Build Magazine August 2015

Build Magazine 19 Compliance pressure points The first step in addressing corruption risk is for a company to be able to identify what these ‘compliance pressure points’ look like in practice. Each construction project will have its own set of facts but the following list reflects some of the most common pressure points: • Facilitation payments. Public officials often request payments to facilitate the smooth transit of construction supplies through ports and airports or for obtaining visas for em- ployees. Whilst such requests are common, facilitation payments are illegal under the Bribery Act. • Tender risk. During a competitive tendering or bidding process construction companies should be alive to the risks of any excessive corporate gifts and hospitality expenditure be- ing made around the time of the tender award. • Partner risk. Construction projects are heavily reliant on a web of third parties, including sub-contractors, consultants and venture partners, amongst others. This can cause huge problems given a company can be liable for bribes paid or solicited by a third party under the Bribery Act. • Construction permits, licences and planning permissions. Most construction projects rely on being granted a government permission or licence of some kind. Seeking such approvals will inevitably increase the opportunity for corrupt payments to be made or demanded. Compliance response A well-designed compliance programme needs to be bespoke, risk based and pro- portionate. Whilst there is no one-size-fits-all approach, there are certain hallmarks of any effective anti-bribery and corruption compli- ance response, including: • A public and unequivocal tone from the top, making it clear that corrup- tion, in any form, will not be tolerated. This should be evidenced by anti-cor- ruption being a standing item on the Board’s agenda. • Carrying out a regular, by-country risk assessment, to effectively identify and prioritise corruption risk. • In response to the risks identi- fied as part of the risk assessment, crafting and implementing a written set of policies and procedures that cover off, amongst other items; facili- tation payments, gifts and hospitality expenditure, procurement, political and charitable contributions and sponsorships. It is crucial that such policies and related internal controls are subjected to routine external verification to regularly test that they are not being bypassed in practice. Regular training should be provided and include a process of annual cer- tification for those staff members who are ‘on the ground’. • Proportionate, risk based due dil- igence should be undertaken prior to entering into any contractual arrange- ments with third parties. This should include local site visits and in-person interviews where appropriate. • All third party contracts should be drafted to include terms that provide for audit rights over a third party’s books and records, a unilateral right of cancellation in the event of a corruption related breach and a fixed annual term. • Establishing an effective and well-resourced whistleblowing pro- gramme. To ensure that this works well in practice it should be available in the relevant local language and ideally be available for use by third parties. • Actively participating in sectoral anti-corruption initiatives with stakeholders such as governments, suppliers, contractors and joint venture partners. Conclusion Whilst corruption risks in the construction sector are real and can have po- tentially debilitating consequences, it is hoped that this article makes it clear that they are also more than capable of being identified and mitigated against in a proportionate manner. Inside the Industry