On 25 May the National Crime Agency published its National Strategic Assessment of Serious and Organised Crime for 2021. In its wide-ranging report the NCA noted that UK companies will likely face increased bribery and corruption risks as a result of Brexit and the COVID-19 pandemic.
The NCA says that it expects the difficult trading environment which stems, in large part, from the UK's exit from the EU and the ongoing pandemic, to mean that UK businesses are going to be "more likely to consider trade opportunities in alternative jurisdictions." These new markets may well present more pronounced corruption risks and barriers to ethical trading.
However, the NCA has also flagged up other factors which may lead to a heightened risk to businesses:
- The likely increased risk of "insider threat" with the "realistic possibility that increased homeworking has reduced the ability to monitor staff and identify unusual behaviour" and staff who face personal financial struggles or the threat of redundancy potentially being more tempted to engage in corrupt behaviours.
- A perceived increased vulnerability to national and local government procurement contract mechanisms (both in general and specifically relating to COVID-19). It will be interesting to see whether the proposed reforms to judicial review hamper the ability of business to challenge local and national government procurement decisions where they have bribery or corruption concerns.
- A number of variations in market behaviour which depart from the norm which present challenges to financial institutions and their ability to spot suspicious bribery payments; these changes include the highly volatile pricing of certain goods and services in the last 12 months or so.
In addition, we consider that there are some further developments which lead to an ever-increasing risk of companies being pulled into unethical behaviours:
- Novelty and change present opportunities for those willing to act outside the law and the pandemic has brought significant changes to our daily lives. From furlough to cryptocurrency, some of these changes are perhaps fleeting whilst others are here to stay.
- Economic restrictions and hurdles in place during the pandemic, together with the inevitable boredom suffered by many during the "groundhog day"-like existence of life in lockdown, means that there is a "pressure cooker" of private capital waiting to be unlocked and put to good use. As we gradually adjust back to something approaching "normal", there may well be pressure on financial advisers and brokers to generate significant returns to compensate for investments which have performed poorly during the height of lockdown. Risky investments promising higher short-term returns present further opportunities for a corrupt actor and traps for the unwitting.
Given the inevitable and built-in delay of legislative and regulatory framework "catching up" with the increased corruption risks, businesses would be well-advised to look to experienced and trusted advisors to help businesses and individuals navigate what can be a fine difference between "too good to be true" and "too good to pass up".
It is a realistic possibility the risk from international bribery and corruption involving UK businesses and individuals will increase as the UK recovers from the impact of the covid-19 pandemic, and following the UK’s exit from the EU