BRIBERY & CORRUPTION PLAGUES MIDDLE EAST - HOW CAN ISO 37001 HELP? CASE STUDY - CRI Group
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CASE STUDY BRIBERY & CORRUPTION PLAGUES MIDDLE EAST HOW CAN ISO 37001 HELP?
INTRODUCTION
Political and governmental unrest can affect a region’s economy and
the integrity of business transactions. The current state of the Middle
East exemplifies this phenomenon. While governments in the
region are making efforts to curb corruption, political instability
and regime changes often undermine these measures. Bad actors
understand how to take advantage of such vulnerabilities, leading to
increased bribery and corruption across international borders. Recent
cases and statistics show that the problem persists in most countries
in the region. Against this backdrop, most government officials
and private sector business leaders view it as a high priority to
reduce bribery and corruption. One of the problems, however, is
that some dishonest politicians use supposed anti-corruption efforts
as a tool against political enemies. This makes clear that the best
approach is for government agencies and businesses themselves to
lead from the front.
By adopting an internationally recognised set of anti-bribery
anti-corruption standards, increased business integrity will
result. Organisations that are committed to this effort are adopting
the ISO 37001 – Anti-Bribery Management Systems standard as
a comprehensive approach to mitigating bribery and corruption
risk. ISO 37001 and its elements can be tailored to any type of
organisation, of any size. The key elements include adopting an
anti-bribery policy, appointing a person to oversee anti-bribery
compliance, training, risk assessments and due diligence
on projects and business associates. ISO 37001 also calls for
implementing financial and commercial controls, and instituting
reporting and investigation procedures.CORRUPTION A MAJOR CHALLENGE IN THE MIDDLE EAST The Middle East lags behind several other regions when it comes to bribery and corruption. Even as these elements are on a slight decrease globally, the Transparency International Corruption Perceptions Index shows the troubled state of the Middle East and North Africa. “The Corruption Perceptions Index 2018 presents a grim reality in the Middle East and Northern Africa where, despite some incremental progress by a select few, most countries are failing in the fight against corruption”. Syria, Yemen and Libya are at the bottom (worst) end of the list. There are some bright spots, though. United Arab Emirates (UAE) and Qatar, both countries that have taken strong stances on fraud and corruption, score the highest for the Middle East. Morocco and Egypt showed some improvement. Overall, however, the political instability in the region has created a tumultuous business environment. According to the article: “In many Arab governments, powerful individuals have actively influenced government policies and diverted public funds and state assets for their own self-interest and enrichment at the expense of citizens. This reduces anti- corruption efforts to merely ink on paper, where laws pass, but are rarely enforced or implemented.” This is underscored by limits and obstacles that corruption throws up in the way of those looking to enact real change. “Across much of the developing world, the corruption of courts and other government institutions threatens the free flow of goods and capital that promotes economic growth. Left unaddressed, such threats can lead to heightened tensions among nations and even outright trade wars. Diplomats operate under constraints that limit how much they can call out international bad actors who violate the rule of law. That’s why the role of outside watchdogs is so important in promoting the Rule of Law and holding nations to the standards of fairness and impartiality they claim to meet,” writes National Review.
POWER STRUCTURES HAMPER PROGRESS One country that exemplifies the Middle East difficulties with
corruption is Iran. The problem is described by one analyst
as “deeply rooted,” and even recognised by the country’s
conservative rulers. In such a political structure as Iran’s, a
campaign to combat “systemic corruption” is often seen as the
lens of political reprisals against rivals. “In autocratic systems,
every now and then, a campaign emerges under the banner of
fighting corruption. The main reason is to buy legitimacy for the
system. During the last years of the rule of the former Shah of
Iran, in an attempt to tame the revolution, such a campaign led
to the arrest of several prominent political figures, including Amir-
Abbas Hoveyda, who served for 13 years as prime minister”.
“While the same impetus could be behind the current move by
Raisi, there is strong speculation in Iran that the move also, and
more importantly, aims to shape a consensus within the country
to accept Raisi’s giant leap towards assuming the leadership of
the country after Khamenei’s death”.
While there has been some concern that the corruption
crackdown is a cover for prosecuting reformers, some disagree
– positing that it depends more on which party is leading the
effort. “Corruption in Iran is linked to political power. Therefore,
IRAN:
whichever of Iran’s two main political factions – fundamentalist or
moderate-reformist – takes over the executive branch, corruption
among the members of that faction increases. At the end of
former President Mahmoud Ahmadinejad’s term in office, for
instance, his first vice president, Mohammad-Reza Rahimi, and
his Vice President for Executive Affairs, Hamid Baghaei, were
imprisoned for economic corruption and embezzlement. Such
corruption reached an all-time high during his tenure in office”.
In any case, it’s clear that most observers aren’t convinced that
the country’s anti-corruption campaign is to be taken at
face-value – yet.BRIBERY
EXPOSED IN UAE
CASES
Two bribery cases demonstrate some common In another case, two Asian residents of UAE
characteristics among such schemes. While were sentenced to three years and one year in
both of these instances were uncovered (and jail for giving and accepting a bribe. They were
prosecuted) in the UAE, they are likely typical also fined Dh5,000. One of the perpetrators
for the Middle East region and beyond. was a government officer. The first defendant,
a trader, offered a bribe of Dh900 to the
In 2018, an Emirates Post revenue officer government officer, who works as a customs
was sentenced to prison after being convicted clearance staff member with the Saqr Port in
of attempted bribery. The officer solicited a Ras Al Khaimah.
Dh100,000 bribe from a corporate customer. He
was in a unique position to attempt the crime, The goal was to ship two containers full of
as his duties included collecting and auditing scrap iron out of the UAE without paying taxes
profits for the Emirates Post office in Dubai. or undergoing an inspection. When they were
caught, the trader who gave the bribe claimed
The Jordanian revenue officer, 28, collected that it was just a loan, and that he had already
and audited profits, among other duties, on paid “over DH50,000 in taxes and charges”.
behalf of Emirates Post office in Dubai. The
offender perpetrated the scheme by leveraging The other defendant (the customs officer)
fines on a shipping company based in India agreed, but the court did not accept their
for supposed postal fee violations. The alleged explanation. Both defendants will be deported
fine, according to the revenue officer, totaled to their home countries after serving their prison
Dh2.4 million, and he attempted to negotiate a sentences. These types of cases are typical
scheme with the client to have the fine reduced among positions of access, and can happen in
to Dh400,000 – in exchange for the Dh100,000 any jurisdiction.
bribe.
They exemplify the problem that government
Instead of paying, the client wisely contacted agencies and companies alike are trying to
the police. In a sting operation, the client was reduce and prevent.
fitted with a listening device, and met and paid
the bribe – under coordination of the police. As
a result, the revenue officer was arrested, and
subsequently convicted.To some degree, the same these internships were found by the
problems that plague the Middle SEC to be more valuable than those
East are endemic around the offered to the regular applicants,
world. Among them, the dilemma who had endured the competitive
of misunderstanding in terms of admissions process against strict
what constitutes bribery. In nearly entry requirements. For example,
all cultures, relationship building is rotation between business units was
considered an essential part of doing arranged, which is not an opportunity
business. Often, business associates afforded to regular interns.”
consist of numerous friends or even
family members. When that is the “Emails between BNYM employees
case, there can be a slippery scale clearly demonstrate that the
in terms of what is merely a favor motivation behind the favour to the
or a gift, versus what constitutes foreign officials was to influence
BUILDING’ V. BRIBERY
bribery or corruption. The Foreign the latter’s decision-making in the
Corrupt Practices Act (FCPA) can interests of BNYM. There can be no
provide some guidelines here. A case doubt that this was bribery in action
involving Bank of New York Mellon – the BNYM employees expected
is instructive. “On 18 August 2015, to retain and gain business from the
Bank of New York Mellon (“BNYM”) foreign officials in return for offering
consented to a Securities and their relatives valuable internships to
Exchange Commission (“SEC”) Order which they would not otherwise have
requiring BNYM to pay $14.8 million had access”.
to settle charges that it violated
‘RELATIONSHIP
the FCPA by providing student The case clearly describes what
internships to family members of could be considered a “gray area”
foreign government officials affiliated compared to some of the more
with a Middle Eastern Sovereign extreme realities of bribery and
Wealth Fund (“SWF”). All parties corruption. One study of the Middle
involved, except BNYM, have been East and North Africa in 2016
anonymised in the Order so that suggested that people felt the need
the nationality of the foreign public to bribe officials for basic services.
officials and the SWF is publicly “About 30% of those polled said
unknown beyond being described as that they had to access basic public
‘Middle Eastern’.” services by bribing officials. If that
figure holds across the entire MENA
“The BNYM internships were given region, that would mean that about 50
to three people: the son and nephew million people, the majority of whom
of one key figure of the SWF and the are poor, feel they must pay bribes in
son of another. The internships were order to have access to basic public
given despite the facts that the interns services. In five countries, the rich
did not meet the rigorous selection reported being far less likely to have
criteria usually applied by BNYM and to pay a bribe: 63% of poor Sudanese
did not go through the standard (or citizens versus 38%of wealthy ones,
any) recruitment process before being for example, and 23% versus 12%,
awarded the internships. In addition, respectively, in Algeria”.
6ISO 37001 TO
COMBAT BRIBERY
& CORRUPTION
Corruption certainly isn’t exclusively a Middle There are requirements and guidance that
Eastern problem. Organisations around the ISO 37001 standard prescribes for a
the world are taking action to reduce risk. comprehensive anti-bribery management
They’ve found the structure and process system.
they need in ISO 37001. ISO 37001 was
issued by the International Organization The following bribery elements are
for Standardization (ISO) in 2016 to help addressed by ISO 37001 in relation to the
organisations worldwide increase and organisation’s business processes and
measure their efforts against bribery and activities:
corruption. Through ISO 37001 ABMS,
organisations can implement standards at • Bribery in the public, private and not-for-
every level. profit sectors
• Bribery by the organisation
These measures include adopting an anti- • Bribery by the organisation’s personnel
bribery policy and appointing a person to acting on the organisation’s behalf or for
oversee anti-bribery compliance, training, risk its benefit
assessments and due diligence on projects • Bribery by the organisation’s business
and business associates. It’s also critical associates acting on the organisation’s
that the organisation implement financial and behalf or for its benefit
commercial controls, along with reporting • Bribery of the organisation
procedures and investigation processes. • Bribery of the organisation’s personnel
in relation to the organisation’s activities
CRI Group founded ABAC® (Anti-Bribery and • Bribery of the organisation’s
Anti-Corruption) Center of Excellence to help business associates in relation to the
organisations of all types and industries organisation’s activities
implement ISO 37001 certification and/ • Direct and indirect bribery (e.g. a bribe
or training. ABAC® has a team of experts offered or accepted through or by a third
around the world that include certified party)
ethics and compliance professionals,
financial and corporate investigators,
forensic analysts, certified fraud examiners,
qualified auditors, and accountants.
They are trained and experienced in
implementation of ISO 37001’s key elements,
helping clients more effectively prevent bribery
and corruption. ABAC Certification is an
accredited provider of ISO 37001 ABMS,
and it provides certification and training for
organisations of various types and industries.
7GOVERNMENT
ORGANISATIONS AND
COMPANIES CAN REDUCE
THE RISK OF BRIBERY
THROUGH ISO 37001’S
BEST PRACTICES FOR
ANTI-BRIBERY AND
ANTI-CORRUPTION.
The following are just a few of the ways ISO 37001 helps accomplish this goal:
• Provide needed tools to prevent bribery and mitigate related risks
• Help an organisation create new and better business partnerships with entities that
recognise ISO 37001 certified status, including supply chain manufacturing, joint
ventures, pending acquisitions and co-marketing alliances
• Potentially reduce corporate insurance premiums
• Provide customers, stakeholders, employees and partners with confidence in the
entity’s business operations and ethics
• Provide a competitive edge over non-certified organisations the organisation’s
industry or niche
• Provide acceptable evidence to prosecutors or courts that the organisation has
taken reasonable steps to prevent bribery and corruption
It is important to note that “Conformity with (ISO 37001) cannot provide assurance that
no bribery has occurred or will occur in relation to the organisation, as it is not possible to
completely eliminate the risk of bribery”, according to ISO.
The certification is potentially an important piece of evidence, however, that shows
regulators, prosecutors, and the courts that the organisation has taken meaningful
action to prevent bribery and corruption.CONCLUSION All is not lost. Some Middle Eastern countries, like the United Arab Emirates, have made a commitment and continue to demonstrate positive strides toward combating corruption. UAE has expanded its laws, broadened the definitions of what is considered bribery and corruption, and increased punishments. But the country is largely an outlier in a region that is struggling under the weight of instability and corruption. In this type of environment, both government organisations and the businesses they serve (and regulate) need ISO 37001. The sooner organisations implement the comprehensive measures prescribed by ISO 37001, the calmer the seas will be for international trade, business agreements and mergers, acquisitions and other positive elements of economic growth. An established standard like ISO 37001 ABMS can help organisations address bribery and corruption through implementing best practices in a program of training and certification. While following the curriculum, the training process can easily be tailored to the organisation based on its size, type, industry or risk level. Bribery and corruption are pervasive problems that won’t be solved overnight. It will take a concerted effort by all major players in the region to make positive strides and reduce risk factors. ISO 37001 provides a blueprint for making those changes. Twenty or thirty years ago, organisations were mostly on their own went it came to developing an anti- corruption strategy. Today, there is a tried-and-true path forward. Committing to it is the first step toward making real progress in the Middle East. Contact us in the UAE: Muhammed Sanoop, Business Development Specialist e: Muhammed.sanoop@CRIgroup.com t: +971 435 89884 | +971 241 87568 m: +971 588 849238
SOURCES
1. “Middle East & North Africa: Corruption 7. Andrew Hudson, “Middle East meets
Continues As Institutions And Political West: Where is the line between
Rights Weaken,” Transparency relationship-building and bribery?,” Al
International, 29 Jan. 2019, Tamimi 7 Co., September 2015,
< https://www.transparency.org/news/ < https://www.tamimi.com/law-update-
feature/regional-analysis-MENA> articles/middle-east-meets-west-
(accessed 25 Oct. 2019) where-is-the-line-between-relationship-
building-and-bribery/> (accessed 25
2. John Fund, “Cleaning Up Corruption Is Oct. 2019)
a Key to Middle East Stability,” National
Review, 23 October 2019, 8. Ben Thompson, “Bribery worsening
(accessed 25 < https://www.csmonitor.com/World/
Oct. 2019) OECD, The rationale for Global-News/2016/0503/Bribery-
fighting corruption. 2014 worsening-in-the-Middle-East-and-
North-Africa-citizens-say> (accessed
3. Shahir Shahidsaless, “Iran’s 25 Oct. 2019)
conservatives are saying it: Corruption
is ‘systemic’”, Middle East Eye, 7 Oct. 9. “ISO 37001:2016 ANTI-BRIBERY
2019, MANAGEMENT SYSTEMS --
(accessed 25 Oct. 2019) < https://www.iso.org/standard/65034.
html > (accessed 5 Aug. 2019)
4. Jalil Bayat, “Iran’s Goals In The Fight
Against Economic Corruption,” Lobe 10.Adam Vause, Zara Merali, “The UAE’s
Log, 18 Oct. 2019, fight against bribery and corruption,”
< https://www.dlapiper.com/en/dubai/
(accessed 25 Oct. 2019) insights/publications/2019/07/the-uaes-
fight-against-bribery-and-corruption/>
5. Salam Al Amir, “Emirates Post worker (accessed 25 Oct. 2019)
jailed for seeking Dh100k bribe from
customer”, The National, 31 Oct. 2018,
< https://www.thenational.ae/
uae/emirates-post-worker-jailed-
for-seeking-dh100k-bribe-from-
customer-1.786526> (accessed 10
Nov. 2019)
6. Ahmed Sheeban, “Government officer
jailed for accepting Dh900 bribe in
UAE”, Khaleej Times, 13 April 2019,
< https://www.khaleejtimes.com/nation/
ras-al-khaimah/government-officer-
jailed-for-accepting-dh900-bribe-in-
uae> (accessed 10 Nov. 2019)WHY CRI GROUP?
Since 1990, Corporate Research and Investigations Limited “CRI Group” has safeguarded businesses from
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In 2016, CRI Group launched Anti-Bribery Anti-Corruption (ABAC®) Center of Excellence - an independent
certification body established for ISO 37001:2016 Anti-Bribery Management Systems, ISO 19600:2014
Compliance Management and ISO 31000:2018 Risk Management, providing training and certification.
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