Global Anti-Bribery Guidance

There is no universal definition of bribery but all definitions have in common that it involves someone in an appointed position acting voluntarily in breach of trust in exchange for a benefit. The benefit does not have to involve cash or a payment exchanging hands. It can take many forms such as lavish gifts, hospitality and expenses, access to assets or a favour made to a relative, friend or favoured cause.

TI defines bribery as: the offering, promising, giving, accepting or soliciting of an advantage as an inducement for an action which is illegal, unethical or a breach of trust. Inducements can take the form of money, gifts, loans, fees, rewards or other advantages (taxes, services, donations, favours etc.).

When a person offers, promises or gives a bribe, it is called ‘active bribery’ and when a person requests, receives, or accepts a bribe, it is called ‘passive bribery’.  Both forms are of concern to companies and are outlawed in most countries. Until the advent of the UK Bribery Act, the focus of anti-bribery legislation had been on active bribery of foreign public officials as this is the main arena for bribery because of the harm it brings to societies and the way it undermines fair trading. For example, the OECD Anti-bribery Convention and the U.S. Foreign Corrupt Practices Act (FCPA) address only active bribery.  

Examples of active bribery

• Bribing a public official in order to:
  • Be awarded a contract in the briber’s favour.
  • Obtain an inspection report or to be awarded a license.
  • Circumvent planning or safety controls. For a case study, click here.
• Channelling bribes to win public contracts through a consultant.
• Payment of small bribes to customs officials to expedite passage of goods through a port.
• Employing a public official’s son to influence the award of contracts.
• Providing sponsorship fees and excessive travel expenses for doctors to influence them to prescribe a pharmaceutical company’s products.

Examples of passive bribery

Passive bribery takes place most often in certain operating functions; examples of instances are below:

• Security: A security officer in a company accepts a bribe from criminals to allow access for theft.
• Purchasing and procurement: A procurement executive demands a ‘kickback’ to award a contract. This involves a portion of the contract fee being given back to the individual who made the decision to award the contract. The consequences of such bribery can include financial loss through overpaying for goods, projects or services and purchase of substandard, counterfeit or otherwise non-compliant goods or services. See the UK retailer case study.
• Allocation of goods and services: An employee favours a customer by expediting delivery at the expense of other customers or giving preferential allocation of goods or services.
• Recruitment: An executive demands a bribe to appoint or promote a person who would otherwise not have been selected. A senior buyer awards a contract on the strength of promise of a lucrative appointment with the supplier after a suitable interval.
• Insider fraud: A bank employee accepts a bribe to provide details of the bank’s customers.  See case study.
• Illegal information brokering: An executive accepts a bribe to provide contract specifications to be used in a tender ahead of time. Bribery might also be accepted to alter the specification in favour of a bidder.

A Chinese court in 2016 gave the head of a logistics company a suspended death sentence and a fine of more than 700,000 yuan (about U.S. $100,000) over a massive explosion on 12 August 2015 at a chemical warehouse in the eastern port city of Tianjin that killed 173 people. The dead included 99 firefighters and 11 police officers. Another 798 people were injured, largely because the company illegally built its warehouse too close to residential apartments. The cost of damage was estimated to be U.S. $1 billion according to a report by the Chinese government.

The court ruled that Ruihai International Logistics Chairman Yu Xuewei paid bribes to obtain permission to illegally store more than 49,000 tons of sodium cyanide and other highly toxic chemicals at the company’s warehouse in the city’s port between 2013 and 2015. The explosion was among China’s deadliest industrial accidents in recent years and the resulting investigation was directly overseen by the Cabinet.

Various other Tianjin courts gave lesser sentences to 48 other people. They included 25 local government officials and workers accused of dereliction of duty, abuse of power and bribe taking, 12 other Ruihai employees accused of taking part in the scheme and 11 employees of a company that provided phoney certificates supporting the company’s operations.

Along with his accomplices, Feezan Choudhary stole £113 million from a UK bank’s customers. He paid a £250 bribe every time corrupt staff at a UK bank provided information about the bank’s customers. In September 2016, he was jailed for 11 years and a total of 19 people were convicted including three of the bank’s employees. 

Two former IKEA staff and a supplier were found guilty in the UK in 2007 in a £1.3m bribes case.  The convicted parties set up a number of companies to supply goods to the UK operation of IKEA. IKEA operated a policy whereby it would not take more than 40 per cent of a supplier’s turnover. This ‘turnover rule’ was designed to prevent suppliers being overly reliant on IKEA’s business. In this case virtually the entire turnover of these companies was with IKEA. In addition, by supplying goods through the supplier’s various companies the true extent of the scale of turnover of the supplier’s business with IKEA was masked. To help keep this fact from being discovered and to ensure that the companies’ supplies and invoices would be approved, corrupt payments were made to two IKEA executives in influential positions in purchasing and retail sales. Ultimately the position was reached where the supplier was dictating what would be ordered by IKEA according to what goods the supplier had available.