Bribes paid by UK businesses are used to secure contracts worth millions, analysis of prosecuted cases reveals
17 October 2013
- EY UK Bribery Digest reveals that one third of bribes between £83,000 and £300,000.
- Whistleblowing and media investigations key to flushing out crimes
London October 17 2013: Many bribes paid by UK companies to secure business interests are relatively small in contrast with contracts gains which have run into several millions of pounds, a review of all completed bribery prosecutions has found.
The EY Bribery Digest which analysed 27 bribery prosecutions against UK businesses found one-third of bribes paid out were between £83,000 and £300,000. Companies which paid bribes at this rate ended up winning contracts worth as much as £16m. The contracts picked up by UK companies have mostly been in the oil and gas and engineering sectors involving payments abroad.
Though traditional cash bribes are revealed as a feature of payments by UK companies, the main methods involved more sophisticated kickbacks through intermediaries; or disguised as “consultancy”, “marketing”, “service fees”, “commissions”, or “local taxes”. Despite many businesses focusing on corporate entertaining and hospitality as a source of risk, this featured in just one bribery conviction.
The findings reveal that that a fifth of cases involved paying bribes in the UK, with the Middle East (10 cases), Africa (7 cases) and Asia (7 cases) representing the main destinations for bribes by UK companies.
Catch me if you can: difficulty of securing bribery convictions
The Digest highlights the difficulties for enforcers in building cases, with the shortest corporate “bribery to resolution” period standing at 16 months and the longest investigation taking 19 years. This puts into context the lag in corporate prosecutions under the UK Bribery Act which only became enforceable in July 2011. Setting aside cases relating to enquiries by the UN Independent Inquiry Committee, whistleblowing (four cases) was the main route by which bribes have been discovered by enforcers, followed by press investigations (three cases) and suspicious activity reports (three cases).
Jonathan Middup, EY UK Head of Anti-Bribery and Corruption said: “Surprisingly the value of bribes can be quite small despite the large size of the contracts, which highlights the attentiveness required in identifying payments. Payments of this size may be lost in the roundings in large scale contracts and are difficult to spot.”
“The fact that whistleblowers feature in so many of the cases shows the value of listening to your employees, suppliers and other third parties. Some businesses complain that whistleblowing lines are mainly used for low level employment complaints but their influence is wider than the lines themselves. They are a part of creating an open and accountable culture which is more likely to highlight serious problems.”
Bribery risk: oil and gas has seen most bribery and corruption prosecutions, but all sectors at risk
The oil and gas sector faced the most completed prosecutions for bribery and corruption in the UK, according to the Digest. Oil and gas accounted for five of the 24 corporate cases which can be analysed by sector, followed by engineering and construction (three cases) and insurance (three cases).
However the existence of cases across a wide range of sectors demonstrates that bribery is a risk that should be taken seriously regardless of business sector.
Middup continues: “While oil and gas and engineering are higher risk sectors and account for many UK cases, in total twelve different sectors have featured – including food, retailing and publishing which may not have been seen as prone to corruption risk. This demonstrates that the prosecution authorities will cast their net widely.”
Download UK Bribery Digest edition 3 August 2013 641K, October 2013