Zero Tolerance to Corruption in Your Supply Chain

When was the last time your firm embarked on a corruption-risk evaluation?

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Posted by Dave Food on May 28, 2019 4:56:44 PM
Dave Food

When was the last time your firm embarked on a corruption-risk evaluation?

The latest research shows that only 4% of companies in North America and Europe have implemented a periodic assessment, and only 2% in Latin America, EMEA and China. A blue-low percentage, by the way! Therefore, several governments and companies are considering a reactive-line of attack to eradicate corruptions, punishing with jail workers involved in bribery.

The continued efforts of most countries to control corruption seems to be failing, causing a crisis of democracy around the world; undemocratic and populist politicians use it to their advantage, according to Transparency International 2018 Corruption Perception Index. Lots of surveys and experts’ assessment reveal a link between corruption and the health of democracies, finding that autocratic regimes perform worst.

Corruption has penetrated all part of different governments, affecting the security for its citizens and deliver public services. It is also embedded in social practices becoming an acceptable part of daily life. Widespread corruption in public Procurement sector and the oil industry are among the most affected, whilst favouritism in all industries and companies reflects an unfair competition from state-owned businesses dominating the local market.

Mismanagement of public funds make high-level corruption persists; abuses including torture, arbitrary detention or unfair trials continue. Government cloudiness and lack of public accountability are first problems, plus drug trafficking, organised-criminal networks involved in illicit trade have permeated all levels of the state apparatus.

For instance, the North Korea government severely inhibits fundamental liberties, including freedom of expression, religion, and association. It prohibits political opposition, independent media, civil society, or trade unions; the judicial system is inefficient and disturbed by corruption and a culture of impunity.

What governments and society need to do?

  • Close the gap between anti-corruption legal code, and putting it into practice.
  • Enhance the institutes in charge of inspections and balance over political power.
  • Make sure those organisations have the capacity to work without coercion.
  • Reinforce a free-independent media, and ensure the safety of journalists and their facility to work without threats or persecution.
  • Advocate civil society organisations which improve political engagement and public management over government consuming, particularly at the district level.

How about the increasing-unethical conduct in our Supply Chain (SC)?

Corruption in the SC is still an obscured concern for enterprises, which, in need of the cheapest workforce and low-cost operations, offer bribes to global networks of suppliers, especially to trade with questionable regimes and marketplaces with low-ethics practices, demanding extra payments to facilitate the deal. The permanency of these unethical practices promotes law-breaking, restrains fair competition and sustain corrupt politicians.

However, this tendency is beginning to change. For instance, top leaders in FIFA were dismissed from the football organisation, whilst they were investigated for corruption crimes. New regulations will soon be available to control a variety of dis-honourable commerce risks.

How do they measure it?

Due to particular regulatory environments which bring better inspection, expose obligations and penalties, the implementation of internal control assessments becomes vital! Make efforts to discover the kind of fraud or corrupt practices that might exist within your company, such as bid-splitting, fraudulent payments done through “shell companies”, modifications done in purchase orders or contracts. To accomplish it, you will need:

  • Executive’ leadership support.
  • Transparent systems and reporting,
  • Clear training for staff with high-code of conduct policy.
  • Investigate and audit regularly.
  • Count on a precise segmentation of your SC base.
  • Support transparent partnering, training and reporting.
  • Carry out random auditing.
  • Achieve thoroughgoing checks as to the credibility of the accusations.
  • Create an independent commission to improve systems and procedures and prevent future chances for corruption.
  • Build up management programmers reporting to executives, along with training suppliers in anti-fraud and corruption.
  • A penalty should be enforced if orders vary from standard procedure.

Procurement corruption can be more complex inspections to undertake. The lack of trust caused by corruption has a significant impact on everyone; so, Procurement managers should be accountable for the reputation of the enterprise; therefore, they have to be open and honest when keeping both their personal and his company integrity.

FINAL COMMENTS: Disfunctional institutions facilitate conditions of noncompliance of a regulatory framework that hinders economic competitiveness. Bribery, deviation of public/business funds and conflicts of interest are still present in best-performing countries; the favouring of results or intentionally not documenting meeting outcomes, or being obligated to perform duties out of the code of conduct, are all criminal fraud.

Don’t take chances and deploy well-structured-risk programs supporting Transparency, holds all parties accountable and encourages collaboration on performance. “If you find it, report it."

 

Dave Food

Prophetic Technology


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