New ventures and opportunities

An unsighted investor can fall foul of Police, Serious Fraud Office or regulatory investigation, where anti-bribery due diligence is not completed on an identifiable pre-contract or legacy issue. Investors and senior management considering new business opportunities, particularly when they involve a new business partner or joint venture, must consider whether they need to undertake a minimum level of due diligence, to limit their risk exposure to inhereting bribery/corruption liability:

• The likelihood of inheriting bribery and corruption risk can be reduced by completing appropriate due diligence.
• Should a red-flag or other risk be identified before entering into a contractual arrangement, or committing to finance, investors and senior management will be better placed to identify and assess any significant legacy risk/issue.
• By being better informed, appropriate risk mitigation can be effected, or steps taken to exit an arrangement, to maintain credibility and reputation.

Without proper due diligence an acquirer can find themselves suffering large financial penalties with on-going compliance programmes running for several years. With due consideration, the risk of such a diversion of senior management time and resource can be minimised, if not prevented.

See also:

The Bribery Act 2010
Associated Persons
The Regulator
Law Enforcement
Risk in current operations
Red-Flags
Adequate procedures

An effective Compliance Programme reduces corruption risk when designed to prevent and detect violations or breaches before they occur. Such programmes include:

• Tone from the top - High level Policy Statement or Code of Conduct endorsed by senior management.
• Guidance - Compliance Manual with written standards and guidelines for all employees, contractors, agents, etc,.
• Accountabilty - Designated senior manager responsible for oversight, monitoring and compliance arrangements.
• Education - Training and awareness for directors, management, employees and relevant contractors / agents.
• Alert mechanism - Confidential telephone hotline for reporting details of suspected breaches.
• Assurance - Independent reporting to Senior Management (i.e. The Board) and the Audit Committee (e.g. Results of Internal Audit reviews/compliance-based testing).

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