There is a lot going on in the anti-bribery world, but it’s not clear that all new developments represent progress. More is not always better, argues Alexandra Wrage

The United States has recently passed the Dodd-Frank Wall Street Reform and Consumer Protection Act.

These make it lucrative for employees to blow the whistle on their employers for bribery.

This creates a strange incentive for those in a position to stop a problem, to nurture it instead, in order to increase the total fine eventually levied, from which they’ll get a cut.

Of course, protecting whistle-blowers is critically important to improving corporate governance, but creating a financial incentive for employees to report on their employers raises other concerns.

If there's a bribery scheme, the employee's first priority should be to stop the wrongdoing, not paper his file and strengthen his case.

A step too far?

With this newfound incentive to report potential wrongdoing directly to the Securities and Exchange Commission, what will become of companies’ hotlines and internal reporting mechanisms (hitherto considered an essential pillar for an effective compliance program)?

The United States may also soon bring us new regulations that will debar companies from government contracts if there is a finding or admission of bribery. We’ve seen how well that works with the automatic debarment rules applicable in the European Union.

Both Siemens and BAE negotiated tortured language that resulted in findings of behaviour a lot like, but not quite, bribery.

The automatic debarment would have been ruinous to these companies, so they appear to have negotiated it away. Few things breed cynicism in the business community faster than watching companies sidestep consequences.

The purpose of debarment used to be to ensure that governments were working with good, well-run and reputable companies. Companies that fell short of the desired standard were debarred until they improved.

It was a good system with the right incentives.

What does a penalty mean?

We need to decide whether debarment is about punishment or remediation.

If it’s the former, then whether a Siemens or a BAE should be debarred should not be on any negotiating table.

If it’s the latter, let’s use it effectively to ensure the swift implementation of remedial measures and decline to do business with bribe-paying companies until there is observable progress.

The UK, over roughly the same time period, has enacted a new anti-bribery law that is impossibly broad and which the government has diminishing resources to enforce.

There is confusion to the point of near-panic amongst companies with any connection to the UK as a result.

The new law has created liability for failing to prevent bribery, which appears to create full-employment for the growing number of compliance companies on the grounds that more must be better.

Confusion may abound

Corporate hospitality stands on an equal footing with large commercial bribes. Companies are poised to spend comparable resources on both areas of risk, when the harm to the public is hardly comparable.

Stampeding to do whatever anyone suggests might reduce their liability; business dinners, small gifts and large cash transfers seem to merit equal attention now in order not to “fail to prevent bribery”. There is no question that the UK needed a better law, but many question whether this is it.

And, finally, there is the US Department of Justice’s recent pronouncement that they will be “targeting” certain industries, including the pharmaceutical industry.

All industries have their share of international bribery and, it seems, putting one on notice encourages the others to breathe more easily. Shouldn’t prosecutors target wrongdoers, rather than industries?

New laws, broader laws, new incentives for whistle-blowers and prosecutorial targets – more, certainly, but better?

Alexandra Wrage is the founder and president of TRACE International

Meet the leading figures in global business anti-corruption at this upcoming conference on November 2-3 in London: http://www.ethicalcorp.com/ethicseurope/index.asp