Business Due Diligence Indonesia

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Bribery

ISO Anti-Bribery Management Systems

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Corruption raises the cost of business, undermines public trust and hampers growth. It disproportionately affects the poor and vulnerable by diverting resources from essential public services such as health care, education, transportation and water sanitation. Efforts to implement anti-bribery systems will benefit a company. 

Bribery is one of the world’s most destructive and challenging issues. According to the Organisation for Economic Co-operation and Development

there are over US$ 1 trillion paid in bribes each year. The consequences are catastrophic, reducing quality of life, increasing poverty and eroding public trust.

Yet despite efforts on national and international levels to tackle bribery, it remains a significant issue. Recognizing this, ISO developed a new standard to help organizations fight bribery and promote an ethical business culture. It is designed to help an organization implement an anti-bribery management system, or enhance any existing controls. It helps to reduce the risk of bribery occurring and can demonstrate to stakeholders that an organisation has put in place internationally recognized good-practice anti-bribery controls.

ISO 37001 can be used by any organization, large or small, whether it be in the public, private or voluntary sector, and in any country. It is a flexible tool, which can be adapted according to the size and nature of the organization and the bribery risk it faces.

What is an anti-bribery management system?

An anti-bribery management system is designed to instil an anti-bribery culture within an organization and implement appropriate controls, which will in turn increase the chance of detecting bribery and reduce its incidence in the first place. ISO 37001, Anti-bribery management systems – Requirements with guidance for use, gives the requirements and guidance for establishing, implementing, maintaining and improving an anti-bribery management system. The system can be independent of, or integrated into, an overall management system.

It covers bribery in the public, private and not-for-profit sectors, including brib- ery by and against an organization or its staff, and bribes paid or received through or by a third party. The bribery can take place anywhere, be of any value and can involve financial or non-financial advan- tages or benefits.

What benefits will it bring to my business or organization?

ISO 37001 is designed to help your organization implement an anti-bribery management system or enhance the controls you currently have. It requires implementing a series of measures such as adopting an anti-bribery policy, appointing someone to oversee compliance with that policy, vetting and training employees, undertaking risk assessments on projects and business associates, implementing financial and commercial con- trols, and instituting reporting and investigation procedures.

Implementing an anti-bribery management system requires leadership and input from top management, and the policy and programme must be communicated to all staff and external parties such as contractors, suppliers and joint- venture partners.

In this way, it helps to reduce the risk of bribery occurring and can demonstrate to your manage- ment, employees, owners, funders, customers and other business associates that you have put in place internationally recognized good-practice anti-bribery controls. It can also provide evidence in the event of a criminal investigation that you have taken reasonable steps to prevent bribery.

For more information on how Business Due Diligence Indonesia can support you please contact us. BDDI can also recommend Investigation companies in Indonesia such as Indonesia Private Investigation Agency and Bali Eye Private Investigation Agency.

Sources

https://anticorruption-integrity.oecd.org

https://www.iso.org/iso-37001-anti-bribery-management.html

https://www.iso.org/files/live/sites/isoorg/files/store/en/PUB100396.pdf

 

 

Whistleblowing In Indonesia

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The risk of fraud is faced by all organizations regardless of size. Unfortunately, many of these threats are internal and come from dishonest people who were recruited by the company they are defrauding. According to a 2016 fraud survey conducted by the Association of Fraud Examiners (ACFE) Indonesia Chapter[1][2]  “fraud is a latent danger that threatens the world. The results of the Global Association of Certified Fraud Examiners (ACFE) research show that each year an average of 5% of the organization’s revenue is a victim of fraud”. The report states that corruption was by far the most common form of occupational fraud in Indonesia, occurring in 67% cases, followed by asset misappropriation (31%), and financial statement fraud (2%). ACFE went on to claim that the total loss caused by corruption can reach up to 10 billion Indonesian Rupiah.  The loss caused by asset misappropriation can go beyond 10 billion Indonesian Rupiah.

The survey indicated that the most common fraud detection method was by means of a whistleblowing hotline with internal employees as the main reporting source. A whistleblower is a person who exposes secretive information or activity that is deemed illegal, unethical, or not correct within a private or public organization. The information of alleged wrongdoing can be classified in many ways: violation of company policy/rules, law, regulation, or threat to public interest/national security, as well as fraud, and corruption. Those who become whistleblowers can choose to bring information or allegations to surface either internally or externally. Internally, a whistleblower can bring his/her accusations to the attention of other people within the accused organization such as an immediate supervisor. Externally, a whistleblower can bring allegations to light by contacting a third party outside of an accused organization such as the media, government, law enforcement, or those who are concerned. Whistleblowers, however, take the risk of facing stiff reprisal and retaliation from those who are accused or alleged of wrongdoing.

An organization that implements a whistleblowing system will promote a culture of transparency, honesty, and integrity. This culture will help the organization to detect and handle early signs of fraud. Some business industries which are more at risk of fraud, such as banking and financial services, as well as government and public administrations have enacted their own whistleblowing policies to provide a clear mechanism in handling reports and complaints.

The Indonesian law does not contain explicit provisions on whistleblowing, however, it provides protections for employees who have knowledge of criminal acts of the employer. Indonesian Employment Law No 13 of 2003 Article 169 stipulates that an employee may submit a request for termination of his/her employment in case the employer persuades and/or orders the worker/laborer to do a deed that is in conflict with laws and regulations. The terminating employee must be entitled to severance, reward, and compensation pay. Protections for whistleblowers (witnesses) are regulated in the Indonesian Witness and Victims Protection Law No. 13 of 2006.

For more information on how Business Due Diligence Indonesia can support you please contact us. BDDI can also recommend Investigation companies in Indonesia such as Indonesia Private Investigation Agency and Bali Eye Private Investigation Agency.

[1] https://acfe-indonesia.or.id

[2] https://acfe-indonesia.or.id/wp-content/uploads/2017/07/SURVAI-FRAUD-INDONESIA-2016_Final.pdf