Generally, corruption consists of bribery, kickbacks, extortion and conflicts of interest. These types of activities involve some kind of inducement in return for some sort of advantage (usually financial) or perhaps preferential treatment; a relationship that has not been disclosed can literally net someone a financial, operational or strategic advantage.
There is little doubt that corruption can deprive businesses and companies, their owners and employees of honest services. It can also make it impossible for companies to compete on a level playing field in the bidding process or to earn all the profits to which they are entitled. When an employee or associate is ‘skimming’ money off the top of a business transaction, the harm can unquestionably be more wide-spread than the employee realises.
Difficult to Detect
In my experience, fraud involving corruption is very difficult to deal with or to detect. The reason being that most, if not all of the actions related to these crimes occurs outside the business accounting procedures. There is no paper trail to be followed when a person is handed a brown envelope full of bribe money in a dark alley. There are no receipts given, and the person accepting the bribe is certainly not going to report that money to an employer unless of course they have a sudden change of heart or an attack of conscience.
Due to the fact that the investigation and detection of bribes, kickbacks and other types of corrupt practices is so difficult, companies often find that preventing the activity is easier than detecting it after it has occurred. As already mentioned, crimes like these are extremely difficult to uncover because the lack of an auditable paper trail within the business. Often the activity is uncovered by chance when someone becomes suspicious about rising costs or when someone comes forward and conveys their suspicions in confidence.
Counter-Measures
The importance of effective counter-measures or internal controls cannot be stressed enough as they can prevent corrupt practices from gaining a hold within an organisation. However, those controls must be strictly monitored. There is no value in having a company policy with regard to the receiving of ‘gifts’ by an employee responsible for company purchasing if no-one monitors it to ensure that it is not happening. This is why it is very important for a company to keep close links with the businesses they buy from in order to vigorously communicate the company policy to them and to ensure that the policy is being adhered to.
Experience tells me that employees can be valuable intelligence assets with respect to corruption and therefore it is very important for a business to have in place a “whistle-blowing policy” that protects those employees that are willing to come forward with information. An anonymous reporting facility i.e. hotline is a very effective method of persuading people to come forward to provide anonymous information which will assist in the investigation process. The perceived threat of reprisals is often a significant hurdle to overcome in the investigation process and therefore anonymity of informants is essential.
There is no doubt that corruption will flourish in any organisation that tolerates certain levels of dishonesty. The Company that is devoted to routing out any dishonesty within their organisation no matter how small has the best chance of stamping out the behaviour altogetherGenerally, corruption consists of bribery, kickbacks, extortion and conflicts of interest. These types of activities involve some kind of inducement in return for some sort of advantage (usually financial) or perhaps preferential treatment; a relationship that has not been disclosed can literally net someone a financial, operational or strategic advantage.
There is little doubt that corruption can deprive businesses and companies, their owners and employees of honest services. It can also make it impossible for companies to compete on a level playing field in the bidding process or to earn all the profits to which they are entitled. When an employee or associate is ‘skimming’ money off the top of a business transaction, the harm can unquestionably be more wide-spread than the employee realises.
Difficult to Detect
In my experience, fraud involving corruption is very difficult to deal with or to detect. The reason being that most, if not all of the actions related to these crimes occurs outside the business accounting procedures. There is no paper trail to be followed when a person is handed a brown envelope full of bribe money in a dark alley. There are no receipts given, and the person accepting the bribe is certainly not going to report that money to an employer unless of course they have a sudden change of heart or an attack of conscience.
Due to the fact that the investigation and detection of bribes, kickbacks and other types of corrupt practices is so difficult, companies often find that preventing the activity is easier than detecting it after it has occurred. As already mentioned, crimes like these are extremely difficult to uncover because the lack of an auditable paper trail within the business. Often the activity is uncovered by chance when someone becomes suspicious about rising costs or when someone comes forward and conveys their suspicions in confidence.
Counter-Measures
The importance of effective counter-measures or internal controls cannot be stressed enough as they can prevent corrupt practices from gaining a hold within an organisation. However, those controls must be strictly monitored. There is no value in having a company policy with regard to the receiving of ‘gifts’ by an employee responsible for company purchasing if no-one monitors it to ensure that it is not happening. This is why it is very important for a company to keep close links with the businesses they buy from in order to vigorously communicate the company policy to them and to ensure that the policy is being adhered to.
Experience tells me that employees can be valuable intelligence assets with respect to corruption and therefore it is very important for a business to have in place a “whistle-blowing policy” that protects those employees that are willing to come forward with information. An anonymous reporting facility i.e. hotline is a very effective method of persuading people to come forward to provide anonymous information which will assist in the investigation process. The perceived threat of reprisals is often a significant hurdle to overcome in the investigation process and therefore anonymity of informants is essential.
Source: Ian Harm - www.iacinvestigations.co.uk
