Serious Fraud Office (SFO), the DOJ and Brazilian authorities left a hole in the company\u2019s accounts. Since then, the authorities have appointed new management and if its praised cooperation with SFO is an indication of the company\u2019s culture shift, Rolls-Royce should no longer be in the news due to corruption scandals.<\/p>\n

ISO standards<\/strong><\/h3>\n

Failed leadership is the obvious reason\u00a0for the above bribery cases. ISO 37001: 2016\u00a0Clause 5 Leadership outlines what is required\u00a0from top management in order to obtain\u00a0ISO 37001:2016 anti-bribery management\u00a0system certification. Leadership is crucial\u00a0for an anti-bribery management system\u00a0to be effective and all points under Clause 5\u00a0Leadership are requirements.<\/p>\n

As illustrated in the standard: \u201cFor a compliance management system to be effective, the governing body and top management need to lead by example, by adhering to and actively supporting compliance and the compliance management system.\u201d Management has a number of other responsibilities, which are outlined in the standard. There are responsibilities that are more obvious than others, such as \u201censuring that the anti-bribery management system, including policy and objectives, is established, implemented, maintained and reviewed to adequately address the organisation\u2019s bribery risk\u201d (5.1.2. a) and \u201cdeploying accurate and appropriate resources for the effective operation of the anti-bribery management system\u201d (5.1.2. c). There are also requirements that are not so obvious but just as important; \u201cpromoting an appropriate anti-bribery culture within the organisation\u201d (5.1.2. h) and \u201cpromoting continual improvement\u201d (5.1.2. i). These requirements highlight that obtaining ISO 37001:2016 certification is not just a box-ticking exercise. In order to obtain the certificate, a company needs to illustrate that compliance with anti-bribery legislation is integrated within its business model and, crucially, its culture. In practical terms, that means that the tone at the top needs to align with the ISO\u2019s anti-bribery management system (ABMS) and the message needs to be understood from the boardroom to the factory floor.<\/p>\n

Adopting bespoke policies<\/strong><\/h3>\n

ISO 37001:2016 is a strategic approach to\u00a0bribery risk identification and subsequent\u00a0risk mitigation. Risk knowledge is a\u00a0necessary factor for effective management.\u00a0The adoption of ISO anti-bribery\u00a0management system-tested principles and\u00a0practices allows an organisation to tailor\u00a0recommendations to its contextual business\u00a0environment. ISO 37001:2016 has had the\u00a0impact of making companies adhere to the\u00a0international anti-bribery management\u00a0system standard. As an international\u00a0standard of high repute, ISO 37001 has\u00a0brought changes to market dealings and firm\u00a0operations. Organisations have a guideline\u00a0of rules and code of ethics to follow to\u00a0mitigate the risk of being involved in\u00a0corruption charges. The international\u00a0nature of the ISO 37001 management system\u00a0allows organisations to align their internal\u00a0policies with national laws where the\u00a0organisation is operating. It is important\u00a0to note that state-nations are increasingly\u00a0internalising globally recognised legal\u00a0anti-corruption frameworks and actively\u00a0prosecuting offenders.<\/p>\n

The assurance that an organisation is operating within international standards and processes helps cultivate social legitimacy in the operation of that company which directly serves to boost investor confidence and attract investors. Also, some consumers base their purchasing decisions on the ethical operations of a company. As such, the ISO standard serves as a pull factor for new consumers. Bribery is a very serious issue with adverse macroeconomic and microeconomic effects. In particular, it not only distorts markets and competition but also erodes the profitability of private firms and individual enterprises throughout an economy. The ISO anti-bribery management system provides measures that help organisations to prevent, detect, eradicate and address bribery. This is done by adopting anti-bribery policies, hiring personnel to oversee compliance risk management and due diligence on projects and business associates, implementing commercial and financial controls and also reporting and investigation procedures. ISO 37001:2016 can be used in any organisation regardless of its size, type whether public or private or non-profit.<\/p>\n

Enhanced transparency<\/strong><\/h3>\n

Identification and resolution of bribery\u00a0risks increase an organisation\u2019s capacity to\u00a0deliver consistent and improved services\u00a0to consumers within the law and without\u00a0engaging in bribery and corruption. In\u00a0addition, the anti-bribery management\u00a0system improves the way the organisation\u00a0protects its people from fraud and ensures\u00a0that there is a favourable working\u00a0environment. Therefore, the ISO 37001:2016\u00a0anti-bribery management system enhances\u00a0transparency in organisational culture, thus\u00a0promoting the optimisation of resources.\u00a0Protection of the organisation\u2019s assets, shareholders and management from the\u00a0adverse effects of bribery and corruption\u00a0is another benefit associated with an ISO\u00a0standard anti-bribery management system.\u00a0Often, the negative effects of corruption are\u00a0economic in nature. For instance, bribery\u00a0affects the profit margins of a company to\u00a0the extent that the management has to divert\u00a0funds meant for either operating capital or\u00a0assets capital to facilitating bribes.<\/p>\n

Additionally, the public knowledge\u00a0that an organisation is actively involved\u00a0in bribery or any other form of peddling\u00a0influence affects brand identity, which\u00a0erodes the consumer base, thus reducing\u00a0the overall profitability of an organisation.\u00a0This system can operate as a standalone\u00a0facility or function under another system\u00a0through integration. One advantage\u00a0that cuts across all organisations is the\u00a0amplification of confidence in the eyes\u00a0of external stakeholders. From another\u00a0perspective, an organisation using this ISO\u00a0format is assured of a good reputation as well\u00a0as an excellent working environment. The\u00a0risk factors are minimised\u00a0and a solid credential\u00a0pathway is realised. Indeed,\u00a0many for-profit outfits\u00a0have consistently applied\u00a0anti-bribery systems as\u00a0a measure of acquiring\u00a0extensive market\u00a0penetration goals. The ISO\u00a037001 typically seeks to\u00a0create an accountability\u00a0culture around the globe\u00a0that allows organisations to\u00a0conduct activities in a clean\u00a0and healthy environment.<\/p>\n

Committed approach<\/strong><\/h3>\n

An organisation with an ISO: 37001 2016 certification is open to public scrutiny since its management operates without fear. Further, such an entity displays fidelity and compliance to bribery legislation, such as acts of parliament or the congress. More importantly, subscribing to the system certification demonstrates a commitment to collaborate and work with like-minded organisations in managing bribery and corruption in the world. The chain of responsibility and accountability, additionally, ensures that the supply chain systems used by the organisations conduct clean and verifiable business. Closely related to that advantage is the growth of moral and legal business transactions between businesses and their contractors. Corruption can permeate every corner of an organisation and the anti-bribery certification blocks such realities.<\/p>\n

The ultimate beneficiary of ISO: 37001 is the shareholder. When an organisation bribes its way into the business and has its licence taken away, the shareholder loses their investment. If credibility is lost and the activity schedule goes down, it is the shareholder who bears the heaviest burden. However, bribery in organisations practically affects everyone in the political, commercial or social jurisdiction of such a company. Disgrace can lead to the loss of jobs. And a fined or closed company implies lower tax revenues to the government. Therefore, businesses should integrate ISO: 37001 2016 in their management operations as well as in risk and compliance.<\/p>\n

Curbing risks<\/strong><\/h3>\n

The ISO certification embeds a culture\u00a0of corporate social responsibility and\u00a0willingness to collaborate with law\u00a0enforcement agencies. Cognisant of the\u00a0backlash and opprobrium associated with\u00a0corporate obstruction of justice in the\u00a0investigation of bribery and corruption,\u00a0the ISO certification allows organisations\u00a0to document their proactive involvement\u00a0in reviewing their compliance with global\u00a0standards of anti-bribery management\u00a0as well as the concrete measures the\u00a0management has initiated to show its\u00a0willingness to prevent and curb bribery risks.<\/p>\n

Finally, it is important to note that organisations have a distinct legal personality away from the management and other stakeholders. The separate legal personality of an organisation means that an organisation is liable for bribery activities committed by its employees or its management. Under domestic laws, culpable organisations are subject to legal sanctions, which include hefty pecuniary fines and, in some cases, dissolution of the organisation. Pecuniary fines affect the operations of a company by diverting either operating capital or assets to unintended activities. Overall, diversion of financial resources to foot fines affects the profitability of a company as well. In addition, such diversion of financial resources through fines affects growth strategies, such as expansion into new markets. In this case, the provision of documented evidence to the prosecution or the courts demonstrates that an organisation has taken reasonable measures to prevent bribery and corruption, thus helping the organisation to avoid fines and sanctions, such as winding up.<\/p>\n

Who is CRI Group?<\/span><\/strong><\/p>\n

Based in London, CRI Group works with companies across the Americas, Europe, Africa, Middle East and Asia-Pacific as a one-stop international\u00a0<\/span>Risk Management<\/span><\/a>,\u00a0<\/span>Employee Background Screening<\/span><\/a>,\u00a0<\/span>

\u0630\u0643\u0627\u0621 \u0627\u0644\u0623\u0639\u0645\u0627\u0644<\/div><\/span><\/a>,\u00a0<\/span>
\u0627\u0644\u0639\u0646\u0627\u064a\u0629 \u0627\u0644\u0648\u0627\u062c\u0628\u0629 360\u00b0<\/span><\/div><\/span><\/a>\u00a0and other professional Investigative Research solutions provider. We have the largest proprietary network of background screening analysts and investigators across the Middle East and Asia. Our global presence ensures that no matter how international your operations are, we have the network needed to provide you with all you need, wherever you happen to be. CRI Group also holds\u00a0<\/span>BS 102000:2013<\/span><\/strong>\u00a0and\u00a0<\/span>BS 7858:2012 Certifications<\/span><\/strong>, is an HRO certified provider and partner with Oracle.<\/span><\/p>\n

In 2016, CRI Group launched\u00a0<\/span>the Anti-Bribery Anti-Corruption (ABAC\u00ae) Center of Excellence<\/span><\/a>\u00a0\u2013 an independent certification body established for\u00a0<\/span>ISO 37001:2016 Anti-Bribery Management Systems<\/span><\/a>,\u00a0<\/span>ISO 37301 Compliance Management Systems<\/a>\u00a0and\u00a0<\/span>ISO 31000:2018 Risk Management<\/span><\/a>, providing\u00a0<\/span>training<\/span><\/a>\u00a0and\u00a0<\/span>certification<\/span><\/a>. ABAC\u00ae operates through its global network of certified ethics and compliance professionals, qualified auditors and other certified professionals. As a result, CRI Group\u2019s global team of certified fraud examiners work as a discreet white-labelled supplier to some of the world\u2019s largest organisations.\u00a0<\/span>Contact ABAC\u00ae for more<\/span><\/a>\u00a0on ISO Certification and training.<\/span><\/p>\n

 <\/p>\n

 <\/p>","protected":false},"excerpt":{"rendered":"

Beating bribery leadership and culture Beating bribery leadership and culture. Global corruption costs trillions in bribes. Samsung Group\u2019s third-generation leader, Lee Jae-Yong, has been accused of bribing Choi Soon-Sil, a friend of former President Park Geun-Hye. Following Lee Kun-hee\u2019s (Lee Jae-Yong\u2019s father) heart attack in 2014, it has been calculated that Lee Jae-Yong would need […]<\/p>","protected":false},"author":1,"featured_media":15830,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[23,28],"tags":[],"class_list":["post-9896","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-industry-insights","category-leadership-insights"],"gutentor_comment":0,"yoast_head":"\n\n\n\n\n\n\n\n\n\n\n\n\n\n\t\n\t\n\n\n\n\n\t\n