EY research shows small bribes bring in big contracts

Bribes paid by UK companies to secure business interests are typically very small in relation to the size of the contracts gained, while it can take a long time for enforcement authorities to build a case, according to research by EY into all completed bribery prosecutions.

The EY Bribery Digest analysed 27 bribery prosecutions against UK businesses and found one-third of bribes paid out were between £83,000 and £300,000. In contrast, companies ended up winning contracts worth as much as £16m, largely in the oil and gas and engineering sectors.

Oil and gas accounted for five of the 24 corporate cases which EY said could be analysed by sector, followed by engineering and construction (three cases) and insurance (three cases). There were also instances of bribery in sectors such as food, retailing and publishing, which EY said were not normally seen as prone to corruption risks.

Jonathan Middup, EY UK head of anti-bribery and corruption said: 'Surprisingly the value of bribes can be quite small despite the large size of the contracts, which highlights the attentiveness required in identifying payments. Payments of this size may be lost in the roundings in large scale contracts and are difficult to spot.'

While some of these bribes were straightforward cash payments, the main methods identified by EY involved more sophisticated kickbacks through intermediaries, or bribes disguised as 'consultancy', 'marketing', 'service fees', 'commissions', or 'local taxes'. However, corporate entertaining and hospitality, although often viewed as a source of risk, featured in only one bribery conviction.

EY's findings reveal that that a fifth of cases involved paying bribes in the UK, with the Middle East (10 cases), Africa (7 cases) and Asia (7 cases) representing the main destinations for bribes by UK companies.

The firm says its research shows the difficulty of building the prosecution cases, with the shortest corporate 'bribery to resolution' period standing at 16 months and the longest investigation taking 19 years. Enforcers most commonly found out about wrongdoing via whistleblowing (four cases), followed by press investigations (three cases) and suspicious activity reports (three cases).

Middup said: 'The fact that whistleblowers feature in so many of the cases shows the value of listening to your employees, suppliers and other third parties. Some businesses complain that whistleblowing lines are mainly used for low level employment complaints but their influence is wider than the lines themselves. They are a part of creating an open and accountable culture which is more likely to highlight serious problems.'

Pat Sweet | Reporter, Accountancy Daily [2010-2021]

Pat Sweet was the former online reporter at Accountancy Daily and contributor to the monthly Accountancy magazine, pub...

View profile and articles

0
Be the first to vote

Rate this article

Related Articles
Subscribe