Only 50% of UK businesses vet suppliers for Bribery Act compliance

Only half of British businesses vet their suppliers for UK Bribery Act Compliance, according to a survey by Ernst & Young.

48 percent of British firms are failing to vet their supplier, with only six percent adding that they would re-tender if they discovered their suppliers were not compliant.

The study polled procurement managers and directors from a range of firms across the UK. The study found that while midmarket firms are often less likely to have robust processes and systems in place to counter bribery risk, companies at both ends of the spectrum appeared complacent when it came to vetting their suppliers for compliance with the Act.

Ernst & Young’s study found that although 60 percent of firms with a turnover of £5m to £50m currently vet their suppliers to assess whether their business practices comply with UK Bribery Act, 16 percent of these midmarket firms would ‘do nothing’ if their suppliers fail to comply. Moreover, 60 percent of firms that do not currently vet their suppliers reported that they are not planning to implement any anti-bribery programmes in the future.

Only 40% of larger firms (with a turnover of more than £50 million) would remove suppliers from their supply chain if they fail to comply with the Act.

John Smart, Partner at Ernst & Young said:

“Following recent concerns over food contamination, there has been much focus on supply chains and how much companies know about suppliers and agents acting on their behalf. In cases where bribery and corruption are discovered, the consequences for companies under the law may be serious. It’s worrying to see that businesses are failing to make sure that their suppliers are complying with the UK Bribery Act, especially as the Act came into effect over a year and a half ago.

“Many directors are still unaware that they can be held personally accountable for any failings in this area. This means that senior managers and directors risk significant prison terms and large fines for non-compliance in which they are personally involved, even if the breach is caused by the actions of a third-party supplier.”  

Additional findings from the research include:

• Almost a quarter (24 percent) of firms believe that taking on a new supplier will incur the most risk to supply chains;
• Only 48 percent of firms carry out third- party due diligence in their supply chain;
• 12 percent of firms would ‘do nothing’ if they found out that their suppliers failed to comply with the Act;
• Less than half (44 percent) of firms with a turnover from £5m to £50m carry out third party due diligence