Bribery, Extortion and Conflict of Interest
Business Case
Brand reputation
Financial resilience
Legal and regulatory compliance
Operational continuity
Stronger supplier relationships
Strategy & Planning
Assessment
Conduct an internal assessment of your own procurement structures and practices to identify risk of corruption and conflict of interest risks, examining:
- segregation of duties across requisitioning, approving and paying functions
- whether competitive bidding is required and consistently applied across spend categories
- gift, hospitality and entertainment policy between procurement staff and suppliers
- use of intermediaries, agents or brokers in sourcing processes
- active conflict of interest declarations for procurement staff with authority
- whether audit rights exist in supplier contracts and are exercised
- whether mechanisms exist for suppliers to report extortion demands made by the buyer's own procurement staff
Conduct a corruption risk assessment across procurement categories and supplier relationships, with prioritization of risk based on spend categories, supplier types and geographic contexts with higher exposure to corruption, bribery or extortion risks. Use the UN Global Compact six-step risk assessment process: establish the process, identify risks, rate risks, identify mitigating controls, calculate residual risk and develop an action plan. Risk factors to assess include:
- supplier size, location and goods or services to be delivered
- corruption risk in the supplier's operating location
- how the supplier was identified and whether they were introduced through a trusted or verifiable source
- whether the supplier has a family or personal relationship with a procurement employee
- nature of the engagement, including likelihood of kickbacks, extortion risk, invoice complexity, government licensing requirements and points of contact with government officials
- whether the supplier has political-exposure risk, such as whether the supplier is government-owned, has a relationship with government officials or has politically exposed persons
- presence of competing suppliers and whether sole-source arrangements are justified
Extend corruption risk assessment to tier 2 and 3 suppliers by requiring strategic suppliers to conduct and share their own supplier corruption risk assessments.
Policy
Adopt a zero-tolerance anti-corruption policy aligned with the UN Convention Against Corruption, covering all procurement staff and establishing:
- mandatory conflicts of interest declarations for all staff with procurement authority, renewed annually
- clear segregation of duties across procurement roles to increase transparency and reduce single points of control
- prohibition on gifts, hospitality and entertainment above defined thresholds for staff involved in procurement
- requirement for competitive bidding and published evaluation criteria for all procurement above defined thresholds
- whistleblower and non-retaliation mechanisms for reporting suspected corruption
- explicit prohibition on procurement staff soliciting gifts, payments, favors or any other benefit from suppliers in exchange for contract awards or preferential treatment
- consequences for non-compliance, including disciplinary and legal consequences
- commitment to anti-corruption clauses in all supplier contracts regardless of risk level
- mandatory training of all procurement staff and onboarding for new procurement colleagues covering bribery risks, conflict‑of‑interest rules, red‑flag identification and reporting channels, as well as content indicatively covered by relevant local government legislations on anti-corruption, especially on dealing with public officials and who can qualify as public officials
- clear guidelines on dealing with agents, especially in foreign countries and clear delineation of approved payment approach and prohibited payment approach (e.g. facilitation payment)
Conduct periodic reviews of procurement roles and rotate procurement manager assignments regularly to reduce exposure to long-term supplier relationships that increase corruption risk, with procurement managers required to document corruption risks and mitigation measures as part of category planning.
Require suppliers in high-risk categories to maintain their own anti-corruption policies with anti-corruption due diligence processes and demonstration of training coverage, as well as to cascade these requirements to their supply chain.
Targets
Set a target for 100% of procurement staff with contract or supplier approval authority to complete conflicts of interest declarations, and for anti-corruption clauses to be included in all supplier contracts.
Set targets for the percentage of high-risk procurement categories with completed corruption risk assessments and define what effective resolution looks like when conflicts do occur, including how conflicts are analyzed, mitigated and traced within procurement decision-making processes.
Set targets for the percentage of strategic suppliers with verified anti-corruption programs in place across their own supply chains.
Supplier Selection
Screening
Consider the supplier's reputation, whether any conflicts of interest may exist and how the supplier was introduced, as well as include questions in supplier pre-qualification to assess corruption risk before inviting suppliers to bid, covering the below. Exclude any supplier that has attempted bribery and as appropriate make notation of supplier's non-compliance for inclusion of future bids. Require bids to be reviewed by a team of at least two employees to prevent single points of decision-making.
- has the supplier or any of its directors been subject to corruption-related investigations, sanctions or legal proceedings in the past five years, based on research and independent verification mechanisms (e.g., beneficial ownership registries, sanctions lists)?
- does the supplier have a registered office address and publicly verifiable ownership structure?
- what anti-corruption controls does the supplier have in place?
- do you require staff in high-risk roles to declare conflicts of interest?
Conduct risk-based due diligence on suppliers as part of the RFP process, covering topics such as:
- ownership and beneficial ownership transparency, especially opaque beneficial ownership and unclear Ultimate Beneficial Owner (UBO)
- use of agents, intermediaries or brokers, including purpose and compensation structure
- internal anti-corruption controls
- staff training coverage
- high‑risk payment practices, such as offshore accounts, tax‑haven routing or unusual invoicing
- any history of red flags, historical performance and behavioral track records identified through media or third-party intelligence searches, including prior audit findings or integrity related incidents
Require suppliers in high-risk categories to demonstrate as a condition of eligibility to respond to RFPs, such as ISO 37001 certification or alignment with the UN Global Compact anti-corruption principles.
Selection
Allocate points for suppliers with safeguards for identified risks, such as internal controls over financial flows and measures to prevent conflicts of interest.
Allocate points in selection criteria for the depth and maturity of suppliers' anti-corruption policies and programs, including training, controls and reporting mechanisms.
Select suppliers based on how effectively they extend anti-corruption controls to their supply chain, including their own due diligence and audit practices.
Contracts
Include anti-bribery and anti-corruption clauses in all supplier contracts, requiring suppliers to:
- comply with applicable anti-corruption law
- maintain their own anti-corruption policies
- notify the buyer of any investigation or enforcement proceeding
- abide by the buyer's supplier code of conduct
Include contractual requirements for suppliers to maintain anti-corruption programs, notify of breaches, disclose subcontractors and intermediaries and allow audit rights.
Require strategic suppliers to cascade anti-corruption contractual requirements to their own critical suppliers with required integrity audits and evidence of compliance provided to the buyer on request.
Supplier Engagement
Goal Setting
Communicate the buyer's zero-tolerance anti-corruption policy to all active suppliers and work with suppliers to set goals on creating a formal anti-corruption policy and whistleblower mechanism in place covering bribery, kickbacks, conflicts of interest, gifts and entertainment and accuracy of business records.
Set supplier-specific anti-corruption improvement goals for high-risk suppliers, including implementation of internal reporting mechanisms, staff training and documentation of anti-corruption controls.
Co-develop multi-year anti-corruption improvement roadmaps with strategic suppliers, including measurable targets for achieving ISO 37001 certification and cascading anti-corruption requirements through their own supply chains.
Capacity Building
Provide all procurement staff and suppliers with training on anti-corruption laws and policies, covering consequences of bribery and corruption for the organization and for individuals, how to recognize and respond to corruption demands and how to report concerns without fear of retaliation.
Deliver in-depth training to suppliers on more specific anti-corruption topics, such as how to conduct corruption risk assessments across their own operations, how to design and implement conflicts of interest management systems and how to structure effective whistleblower mechanisms or host peer‑learning workshops among suppliers to share corruption‑prevention strategies and common red‑flag patterns.
Host anti-corruption capacity building for tier 2 and 3 suppliers, training them on how to conduct corruption risk assessments, implement whistleblower mechanisms and manage risk in their own sourcing decisions.
Data
Monitor the buyer's own procurement transaction data for red flags indicating potential corruption or fraud across all stages of the procurement process, such as:
- bidding: frequent use of exemptions; acceptance of late bids; identical pricing across supposedly competing suppliers
- selection: awards to bids significantly above expected cost; decisions not documented
- payment: purchase orders raised after invoices received; false, inflated or duplicate invoices; invoices not matching contract terms or payments not matching goods/services; payments to accounts outside the project location or in tax haven jurisdictions
- contract management: split contracts to avoid approval thresholds; scope variations that push spend above thresholds
- delivery: goods or services not received or below contracted quality; staff or community complaints about delivery
Work with suppliers to track data on anti-corruption practices and programs, such as training completion rates, number of conflicts of interest declarations submitted, whistleblower reports received and resolved and corrective actions taken following audit findings, as well as major red flags related to abnormal payment patterns.
Work with strategic suppliers to implement monitoring systems covering their own procurement transactions, and require periodic reporting on red flag findings and resolution outcomes across their supply chain tiers.
Certifications
Introduce suppliers to ISO 37001 as the recognized international standard for anti-bribery management systems and provide guidance on its requirements.
Support suppliers to begin ISO 37001 certification by sharing implementation guidance or sponsoring the process.
Require and support strategic suppliers to verify that their own key subcontractors and tier 2 suppliers meet a defined anti-corruption standard, such as ISO 37001 alignment or equivalent.
Advisory
Provide suppliers with advisory services on how to recognize and refuse corrupt demands, including how to respond when a procurement employee solicits a payment or favor, how to document and report extortion demands and how to escalate concerns through the buyer's reporting channel without fear of commercial retaliation.
Provide guidance to suppliers operating in high-risk markets on practical tools for documenting and refusing facilitation payment and extortion demands, including demands made by the buyer's own procurement staff, and on implementing effective internal anti-corruption controls.
Support strategic suppliers in embedding anti-corruption due diligence into their own procurement governance, including supplier selection criteria, contract provisions and monitoring systems for their own supply base.
Financial Support
Ensure contract values and payment terms are sufficient for suppliers to deliver without financial pressure that could incentivize fraudulent billing, invoice inflation or corrupt shortcuts.
Offer preferential payment terms or early / accelerated payment options for suppliers demonstrating active progress on anti-corruption programs and commitments or who demonstrate strong integrity controls.
Link commercial incentives such as contract extensions, volume increases and pricing adjustments to verified achievement of anti-corruption improvement milestones and ISO 37001 certification across the supply chain.
Audits
- conduct regular and random audits of your own procurement processes to: review contracts for inconsistencies or unusual transactions; verify invoice accuracy; check procurement staff expenses; checking competitive bidding requirements; confirmations of deliveries
- request suppliers to complete an anti-corruption self-assessment questionnaire on anti-corruption policy, a whistleblower mechanism and conflicts of interest declarations
Conduct on-site audits of anti-corruption controls for high-risk suppliers, reviewing:
- existence and effectiveness of anti-corruption policies and staff training
- invoice and payment documentation accuracy
- corrective action plans for any findings, tracked to resolution
- unusual financial practices
Commission third-party audits of anti-corruption controls for strategic suppliers to review procurement transaction data for red flags and extending audit scope to Tier 2 suppliers.
Project Partnerships & Innovation
Launch pilot initiatives with a small group of priority suppliers to identify root causes of corruption risk in shared procurement processes and co-develop initial prevention measures.
Partner with suppliers and key actors operating in to implement a collective action initiative, such as testing grievance reporting tools, new training approaches or new audit processes throughout the supply chain.
Partner with suppliers, industry peers, anti-corruption organizations and civil society to advance anti-corruption standards across shared supply chains through collective action mechanisms including integrity pacts, common audit standards and joint training programs.
Continuous Improvement
Metrics
Track the following:
- percentage of procurement staff with active conflicts of interest declarations
- percentage of procurement staff and relevant supplier‑facing staff who have completed required anti‑corruption training
- number of suppliers with anti-corruption policies, programs or certifications
- number of internal audit findings related to procurement integrity
- number of red flag transactions identified and resolved
Track the following:
- percentage of high-risk categories with completed corruption risk assessments
- percentage of high-risk suppliers audited for anti-corruption compliance
- supplier audit findings related to anti-corruption controls by category
- corrective action plan completion rates
- training completion rates
Require strategic suppliers to report on anti-corruption performance across their own supply chain tiers, including audit findings, incident reports, corrective actions taken and ISO 37001 certification across tier 2 and 3 suppliers.
Scorecards
Include anti-corruption compliance as a component in supplier scorecards, covering policy existence and execution, self-assessment completion and incident reporting.
Score suppliers on training coverage rates, audit finding resolution rates and improvement against previous scorecard results or indicated goals.
Weigh anti-corruption performance in strategic supplier scorecards, with top performers receiving preferential weighting in tenders and bottom performers required to submit improvement plans.
Impact Verification
Gather feedback from procurement teams and suppliers on effectiveness of anti-corruption programs.
Assess whether supplier engagement and capacity building initiatives are improving anti-corruption procurement practices among strategic suppliers.
Measure the effectiveness of collective action and cascading anti-corruption initiatives in improving governance standards across supply chain tiers, including reduction in red flag incidents and improvement in audit findings over time.
Sources consulted
- https://businessintegrity.unodc.org/bip/en/Global-webinars.html
- https://unglobalcompact.org/library/153
- https://unglobalcompact.org/library/162
- https://unglobalcompact.org/library/411
- https://unglobalcompact.org/library/5896
- https://unglobalcompact.org/library/162
- https://www.ibac.vic.gov.au/corruption-procurement-risks-and-warning-signs
- https://www.transparency.org/en/our-priorities/business-and-corruption