Firms Must Consider Integrity in Public Tenders to Avoid Reputational Risks
A Growing Concern for Financial Services Providers
A recent trend has emerged among financial services providers (FSPs) and lawmakers to study and implement foreign legislation into their integrity programs. However, it’s essential to also consider the potential consequences from foreign authorities when designing and implementing such programs.
The Importance of Transparency in Public Tenders
In public tender processes, FSPs must ensure that they maintain transparency and integrity in their dealings with state-owned companies and agencies. A recent investigation in Argentina highlighted the risks associated with neglecting these interactions, which can lead to reputational damage and even criminal charges.
Common Risks and Mitigation Strategies
FSPs often underestimate the importance of interactions with state clients, particularly in credit agreements, payroll services, and public debt bond issuances. These lines of business are frequently handled informally, without proper tender rules or procedures in place. This lack of transparency creates a high-risk environment for corruption and reputational damage.
- Prioritize training for directors, administrators, and employees on anti-bribery and corruption measures.
- Provide training that is specifically adapted to the local reality and circumstances, rather than relying solely on foreign legislation.
- Conduct thorough checks on third-party business associates and intermediaries before engaging with them or during the business relationship.
- Regularly reassess risks through periodic risk assessments.
Key Roles in Maintaining Integrity
The commitment of top management is critical in driving the integrity program forward. Clear, written records of interactions with public officials must be kept, and any suspicious activities should be reported immediately.
- Appoint an internal officer or team to develop and monitor the integrity program.
- Ensure that the individual or team has the necessary expertise and resources to ensure the program’s effectiveness and compliance with relevant regulations.
The Importance of a Protocol
In the event of an investigation, having a protocol approved by the governing body is essential for detecting and mitigating risks, as well as justifying sanctions for violations.
Conclusion
By taking these measures, FSPs can minimize reputational risks and maintain a strong commitment to integrity in public tender processes. It’s crucial to prioritize transparency, training, due diligence, and regular risk assessments to ensure that FSPs operate with integrity and avoid reputational damage.