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Rapid Response Team: 0800 559 3500
Switchboard: +44 (0)203 947 1539
Rapid Response Team: 0800 559 3500
Switchboard: +44 (0)203 947 1539

Understanding Global Bribery and Corruption Investigations: A Comprehensive Guide

Author: Azizur Rahman  12 August 2013
5 min read

Some of the world’s biggest and most famous companies and institutions have been heavily punished over the past 12 months for corrupt business dealings.

Which just goes to prove that no one is too big to pay the price for a lack of compliance. So how can you avoid the same fate?

Corruption has always been a word that invokes strong feelings in many of us. Some of us abhor it. Many among us wonder exactly where it is going on and who benefits. And a percentage of us – although we never know exactly how large a percentage at any given time – are looking to see how it can be used to their advantage.

It is something that has been in society for as long as time. And it’s a safe bet to claim that it has been part of business since the birth of trade. Certainly, on first glance, business looks neat, tidy and above board. The old-fashioned concept of shadiness is not as apparent in business figures as it may have been centuries, or even mere decades, ago. In the high-tech, worldwide business community everything can now have the appearance of functioning perfectly. Yet a closer inspection can seem to prove otherwise.

As Bob Parsons, the US entrepreneur and executive chairman of the Go Daddy group of companies, said: “Let’s be honest. There’s not a business anywhere that is without problems. Business is complicated and imperfect. Every business everywhere is staffed with imperfect human beings and exists by providing a product or service to other imperfect human beings.’’

Mr Parsons acknowledges that the outward appearance is far from the truth. His talk of problems and things being imperfect hints at some of the dark side of business without actually revealing it. Perhaps the issue of business wrongdoing is more clearly evident in the words of one of George Orwell’s characters, who said: “The mistake you make, don't you see, is in thinking one can live in a corrupt society without being corrupt oneself. After all, what do you achieve by refusing to make money? You're trying to behave as though one could stand right outside our economic system. But one can't. ‘’

Orwell’s words depicting the underbelly of business were written 77 years ago in his novel “Keep the Aspidistra Flying’’ and yet they ring true now as much as they ever did. A casual trawl through the business headlines this year shows us that:

  • GlaxoSmithKline is under investigation in China over an alleged bribery scandal. Their offices were raided a week after the company’s own internal investigation found no evidence of bribery or corruption activities.

  • US drug maker Eli Lilly is paying $29 million to settle accusations of improper payments to government officials and physicians in Brazil, China, Poland and Russia.

  • HSBC was fined $4.2 billion for money laundering and product misselling offences.

  • Libor rate fixing saw RBS fined £390 million – £100m more than Barclays paid last year for the same offence – while UBS was fined £940M.

Such incidents are among the headlines. They are from a comprehensive round-up of corruption in 2013. And there are undoubtedly huge amounts of corruption going on as you read this that have yet to be unearthed. But that should not lead anyone to be complacent about the need to make sure they are operating within the law.

Being legally compliant was probably not a consideration in George Orwell’s day. Even in these times, there are many who would dismiss it as a time-consuming and costly exercise in jumping through legal hoops. But that may well have been the view of senior executives at GlaxoSmithKline, Eli Lilly or any number of banks that are now facing up to balance sheets and reputations that have been heavily damaged. It would be interesting to see if any of them have changed their minds about the potential benefits of compliance. If you have responsibility for the actions of staff, third parties, suppliers or even agents doing occasional work on your behalf, you have to do due diligence checks. Otherwise, there is little or no chance that a successful legal defence can be mounted if any of these people are subsequently discovered to be involved in bribery, corruption, money laundering or all manner of business crime that could (and should) have been identified through proper background checks

A lot of compliance is relatively straightforward: If staff work abroad, what systems are in place to ensure they are complying with UK or international law? Have suppliers, agents and third parties been adequately checked? And are they subject to any form of monitoring while they are acting on a company’s behalf?

Rahman Ravelli advises corporates, including large PLC’s, on compliance matters. We help companies devise and run internal systems that take away the scope for wrongdoing. Once companies see the benefit of creating a legally compliant culture in their operation they realise that it is an area that cannot be ignored. To ignore it is to run the risk of prosecution, fines, imprisonment, loss of reputation and business, not to mention the huge legal costs and loss of working hours involved in preparing a defence case. Each company is different and has different compliance needs depending on their size, location, sector of business and working relationships. But each will have its own risks that have to be minimised.

In the UK alone, investigating authorities now have the likes of the Bribery Act, the Fraud Act 2006, Money Laundering Regulations, the Companies Act and the Enterprise Act with which to punish wayward companies. The Bribery Act’s jurisdiction covers the activities of any company with a UK connection anywhere in the world while, in the US, similar powers are given to their authorities under the Foreign Corrupt Practices Act. Sitting behind a desk and hoping that everyone working on behalf of the company, wherever they are in the world, is acting in accordance with the law is simply not a realistic option. Procedures have to be introduced, enforced, monitored regularly and amended when necessary. Every person working in any capacity for a company has to know the law as it applies to them and their responsibility to stay within it at all times.

  The Serious Fraud Office (SFO) has indicated it is looking to take a tougher line on serious and complex fraud and intends to come down hard on those it suspects of bribery. The indications are that the SFO now prefers criminal convictions for wrongdoing rather than civil settlements. If we consider the SFO and the Bribery Act on their own, it is clear that we have a piece of legislation with a worldwide reach and an organisation keen to enforce it aggressively. This alone has to make companies sit up and take notice of the need to be fully compliant. That is before you even factor in the SFO’s talk of going to government for extra funds when it needs them, the Financial Services Authority being replaced by the Financial Conduct Authority (FCA) for greater effectiveness and the general willingness of agencies around the world to share more intelligence quicker than ever before.

The authorities now have more weapons at their disposal to take the war on corruption to individual companies. In such instances, a company’s only real defence is that it took whatever measures it could to be legally compliant. Evidence that a company took the necessary steps to reduce the potential for wrongdoing by those working for it will help its defence enormously. But, as we mentioned earlier, such action has to have been thorough and on-going if the authorities are to be convinced of a company’s genuine efforts to prevent corruption.

Noone is trying to put companies out of business. But plenty of organisations are trying to make sure companies do business legally. And they will come down hard on those that don’t do business that way. Parsons and Orwell each, in their own way, identified the potential problem on a general scale. It is up to companies to recognise it and eradicate it from their own affairs.

Azizur Rahman C 09369

Azizur Rahman

Senior Partner

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Aziz Rahman is Senior Partner at Rahman Ravelli and its founder. His ability to coordinate national, international and multi-agency defences has led to success in some of the most significant corporate crime cases of this century and top rankings in international legal guides. He is recognised worldwide as one of the most capable legal experts regarding top-level, high-value commercial and financial disputes.

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