Reports about bribery scandals involving large trans-national corporations are in the news almost every day. But bribery is an even more problematic issue for small and medium enterprises which carry out most of the world’s business today. SMEs may feel powerless in the face of demands for bribes and are often unaware that bribery can be resisted or how to go about it. But not only is it possible for SMEs to counter bribery but it is good business practice. Transparency International has developed a new tool that can help SMEs to take a first step to resist bribery and to develop an anti-bribery programme - the Business Principles for Countering Bribery, SME edition.

Large corporations have learnt to manage the changing norms and environment and increasing numbers have systems in place to resist and counter bribery. But SMEs often lack the financial and human resources to do this and consider themselves defenceless in the face of corrupt demands and extortion. Pressure on SMEs is also mounting from larger companies which are increasingly expecting their suppliers to show evidence that they have anti-bribery policies and processes in place. The consequences for SMEs are that contracts are not awarded on commercial merits but on bribes paid. If they then feel compelled to pay bribes or meet extortion demands it imposes extra costs on their businesses. Not only is it possible for SMEs to counter bribery but it is necessary as smaller companies are bound by the same legal obligations and responsibilities as larger firms. Countering bribery is also good business practice. It can help build reputation, especially with customers; it can reduce risks and foster a positive and ethical culture for a company’s own employees. By building strong anti-bribery cultures SMEs can successfully challenge and resist bribery.

Being involved in bribery scandals today can bring serious harm to a company's reputation and credibility and its executives and managers risk criminal prosecution. International legal frameworks require rigorous national anti-corruption laws and international prosecution (e.g. the UN Convention against Corruption, the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions).

Initiatives such as the UN Global Compact and its 10th Principle against Corruption are promoting voluntary codes of conduct are raising awareness on business integrity and on ways how to counter bribery. The Global Compact currently reaches around 4,500 companies, no less than 40% of which are SMEs.

What can SMEs do to counter bribery?
The first step is to assess their business risks and put systems and policies in place to counter bribery. There are resources available to help SMEs in doing this.

Transparency International has been actively involved in the development of a voluntary code against bribery for large companies, the Business Principles for Countering Bribery and now has produced an edition for SMEs.

The Business Principles for Countering Bribery – SME Edition, which were launched in January 2008 set out in a clear and direct manner the process by which smaller businesses can develop an anti-bribery programme relevant to their size and resources. TI also encourages larger companies to communicate the SME Edition to their suppliers and to require that they have in place anti-bribery policies and procedures.

There are a growing number of initiatives and tools to help SMEs in countering corruption and bribery. For example, Danida (the Danish Development Agency) in cooperation with other partners has developed a website for SMEs operating in emerging markets and developing countries which provides information on possible corruption risks that might be encountered and ways in avoiding and fighting corruption. Furthermore, SMEs whilst perhaps less powerful on their own can seek to strengthen their approach by working in collaboration with other SMEs and by seeking the help of larger companies, the national chambers of commerce or small business associations.

If you are an SME, keep in mind that you can do something about bribery and corruption and you are not alone in your quest.

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Recognizing the different needs and resources of SMEs and growing supply chain requirements, TI has launched a tool designed specifically to help SMEs develop processes and programmes to address bribery – The Business Principles for Countering Bribery, Small and Medium Enterprise (SME) Edition.

The SME Edition was announced on 30 January 2008 at the Conference of the States Parties to the United Nations Convention against Corruption in Bali. It was developed through a process of consultation which involved smaller businesses and reflects their needs and challenges.

The SME Edition was based on the Business Principles for Countering Bribery but tailored to the needs and resources of SMEs. It sets out in a clear and direct manner the principles and the processes to develop an anti-bribery programme for SMEs. In addition to anti-bribery principles, the SME Edition includes a practical guidance document on how to develop an anti-bribery programme that is tailored to the size and resources of individual businesses and provides sample codes of conducts and sample rules on gifts and entertainment, an area which is often problematic for small enterprises.

The SME Edition is not only a tool for SMEs but can also be used by larger companies to encourage SMEs in their supply chain to implement no-bribes policies and practices.

TI is grateful to the Association of Chartered Certified Accountants for its support in testing the Edition though a global survey of SMEs.

The Business Principles for Countering Bribery (BPCB) provide a framework and practical guidelines which companies can use as a comprehensive reference for good practice in countering bribery. They include a commitment to counter all forms of bribery and to implement an anti-bribery program. They give practical guidance on how to identify processes and structures in business operations that are prone to bribery, and provide practical details on how to develop effective mechanism to prevent and counter bribery in business operations.

The Business Principles, introduced in December 2002, were spearheaded by Transparency International in co-operation with Social Accountability International and are the product of a collaborative effort of a multi-stakeholder Steering Committee drawn from companies, academia, trade unions and non-governmental bodies.

Many large companies have no-bribes policies in place, but all too few implement these policies effectively. The Business Principles can serve as a starting point for developing or benchmarking corporate anti-bribery systems. TI has developed a set of tools to support companies in their implementation efforts (guidance document, self-evaluation tool etc.).

Strategy & Management: Transparency International – Counting corporate corruption, Ethical Corporation, 13 February 2008

Update: over 900 Global Compact participants marked “inactive” or delisted, UN Global Compact, 28 January 2008