Bribery in the Supply Chain: A Growing Issue

January 17, 2013
Categories: Anti-corruption, Global Supply Chains

This week, The New York Times featured an article about how the world’s largest producer of smartphones, laptops and other electronics, Foxconn Technologies, is working with authorities in China to investigate whether its employees accepted bribes from supply chain partners.

In a statement to media, Foxconn noted: “Since the matter is under investigation, we are not able to comment further. However, we can say that the integrity of our employees is something we take very seriously and any employees found guilty of any illegal actions or violations of our company’s Code of Conduct will be prosecuted to the fullest extent of the law. We are also carrying out a full review of our policies and practices to identify steps we can take to strengthen such measures to further mitigate against such actions.”

The issue of corruption in the supply chain is one of growing importance to global brands. The Conference Board recently conducted a survey Safeguarding Intellectual Property and Addressing Corruption in the Supply Chain and subsequently released a report with its findings. In the report, executives surveyed believed “their companies face extensive risk of corrupt activities when engaging agents/business partners in emerging markets (70 percent) and a significant number felt there was extensive risk when engaging suppliers (46 percent).”  Additionally, approximately 40 percent of respondents rated training as very effective for anti-corruption compliance. However, the survey also found that few companies train the employees of their third parties, instead expecting their third parties to provide such training.

Multinational corporations are facing an increasingly complex anti-corruption environment due to their global supply chains. Not only do developed countries such as the United States and the United Kingdom have comprehensive anti-bribery legislation and regulations, but emerging countries like China, which began recently adopted a foreign bribery law, and Russia, which recently joined the Organization for Economic Cooperation and Development’s Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, are building the capacity to address corruption.

The Center for Responsible Enterprise and Trade helps companies mitigate corruption risks through its CREATe Leading Practices for Anti-Corruption program. We offer practical, scalable and cost-effective online assessments, training and resources designed to benchmark and improve processes for corruption prevention. CREATe builds on a company’s existing management systems to better understand its capacity to prevent corruption, and then measures and improves that capacity over time. Our service is available in English, Brazilian Portuguese and Chinese.

To learn more about CREATe Leading Practices for Anti-Corruption click here or contact for a free demo.

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