Why it’s important to avoid corruption in international trade
Exporting to new markets around the world is of course a great opportunity for UK businesses to scale and spread risk. Being involved in international trade is also a great way to gain an understanding of the diverse cultures and people within markets all over the globe.
Yet while it is important to understand and in many ways embrace different business cultures when entering new markets, it is vital that you also understand there is risk involved. This risk can range from misunderstanding particular cultural nuances to the more serious legal and ethical risk of fuelling corruption in these overseas markets.
The importance of the UK Bribery Act
Transparency International UK is among an important group of organisations combatting corruption in the UK, with a priority of ‘reducing the UK’s role in fuelling corruption overseas’. Their campaigning played an important part in bringing the Bribery Act into force in 2011, introducing new offences including bribing a foreign public official.
Most British businesses are not involved in corrupt practices when dealing with international partners, but it is not uncommon for a British business to be placed in an uncomfortable position when a partner says that it is part of their business culture to offer ‘gifts’ or ‘donations’ to public officials to help move a deal along.
It is for this reason that the Bribery Act has come into being: to prevent acts of bribery, from small gifts to serious donations, from creating a culture of endemic corruption, for the sole purpose of winning overseas contracts and increasing your own revenue.
The consequences of fuelling international corruption
The consequences of such a culture of bribery are serious, as pointed out by Transparency International UK:
“Because Britain – particularly London – is such a large financial and diplomatic global centre, the impact of UK corruption goes beyond our country’s borders. When UK companies bribe officials overseas, it fuels corruption and inequality in countries where the majority live below the poverty line. When corrupt politicians and business people steal public funds and launder them through British banks and property, it means less schools, hospitals and roads for millions around the world.”
Ensure your international dealings comply with the UK Bribery Act
Our recent webinar on anti-corruption told of some of the other risks involved in non-compliance with the UK Bribery Act, including fines and reputational damage. It is therefore vital that companies do what they can to comply with the act from a pragmatic financial sense as well, whether that’s through buying in legal advice to just simply avoiding risky situations and prioritising a compliant position over a dive into legal ‘grey areas’. Further detail on the Act and how to comply with it, can be found in the Ministry of Justice Guidance to the UK Bribery Act
Ultimately, if you feel there is a chance that what your international partner is asking for is a form of bribe – implicit or explicit – it is for the best that you avoid obliging. You may risk to lose money from not finalising that deal in the short-term, or you may have to pay extra when getting your goods through customs by not bribing a customs official, but in the long-term good practice will avoid the risks of punishment for non-compliance and also prevent your business from contributing to endemic corruption in the overseas market you are selling into.
Always do your research!
As ever with international trade, do your research! If you’re selling into a market you are unfamiliar with, make sure you know:
- as much as you can about what the business culture is in that market
- where that country ranks in corruption indexes such as this
- what the UK Bribery Act prohibits you from doing
Perhaps most importantly, don’t take risks you don’t have to take when it comes to gifts and donations. There’ll always be more international partners out there, so if a potential partner is asking you to do things you know you shouldn’t or that you feel uncomfortable with, don’t feel obliged to partake just for the sake of a short-term gain.
Ultimately that short-term win could have longer-lasting effects on your business via fines and reputational damage, and even worse, it feeds into endemic corruption that harms the lives of many, many people.
Why corruption matters – https://www.transparency.org.uk/corruption/why-corruption-matters/
Business Principles For Countering Bribery: Small And Medium Enterprise Edition – https://www.transparency.org/whatwedo/publication/business_principles_for_countering_bribery_small_and_medium_enterprise_sme
Transparency International UK Tools and Guidance for businesses – https://www.transparency.org.uk/our-work/business-integrity/best-practice-tools-and-guidance/
Webinar: Managing corruption risk in markets beyond the EU – https://opentoexport.com/webinars/managing-corruption-risk-markets-beyond-eu/