key drivers for applying business integrity solutions
TRANSCRIPT
Key drivers for applying integrity and transparency practices in your business
Dr Mark LovattCEO, Trident Integrity Solutions
www.trident-integrity.com
Key drivers for integrity in business
Three primary drivers for maintaining business integrity:
• Reducing corruption costs
• Reducing the risk of prosecution
• Protecting your brand and reputation
1. Cost: corruption is very expensive
• Corruption adds up to 10% to the total cost of doing business globally, and up to 25% to the cost of procurement contracts in developing countries.*
• In 2012 the cost of private sector corruption was over US$500 billion in 105 developing countries. This excludespublic sector corruption.**
• 27% of US companies experienced procurement fraud in 2013***
• PKNS (Malaysia): Saved US$125 million over 4 years by improving tendering procedure, incl. Integrity Pacts.****
Sources: * WEF, ‘Good Business Is Clean Business’** The Costs of Corruption, CSIS, Jan 2014*** PWC Global Economic Crime Survey 2014**** PKNS own figures to June 2014 (19/8/14)
2. Prosecution risk
Far-reaching legislation is already in place and having a major impact
across the world
FCPA prosecutions of companies for bribery
• Siemens (US, 2008): $1.6 billion fine
• Alstom (US, 2014): $772 million fine
• KBR/Halliburton (US, 2009): $579 million
• BAE Systems (US, 2010): $448 million
• Total S.A. (France, 2013) $398 million
• Daimler (Germany, 2010): $195 million
• Alcatel-Lucent (France): $137 million
2. UK Bribery Act 2010
• Came into effect on July 1, 2011
• Extra territorial like FCPA
• Applies to any act of bribery of any kind, either in the UK or overseas
• If company has operations in the UK of any kind, liable to prosecution for activities anywhere in the world
• Unlimited fines for companies, jail sentences and unlimited fines for individuals
UK Bribery Act Convictions Begin
Will your brand protect you?
3. Reputational & brand risk
The importance of companies protecting their reputation,
especially in the area of corruption failure, has never been more
important
Reputation is a critical business asset
2015 Dow Jones Anti-corruption Survey*
• Survey conducted among more than 250
compliance professionals and companies
worldwide
• 76% said that reputational issues would cause a
review of their business partners
• 68% said that they delayed / stopped working
with a business partner because of concerns
about violations of anti-corruption regulations
*2015 Anti-Corruption Survey Results, Risk & Compliance, Dow Jones
Remember: the Internet knows everything. And it never forgets
Conclusions
• For developing economy companies, the costs of corruption can be a major factor in holding back their growth
• For Multi National Companies (MNCs), the risk of prosecution arising from bribery has never been higher
• For companies wanting to interface with the international business sector, maintaining good practice and a clean reputation is critical
