International - Written by on Tuesday, December 6, 2016 2:24 - 0 Comments

Bribery is “less easily dismissed as a US fetish”: I ask Trace some questions on the publication of the Trace Matrix

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TRACEMatrixLogo2016Last week during the FCPA conference in Washington, Trace published its 2016 update to its Trace Matrix.  Trace says that “The TRACE Matrix® measures business bribery risk in 199 countries. The overall country risk score is a combined and weighted score of four domains – Business Interactions with the Government, Anti-bribery Laws and Enforcement, Government and Civil Service Transparency and Capacity for Civil Society Oversight”.

I took the opportunity on the publication of the Trace Matrix to ask Trace some questions; here is what they told me:

Overall does Trace see the global compliance picture improving since the last survey?

It’s difficult to draw global inferences from the Matrix, but the numbers show the Americas, Africa, and East Asia all slipping a bit, while Oceania makes noticeable improvement, and the bribery landscape stays roughly the same in Europe, Central Asia, and South Asia.  Anecdotally, we know that awareness of the damage bribery does is growing.   Very few people just roll their eyes and call it a “victimless crime” as they once did.   And as more countries prosecute, anti-bribery enforcement is less easily dismissed as a US fetish.  So, the Matrix data taken together with what we hear from companies operating internationally, gives us reason to be optimistic about the progress made since the 2014 Matrix.

What does Trace consider the biggest risks to corporations in the next 12 months?

Third party risk remains the biggest anti-bribery compliance challenge faced by multinational companies.  Most companies have done a good job of educating their employees on the risk and penalties surrounding bribery, but conveying the message to third parties is more difficult.   We’ve seen real progress on this, but there are still a lot of third parties that will do whatever it takes to win business, including paying bribes, regardless of what companies tell them or whether those companies provide support and training to try to bring them into the compliance fold.  The situation is improving as third parties begin to see a good reputation as a business advantage, but improvement is slow.

With the publication of this matrix what does success look like for Trace?

Ultimately we hope that the Matrix will help reduce business bribery by making companies more aware of the specific risks they face when doing business internationally and helping them develop more targeted due diligence and compliance programs.  All companies face limited compliance resources and it’s critically important that they allocate those resources for maximum impact.  In addition, though, the Matrix can serve as a roadmap for countries that want to improve their business environment.   It’s pretty clear that reducing the number of government interactions by reducing red tape will ultimately reduce the risk of bribe demands.  It’s not a coincidence that in Nigeria, a very challenging market, 142 signatures are needed to offload a ship’s cargo.  We often hear from countries unhappy with their ranking, but there is a lot they can do to address their score in each domain, which will result in a more online casinos transparent commercial environment and one more attractive to foreign direct investment.

The Matrix is undoubtedly a useful tool and compliance officers are well advised to add it to their list of underlying source material in conducting Risk Assessments and due diligence.  A useful resource to document that has been referred to in taking steps to mitigate risk.  Nigeria, perhaps unsurprisingly is at the bottom of the class.  On the other hand may be it is surprising to the extent that it ranks beneath Iraq and Syria.

“When we first launched the TRACE Matrix, we recognized the importance for the international business community to have a tool designed specifically for their anti-bribery compliance efforts,” said Alexandra Wrage, President of TRACE International. “Although there were already other corruption related indices, there wasn’t one that addressed the particular bribery related risk assessment needs of companies doing business abroad. In releasing the 2016 edition of the Matrix, we continue in our commitment to providing the most detailed and reliable information possible to support the compliance efforts of the business community.”

The TRACE Matrix is publicly available at https://www.traceinternational.org/trace-matrix and a 90-second video about the TRACE Matrix  ca be viewed here.

 

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