Transforming anti-bribery frameworks with ISO 37001 standard

Most multinational corporations tend to encounter bribery and corruption risks particularly when doing business in emerging markets. However, evolving legal systems and new or amendments to regulations are being rolled out to foster greater transparency. For instance, India recently passed amendments to the Prevention of Corruption Act and the Fugitive Economic Offenders Act 2018, Vietnam’s new penal code criminalizes private sector bribery and Indonesia’s regulation provides guidelines for enforcement authorities on handling corporate crimes.

These are some recent initiatives taken by the Government in emerging markets to strengthen the anti-corruption landscape. Curbing bribery and corrupt practices becomes imperative as most multinationals have back offices, subsidiaries or third parties based out of these regions. An analysis of Transparency International’s Corruption Perception Index 2017 among Asian countries shows that most countries are facilitating change through new legislation and increased enforcement. However, there is a lot that still needs to be done to further improve the rankings.

ISO 37001: Anti-bribery management systems

The adoption of international compliance and anti-bribery standards can have a positive effect on the perceived levels of bribery and corruption. ISO 37001 is the first internationally recognized standard for implementing and certifying anti-bribery mechanisms. It supports anti-bribery due diligence programs through a risk based approach where the level of due diligence is expected to be proportionate to the level of transactions and perceived risk levels. The standard is designed to instill an ethical and compliant culture, and implement appropriate controls that increases the probability of detection and deterrence of bribery within organizations. The standard assumes that bribery can take place anywhere, can be of any value and involve financial or non-financial benefits.

The seven key guiding principles of ISO 37001 standard are: context of the organization, leadership, planning, support, operation, performance evaluation and improvement. Proper implementation of the standard can also help in turning policies and procedures into desired behavior. A high-level structure of an anti-bribery management system (as demonstrated in the standard) would cover:

ISO 37001 comprises ten clauses and can help institute a robust anti-bribery program if the steps are followed in a sequential manner. Clauses 1 to 3 talk about scope of the standard and applicable definitions, while clauses 4 to 7 is about establishing and designing a management system. Clause 8 is the most important phase in the structure as it is an implementation or operating phase wherein organizations operate their financial and non-financial controls, conduct due diligence and focus on how day-to-day functions are run or conducted. Clause 9 is about evaluating how controls work in operations. It involves monitoring, evaluating, measuring and analyzing controls, and conducting a management review.

Most organizations tend to face gaps at this juncture as an outcome of the management review conducted. Hence, it is important to move to the next phase i.e. continual improvement that can help in identifying the non-compliances and root causes, and take corrective actions. Thus, the last phase is about ensuring that the previous gaps are not repeated.

An organization is ready to be certified only after it has implemented one complete cycle of an anti-bribery management system. For a typical mid-sized organization, it can take up to a year before they are ready to be certified. Also, organizations will become more and more efficient as they implement multiple cycles of this management system.

Benefits of adoption

While the structure seems complex, adopting this cycle provides organizations with certain benefits. A typical benefit starts by optimizing the business management system through ISO 37001. The standard can also help in:

  • Bringing a disciplined and structural approach in managing bribery risks
  • Taking informed business decisions, leading to predictability
  • Better resource allocation and supply chain management
  • Improving customer centricty and satisfaction through a fair deal mechanism in ethical practices
  • Demonstrating leadership and commitment
  • Providing the ability to continually improve through a cyclic approach
  • Providing improved reporting towards all stakeholders involved
  • Bringing about clarity in the marketplace

Singapore, Peru, Canada, Middle East, France, Malaysia and many other countries have embraced ISO 37001 to encourage an anti-bribery and anti-corruption regime. However, it is important to note that implementing this standard is a journey and not an overnight process. With adoption levels rising over time, the anti-bribery standard is increasingly becoming an attractive tool, helping countries as well as organizations evaluate and ramp up existing compliance frameworks.