Hidden dangers in global advance

8 May 2002
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09 May 2002

Corruption and bribery are increasingly important issues for purchasers, as recent events in the UK have shown. David Arminas asks how they should proceed

Amove onto the global stage for a purchaser is a great professional leap forward. But globalisation has its hidden dangers, such as increased exposure to corruption and bribery.

Purchasers will have to operate in cultures where gifts to oil the wheels of commerce are taken for granted. They must fully understand what is legal and what is not.

The danger for purchasers is that the long arm of the UK has, since February's introduction of the anti-terrorism act, been extended to offshore activities.

An example is the changed UK law on so-called facilitation payments, either large or small, made to government officials or companies to speed the administrative processes. The pressures will be great for purchasers to deal in this manner, but the payments are now illegal wherever they are done and the payee is subject to UK law.

Falling foul of the law could land a person in jail for seven years.

But corruption and bribery can happen here in the UK, too - brown paper bags with money are not that uncommon, according to the anonymous businessman in SM's report on the recent Institute of Directors' conference on globalisation.

The case of two Co-op employees, including a chief buyer, is a case in point. They were found guilty of corruption in Britain after each took a £1 million bribe in return for favouring a supplier seeking an extension to a food supplies contract. A jury sent them down for three and half years and they will also pay the £50,000 prosecution costs.

Their convictions coming right after the introduction of the anti-terrorism law shows that Britain is arguably the leader in combating corruption. What constitutes best practice and social responsibility in the UK is now also the same for UK companies operating in a global fashion.

It is within this context that purchasers must carry out their professional duties.

In their attempts to reduce corruption, many purchasers will be answering some gut-wrenching questions. No amount of exhortation by the leaders of the profession for purchasers to do the right thing will make blowing the whistle any less difficult or emotional for a purchaser.

Purchasers may face internal political pressure if they have to call into question their own department's behaviour. But it is by no means purchasing professionals who are most likely to fail. Bribes can be made to any person in the company - perhaps the user of a service or product if it is not the purchaser who has the final decision.

To bring evidence of corruption to the attention of senior management could be the end of promotion opportunities. The worst scenario would be management finding some grounds for sacking the purchaser who threatens to blow the whistle.

Roy Ayliffe, CIPS's director of professional practice, has warned that because purchasers are part of a recognised profession, they are duty-bound to combat all such illegal activity.

There is no excuse for inactivity and Ayliffe's call for purchasers to be on their guard is well placed.

Although the issues can be complicated, purchasers have no option when it comes to uncovering bribery and corruption. Morally, doing nothing is tantamount to condoning corruption. They must report it to their senior management.

Where a purchaser suspects that they are being asked to participate in a corrupt practice, CIPS urges them to get in writing what they have been ordered to do.

A big issue for purchasers is to understand where their loyalty lies. CIPS has made it clear that purchasers have a loyalty to their profession through the CIPS code of ethics, and as so they have a duty to rid their company of corruption.

But an organisation also owes it to itself to encourage its purchasers to get a recognised professional purchasing qualification, especially CIPS. It shows the company is committed to professionalism and all that entails.

In particular, the CIPS policy Ethical Business Practices includes the final words on a purchaser's responsibility towards corruption: "There is no excuse for corruption in any form and purchasers have duty to the profession and their employing organisations to alert their senior management."

SMmay2002

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