We conclude our week of Sherlock Holmes inspired themes with one of the few cases in which Holmes fails to bring the criminals to justice, The Adventure of the Engineer’s Thumb. In this adventure a young engineer, Victor Hatherley, arrives at Dr. Watson’s surgery with a gruesome injury, a severed thumb. He relates his tale to Watson, who then takes him to see Holmes. Hatherley was hired to inspect a hydraulic press by one Lysander Stark, who claims that it is used to compress fuller’s earth into bricks. However when Hatherley goes to Stark’s country residence to inspect the machine he discovers that it is actually a printing press used to create counterfeit money. He tries to flee and in the process, Hatherley is forced to jump from a second story window, in the process getting his thumb severed by Stark’s cleaver. Hatherley, Watson and Holmes arrive at the Stark residence as the house is on fire, and the perpetrators have fled.
Once again using the Holmes tale as a contrast I refer to the recently released white paper, published by Transparency International UK (TI-UK), entitled “How to Bribe: A typology of Bribe-Paying and How to Stop It”. It was created by TI-UK, lawyers from the London firm of Pinsent Masons and thebriberyact.com, with principal author Julia Muravska and editors Robert Barrington and Barry Vitou. Just as Stark hid the true purpose of his hydraulic press, the title of this work does not convey its true use in how to stop bribes and bribery schemes by identifying them.
Barry Vitou, partner in Pinsent Masons and co-founder of thebriberyact.com, states in the forward that “This handbook is perfect for General Counsel, Chief Compliance Officers and anyone in any company responsible for anti-bribery compliance from the Board of Directors, down. The purpose is to show how people pay bribes in practice. The examples are based on realistic experiences or real cases. Many bribery cases receive little attention. Often the focus is on the international examples in far away places where, it is sometimes said, you have to ‘pay the man’ to get business done. The impression given is that it would never happen at home. Yet it does. While the first two sections focus on the how, why and when bribes are sometimes paid in a short final section the handbook covers some examples of more prosaic bribery, at home. Who said it could never happen here? Transparency International deserve credit, once again, for putting together a document designed to be practical and helpful for those keen to avoid falling into the trap of bribery.” The white paper has three main sections.
Section I: What is a Bribe?
In this section, the authors review what constitutes a bribe. Recognizing that cash will always be king, they also take a look at excessive gifts, entertainment and travel, charitable donations and political contributions, favors to family members or friends and even the Foreign Corrupt Practices Act (FCPA) exempted facilitation payments. I particularly found the discussion of facilitation payments interesting in light of the recent claims that Archer Daniels Midland Company (ADM) in the Ukraine and Wal-Mart in Mexico were essentially making facilitation payments.
The authors end this section with the following guidance about the specific types of bribe and how to spot them.
Section 2: How Bribes are Paid?
In this section, the white paper lays out a variety of different bribery schemes. Of course they include agents, distributors, intermediaries, introducers, sub-contractors, representatives and the like. But they also detail schemes that the compliance practitioner should acquaint his or herself on. These bribery schemes include false or inflated invoicing or products, offshore payment arrangements and off-balance sheet payments, joint ventures, training, per diems and expense reimbursement arrangements, rebates and discounts and employment agreements. Once again, the authors end this section with the guidance on how to spot and stop each of the bribery schemes they detail.
Section 3: Bribery On Your Doorstep
In this section, the authors cite to cases and examples that were derived from real cases and illustrate how bribes can be paid within the UK. They note that even though “bribery is illegal across the board in the UK, experience shows that bribery also happens in the UK” and cite several reports. The first was by TI-UK and it showed that 5% of citizens polled in the UK said they had paid a bribe at least once in the past twelve months. Further, a recent survey of the construction sector found that more than a third of the industry professionals polled stated that they had been offered a bribe or incentive on at least one occasion. Lastly, the white paper notes that the first three prosecutions under the UK Bribery Act were for bribes paid in the UK. So the authors conclude “It is fair to say that in common with many other countries, UK public officials are susceptible to bribery. Public officials are almost all, universally, paid less than their peers may be paid in the private sector but in many cases in their hands rests the power to make decisions which have huge financial consequences for others. All the ingredients for paying a bribe exist. Likewise, bribes may be paid in the private sector, and there is increasingly a grey area between public and private sector as government services are contracted out.” In this section, some of the examples are inflated invoices, bribes to local planning departments, excessive expenses for training, and even an example of bribes paid to police.
Although neither this blog nor the books I have published on anti-corruption compliance made their list, there is an excellent resource list at the end of the white paper for additional reading and research on the subject. It ranges from government guidance’s to David Lawler’s excellent text “Frequently Asked Questions in Anti-Bribery and Corruption”. Their list is an excellent resource in and of itself.
So we finish our Sherlock Holmes themed blogs. I hope that you have enjoyed the stories and tie-ins as much as I have enjoyed revisiting them this past week.
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© Thomas R. Fox, 2014