Financial Transactions

Potential scenario

You are bidding for a large government contract in a highly competitive environment. Your company desperately needs this contract to reach its revenue target for the year. Losing the deal would also probably result in lower individual remuneration. Fearing such impacts, your sales executive approaches a senior member of the purchasing committee, offering a large sum of money to secure the contract award for your company.

I. Understanding the risk

 
 
  • In simple terms, bribery takes place when an employee gives, offers or even merely promises an undue advantage as an inducement for an improper behaviour. For example, your sales manager may hand over an expansive gift to a public official to help secure an important contract.
  • Bribery also takes place when an employee solicits or accepts an undue advantage for improper behaviour. For example, your procurement manager may accept a hidden cash payment from a supplier, in return for favourable treatment in a major tender.
  • Such an undue advantage can either be financial (cash or wire transfer) or non-financial (e.g. a gift, or travel).
  • Given rising global awareness that bribery is illegal, large financial advantages are increasingly being replaced by “in-kind” benefits, such as gifts, hospitality, donations.
  • In cash-based economies, however, the risk of financial advantages remains.

II. Recognizing practical challenges

 
 
  • Despite rising disapproval, a perception remains among some employees that corruption offers big, short-term opportunities, or else is necessary for doing business.
  • Even clear, visible and accessible anti-corruption policies may be insufficient to deter employees from engaging in bribery, for various reasons, including
    1. The size of the requested payment is perceived as small compared with what can be gained (e.g. contract value);
    2. Individual employee remuneration may be linked to winning the deal (e.g. a sales bonus);
    3. Bidding opportunities in the target market may be infrequent and high in value;
      A perception may prevail that “everyone is doing it”.

III. Mitigating the risk

 
 

A clear, visible and accessible company policy banning all forms of bribery must be the foundation of an anti-corruption programme. Such a policy must be based on an understanding of a company’s particular risk profile.
Additional, practical safeguards to mitigate the risk of financial transactions being misused for bribery include:

  • Apply the “four-eye principle” (i.e. approval from 2 employees is required) when approving critical financial transactions, such as compensations for agents

Training cases

Client demands a last-minute “closure fee” to close a deal that is now too late to lose
[RESIST, Scenario 6]

A supplier offers a bribe to a contract manager to overlook “out of spec” or inferior goods or services
[RESIST, Scenario 20]

A customer representative demands a fee that was not previously agreed as a condition to a contract change
[RESIST, Scenario 21]

Suggested reading

“How To Bribe – A Typology Of Bribe-Paying And How To Stop It”, Section 1.1

"RESIST: Resisting Extortion and Solicitation in International Transactions"