Home – Has Bribery and Corruption Risk Got You Over a Barrel?

Has Bribery and Corruption Risk Got You Over a Barrel?

Posted on 05-25-2016 by Ulyana Androsova

 Energy industries have received a lot of unwelcome attention lately—and it’s not just oil companies like Petrobras and Unaoil that are feeling the watchful eyes of the public and regulatory agencies. While those scandals may have dominated the news in recent months, it seems that some players in ‘clean’ energy are not above getting their hands dirty. Last year, The Huffington Post reported on corruption allegations related to wind energy business NextEra, noting that “… with NextEra as a major player in Ontario’s wind energy business along with Siemens (who has the distinction of paying the largest fine ever under the Foreign Corrupt Practices Act over extensive bribery of foreign officials in 10 different countries) and Samsung (with its own bribery scandals being well-known), one has to wonder whether the government knew who they were inviting into the province when they opened the flood gates under the Green Energy Act in 2009.”

 Unfortunately, it’s a common enough tale when so much money is at stake. With anti-bribery and corruption enforcement on the rise, energy companies must improve their due-diligence and monitoring processes to mitigate risk more effectively—especially when it comes to dealing with third-party relationships. Explore the topic in our free eBook, A Pipeline to Corruption: Why Energy Industries Need Enhanced Due Diligence.

 What Does a Proactive Anti-Bribery and Corruption Workflow Look Like?

Referring to companies that have faced enforcement actions in the past, the UK Financial Conduct Authority acknowledged that “Most firms failed to demonstrate adequate systems and controls for assessing bribery and corruption risks in relation to dealing with and monitoring third-party relationships, such as relationships with agents or introducers.” So, what can companies do to better protect themselves from bribery and corruption risk?

 Risk levels vary widely—even in the high-risk energy—and conducting the same level of due diligence for every entity doesn’t make sense. A superficial approach which may be adequate for low-risk entities leaves you vulnerable when it comes to high-risk third parties. On the other hand, conducting deep due diligence on even low-risk entities wastes valuable human and financial resources. You need to right-size your due diligence to match the risk level. Below is a sample workflow based on risk that can help you establish processes that make the most effective use of your resources while mitigating every level of risk.

 Given the increased attention that energy companies face, now is the perfect time to assess the effectiveness of your current due-diligence and monitoring process to ensure that you’re mitigating bribery and corruption risk as completely as possible. And it’s not just the industry giants that need to worry. Small and mid-size companies can easily attract regulators’ attention—and may find it more difficult to survive the reputational and financial damage that can result from enforcement actions. Is your due-diligence process up to the challenge?

 3 Ways to Apply This Information Now

  1. Get your free copy of our eBook, A Pipeline to Corruption: Why Energy Industries Need Enhanced Due Diligence, to see the full range of corruption risks you must consider.
  2. Register for a free trial of Lexis Diligence® to see how our broad, global content collection can help you mitigate risk.
  3. Share this blog on LinkedIn to keep the dialogue going with your colleagues and contacts.


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