Oil and gas downturn spells greater bribery risk, warns lawyer

The oil and gas downturn could lead to a spate of companies falling foul of anti-bribery and corruption rules, a senior lawyer has warned.

Willie Park, a compliance expert at Pinsent Masons, believes a lowering of standards when work is scarce could weaken checks and procedures which prevent incidents of corruption.

Mr Park spoke out after Braid Logistics became the latest Scottish business to “self-report” an act of bribery to the Crown Office in a deal which saw it pay a settlement of £2.2 million.

Braid agreed to a civil settlement after investigations showed staff had been engaged in unlawful activities which breached the Bribery Act 2010.

Recent cases include the £172,000 settlement Aberdeen-based International Tubular Services Ltd entered in to with the Crown Office’s civil recovery unit for bribery related offences in connection with a Kazakhstan contract and Brand-Rex who paid £212,800 in connection with an incentive scheme for installers of their products. These were dwarfed by one of the largest civil settlements of £5.6m agreed in 2002 by Abbot Group.

Aberdeen-based Mr Park said: “In a downturn every business is looking to cut spending and in many cases compliance is not viewed as a priority but seen an easy cost to cut out.

“When budgets are squeezed the risk of something being missed inevitably increases. It can prove to be a false economy and if lax procedures creep in to an organisation which leads to bribery or corruption, this can cause lasting financial and reputational damage.”

The Braid case centred on long-term relationships between senior employees and clients in an organisation which lacked a stringent compliance procedure.

Payments that ran contrary to accepted standards of good practice were missed and bribery red flags were not acted upon.

Mr Park added: “Companies have to be on top of relationships and to monitor them with a frequency which is commensurate with the risk.

“The global oil and gas sector, particularly around logistics, is viewed as one of the highest risk industries in terms of potential corruption.”

As the fifth anniversary of the introduction of the Bribery Act approaches, Mr Park said companies which rushed to put compliance procedures in place needed to revisit and review anti-corruption systems.

He said: “One of the underlying principles of the Bribery Act is the importance of ongoing monitoring and in many respects this is the biggest challenge for business.

“The level of monitoring conducted on a regular basis, overseen by compliance professionals, is key to avoiding potentially multi-million pound fines and public embarrassment.”