Companies need to consider how they can ensure better corporate governance within their business, as regulatory action against bribery and corruption is on the increase globally


HSBC’s plan to move its UK retail banking arm to Birmingham was recently described as a ‘programme in crisis’ by the US monitor appointed to ensure the bank complies globally with anti-money-laundering rules.

Although HSBC has managed to persuade the monitor to remove the word ‘crisis’ from the final report, which will be sent to the US Department of Justice and the UK Financial Conduct Authority, fears still remain that too few compliance staff want to relocate to Birmingham and that HSBC will struggle to recruit the right people to maintain effective governance and police anti-money laundering compliance.

Picture then the issues facing businesses looking to relocate or operate, permanently or temporarily, in foreign markets where corruption may be rife and bribing government officials is the norm.

The fight against bribery and corruption has historically been led by the US, the first country to implement tough legislation with the Foreign Corrupt Practices Act 1977. Europe is not far behind with a range of legislation designed to prosecute and punish corporate crime. Other emerging market governments are finally cracking down, holding both domestic and foreign businesses and their senior management, to account.

However, responsibility and accountability remains with the business to ensure compliance in high risk territories.

An international affair

The Bribery Act 2010 was introduced to update and enhance the UK law on bribery and is now one of the most draconian international laws on bribery. It has extra-territorial reach both for UK companies operating abroad and for overseas companies with a presence in the UK. It also introduced a new strict liability offence for companies and partnerships of failing to prevent bribery.

The Bribery Act raised the stakes for company bosses and put them in the line of fire if bribery is uncovered anywhere in the company, including those committed in high risk jurisdictions.

Many emerging market economies are also placing corruption at the top of the agenda – fuelled by recognition that, in order to operate on the world stage, governments need to adopt global standards of commercial and fiscal integrity.

Chinese laws on bribery and corruption were revised in 2015 and further amendments to the current commercial bribery regime are under review. India also tightened its anti-corruption laws with the introduction of the Prevention of Corruption (Amendment) Bill in 2013.

In 2014 an Algerian court jailed fourteen people and fined seven foreign companies for corruption, money-laundering and theft of public funds relating to a highway construction project. In 2016 a criminal court sent six people to jail and fined two companies $38,000 each for corruption connected to contracts with a state owned energy firm. One of the companies was also banned from bidding for government contracts for five years.

While the Algerian fines may seem miniscule in comparison to the sanction imposed by the US or European authorities, they mark a clear direction of travel for a country where such intervention would have previously been unheard of. It sends a clear message that Algeria is ready to be taken seriously on the global markets.

Tackling bribery and corruption requires prosecutors and regulators that are properly equipped to investigate and deal with complex factual and legal issues. It requires a judiciary that is impartial and can operate without political interference.

Even this does not address the root of the issue.

The law is not enough

The best legal framework in the world is insufficient on its own. Companies need to understand exactly how to go about preventing unlawful behaviour, particularly in new and distant markets that their HQ may not clearly understand.

Enforcement trends certainly point to the following issue – there is a clear pattern of investigations focusing on activity in emerging markets. The SFO probe into Rolls Royce is focused around Nigerian, Brazilian and Indonesian activity, whilst French giant Alstom’s operations in Indonesia, Saudi Arabia, Egypt, Taiwan and other countries around the world are in the spotlight as part of the US Department of Justice investigation.

Countries with robust criminal and anti-corruption laws might be able to prosecute those individuals or businesses who commit offences within or outside the jurisdiction but the problem will continue until international businesses rigorously apply universal global standards to tackle corruption across emerging markets.

Still about the culture

In short, this is about corporate culture.

First, businesses in emerging or high risk markets need to employ and educate local talent. This talent is more susceptible to value training and less likely to leave the business to return to their home nation. If they do leave the business they are likely to remain within the country, ensuring their values remain too.

Secondly, businesses need to develop a culture through education, where turning a blind eye to unlawful activity is not an option. Staff should feel able to speak out if they see anything potentially suspicious. Anti-bribery and corruption training should be repeated and made relevant to the day-to-day scenarios employees at different levels might face.

Thirdly, the tone must be set at the top. Nest has actively invested into our directors with formal governance training from the Institute of Directors (IoD) in London. This level of top-level attention to corporate compliance programs, including training, should be the norm.

There also needs to be proper dialogue with regulators, not just a one-way stream of new laws and new compliance requirements. A regulator should seek the views of those it is regulating. This two-way approach really does work; Nest has worked with regulators to develop comprehensive regulatory and governance frameworks to help open up once high risk areas to foreign investment.


We all know corruption and associated crimes such as money-laundering can destroy the wealth of nations and the individuals living within them. Businesses and regulators must come together to tackle this through effective legal systems but also through dialogue and collective thinking.

But most importantly of all, businesses need to think through the practical steps through which they can ensure better corporate governance within the firm. Practical day-to-day activity must be the focus; no company should simply rest on its laurels safe in the knowledge that it has good policies in place. When it comes to tackling bribery, a toxic culture will wipe away even the most well intended strategy.