Abusing a position of power for private or business related gain is called corruption. Corruption sadly still occurs in international business. What are the risks? What are the consequences of certain actions? How can you avoid corruption?
Are you at risk?
Is there increased risk for your company on encountering corruption? This depends on a number of matters:
- the country where you do business;
- the sector in which you operate;
- whether you are dependent on public bodies for obtaining permits and licences;
- whether you rely on government contracts for selling your product or service;
- whether you use local agents, intermediaries or consultants for your international activities.
You can consult corruption rankings to determine if your business is exposed corruption risk. A good place to start is the annual Corruption Perceptions Index made by NGO Transparency International. You will also find information by sector and the latest information about worldwide corruption on the Transparency International website. In addition, Risk Advisory has published the Corruption Challenges index 2019.
If you wish to apply for Dutch government subsidies and funding, you must adhere to the OECD Guidelines. The OECD Anti-Corruption Guidelines are mandatory. Read more about OECD guidelines on our OECD Guidelines page.
International laws and regulations
There is an increasing amount of international laws and regulations on corruption. Below you will find several important ones:
- United Nations Convention against Corruption
- OECD Anti-Bribery Convention
- The Dutch Penal Code
- The Dutch Money Laundering and Terrorist Financing (Prevention) Act
If you are doing business in countries that do not actively prosecute individuals for acts of corruption, you may also be faced with the extraterritorial operation of stringent legislation such as:
- the UK Bribery Act;
- the U.S. Foreign Corrupt Practices Act (FCPA);
- FCPA investigations by the U.S. Securities and Exchange Commission (a full overview).
A nice to read is The Business Integrity Compendium published by the International Chamber of Commerce. It is a handbook that provides guidelines on how to deal with integrity and corruption.
Tips on how to avoid corruption
What should you pay attention to and what can you do personally? Below we give you a few tips for doing business without corruption:
- Communicate publicly that you disapprove of corruption and be transparent about how you combat bribery and extortion.
- Do not offer, promise or demand bribes or other unlawful advantages. Do not create the impression that you are doing something to obtain or retain illegal benefits.
- Do not grant questionable donations to candidates in public positions, political parties or other political organisations.
Be well prepared
- You should be well prepared when you conduct business internationally. It is wise to perform an assessment of the situation and the risks.
- Ensure that you are properly informed about the local culture to avoid any misunderstandings.
- Thoroughly prepare the customs clearance formalities for inbound and outbound goods to avoid any confusion or uncertainties.
- Select intermediaries with due care.
- Your managers serve as role models. Make sure that your management knows what ‘inappropriate conduct’ is.
- Make sure decisions involve multiple people to prevent individuals from becoming targets of unethical practices.
- Draw up a code of conduct and whistle-blowers' regulations. Raise awareness of this code among your staff.
- Implement a system for anti-bribery and anti-extortion management. Incorporating control mechanisms in your accounting system will preclude payments, secret accounts and false documents from being kept "off the books".
- Cooperate with embassies and other businesses. Embassies can often assist you in your efforts to prevent and combat bribery. They can also provide you with information and advise you about business sensitivities in specific countries and sectors.