Welcome to the Summer issue of Update.

It has been an interesting few months for corporate responsibility.  The Bribery Act was finally ushered in after many claims that it would be bad for business, impossible to comply with and would destroy competitiveness. Shortly after the Act came into force, the News International hacking scandal hit the headlines, demonstrating, rather effectively, the reputational damage caused when it appears that corrupt practices and poor business ethics are either tolerated or ignored.

At the Parliamentary Hearing, Rupert Murdoch agreed to cooperate with the enquiry but refused to accept responsibility for what had been going on within his organisation. This is a position that business leaders can no longer afford to adopt, no matter how large and seemingly powerful their company. The CEO’s protestation of innocence on the grounds of not knowing what was happening saved her job for a few days only.

Not only is this unacceptable in the eyes of the public, it is now unacceptable in the eyes of the law.  One of the key changes brought about by the Bribery Act is that directors can no longer say that they had no idea what was going on. Feeling betrayed rather than responsible, as the Murdochs claimed, is simply not an option.

Developing and issuing a code of conduct, but having no idea how employees are informed and educated about the content will not wash.  Best practice will demand that corporate responsibility starts at the top, but filters right down to the bottom.  Businesses will need a rigorous code that is implemented and embedded throughout the organisation.

We work with many leading companies to help them ensure that this is the case. After ten years, I am optimistic that most companies are in forward rather than reverse gear as far as ethical business conduct is concerned. To drive things forward, business needs to embrace ethics in the way it embraced health and safety and the environment. Compliance is an important tool to this end but in many organisations it is often a substitute for ethics.  However, to ensure best practice, compliance and ethical culture will need to pull together to form the bedrock of sound corporate responsibility. Hard though this may be, it will depend on recruiting and retaining people with the right attitude, drumming into them what the leadership expects and ensuring that these expectations permeate the organisation as a whole. Only when this becomes the norm will corporate scandals such as Enron and News International stop hitting the headlines.

Michael Littlechild – director GoodCorporation

Prosecution and Adequate Procedures Under the Bribery Act

Prior to the Bribery Act coming into force, GoodCorporation invited business leaders to debate the impact of the new legislation at the House of Lords.

The debate began with a reminder of the existing law of corporate criminal liability that remains unchanged despite the passing of the Bribery Act. What the new legislation means however, is that the senior leadership team, or the ‘operating mind’ as it was called, can no longer claim a lack of knowledge, turning a blind eye if wrong-doing has been committed within its organisation. Ensuring that Adequate Procedures are in place will provide Boards with knowledge upon which they must act.

The debate covered a number of key areas including facilitation payments, venture partners, intermediaries and agents, corporate hospitality and adequate procedures.

The debate revealed that UK-based companies are preparing seriously for life under the Bribery Act. It was said that if British companies become a benchmark for clarity and ethical leadership it will be good for business and good for the UK. We have the opportunity now to raise the bar and set the tone globally for demand and expectation in terms of business behaviour.

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