While Bribery and Corruption are often associated with a ‘brown paper envelope’ there are actually a number of red flags that could be indicators of these offences. At the very least, they indicate that there is potentially a gap in process or control in the area that should be addressed.
Red flags may apply directly to you in your job, or you may witness them elsewhere.
Red flags may show themselves in behaviour or processes.
Red flags may include (but are not limited to):
- Frequent or exclusive engagement with one company to deliver a product or service, without recognised procurement processes appearing to have been followed. For example, contacting a business direct for a product or service ‘because it is easier / less hassle / we know them.’
- Businesses with little or no experience in the industry receiving contracts to supply goods or services.
- Businesses with a poor track record, or where information gathering and due diligence have flagged previous criminal activity, failures of governance, delivery etc.
- Unusual invoice or payment patterns, such as split invoices (which lower value of individual invoices and therefore avoid scrutiny), limited or obscure information on invoices (for example entries such as ‘admin’ or ‘contract’ fees), an absence of paperwork relating to payments or billing in excess to what has been ordered.
- Individuals recruited to roles who appear to have little or no relevant qualifications or experience in the particular area and / or who have been appointed outside of the recognised recruitment process.
- Inadequate information provided by or available on businesses or individuals applying for procurement, recruitment etc and / or a reluctance to provide this when asked for it.
- Commercial or recruitment contracts awarded to companies or individuals with connections to senior public servants or those in key roles.
- Unreasonable or unjustifiably narrow prequalification criteria in recruitment or procurement documentation.
- Procurement processes taking a long time to conclude or alterations to bid documentation part way through the process.
- Colleagues in key roles appearing to live beyond their means or refusing to take annual leave.
- Offers of gifts and / or hospitality that are disproportionate or do not have a connection with the business activities being conducted. If an item is of value to the person receiving it, it may be regarded as a bribe even if it is of objectively low financial value. An example of this may be a ticket to an event that would otherwise be difficult to obtain.
- ‘off the record’ conversations, not conducted through official and recorded communication channels. For example, being unwilling to put something in writing, over email etc.
- Use of inside knowledge of relevant processes and / or relationships to obtain advantage. For example, being asked to ‘put a good word in for interview’, or ‘can you speak to the service about an appointment’.
- Pressure being exerted on staff to act otherwise in accordance with recognised process or procedure.
Red Flags for Money Laundering
Those seeking to launder funds or assets derived from Bribery and / or Corruption may seek to do so via the Isle of Man's financial and regulated sectors. It is therefore important to recognise red flag indicators of potential money laundering of these assets.
These include (but are not limited to):
- The transaction or the third party is in a country known for widespread corruption, as measured by the Transparency International Corruption Perceptions Index or other similar indices
- The third party has a history of improper payment practices, such as prior or ongoing formal or informal investigations by law enforcement authorities or prior convictions
- The third party has been subject to criminal enforcement actions or civil actions for acts suggesting illegal, improper or unethical conduct
- The third party has a poor business reputation
- Allegations that the third party has made or has a propensity to make prohibited payments or facilitation payments to officials
- Allegations related to integrity, such as a reputation for illegal, improper, or unethical conduct
- The third party does not have in place an adequate compliance program or code of conduct or refuses to adopt one
- Other companies have terminated the third party for improper conduct
- Information provided about the third party or its services of principals is not verifiable by data, only anecdotally.