Lawyer Summarises The Key Changes In 2019

TRACE, the world’s leading anti-bribery standard setting organisation, have released their annually updated bribery risk matrix (TRACE Matrix) for 2019.

The TRACE Matrix measures business bribery risk across 200 jurisdictions. The overall country risk score is a combined and weighted score of four domains: Business Interactions with Government; Anti-Bribery Deterrence and Enforcement, Government and Civil Service Transparency and Capacity for Civil Oversight. This score is then reflected in a ranking system to give a clear indication of those higher risk jurisdictions around the world. 

This provides a clear indication of which jurisdictions demand more comprehensive and stringent policies and procedures. Such an asset clearly makes for a useful tool for companies when assessing the risk of bribery and corruption and developing appropriate measures to the level of risk posed.

The changing landscape in the four domains that provide the Matrix score mean that the risk factor of each jurisdiction can change year on year. It is critically important therefore that only the most up to date version of the tool is relied upon.

What was previously deemed to be a jurisdiction that did not warrant additional attention or constraints may now do so. Conversely, you may have stringent regulations placed on a jurisdiction which has since improved its approach to bribery and corruption. This would mean placing unnecessary red tape around dealings. With efficiency being key for businesses, it helps to avoid delays wherever possible.

The fluid nature of jurisdictional risk is evidenced clearly in the TRACE Matrix through the example of Macau, which had a ranking of 189/200 in 2018, but was ranked 75/200 in the 2019 TRACE Matrix. Contrastingly, Estonia slipped from a ranking of 3/200 in 2016 to 15/200 in 2019, and similarly Mauritius moved from 21/200 to 59/200 and Japan from 11/200 to 25/200 in the same period.

These are just a few examples of the ever-changing nature of the TRACE Matrix which is reflecting legal and social developments that contribute to potential risks to your business and its dealings. The various factors that contribute to the Matrix score are not static and so require constant attention to ensure your bribery and corruption policy is in line with the up to date jurisdictional risk factor. What may seem to be a slight change from one year to the next might actually be the start of a continuing pattern that warrants attention, and may later prompt a change to your approach to business in that jurisdiction.

A bribery and corruption policy which has been updated in accordance with the latest jurisdictional risk update will have a stronger chance of being deemed to be ‘adequate procedures’ in defence of a S.7 Bribery Act 2010 charge. It can only be beneficial to show your policies and procedures align with the most current level of risk posed by a jurisdiction.

TRACE also released the Bribery Risk Typology and interactive map, which allows for comparisons to be drawn when interpreting the Matrix scores based on factors such as state fragility and economic complexity . This is another useful tool when carrying out an update of your bribery and corruption systems.

This update should serve as a reminder that your bribery and corruption system must be regularly reviewed and renewed. Jurisdictional risk is just one of a number of factors that are ever changing. There is the potential for your policies being rendered not fit for purpose if you do not keep up with the fluctuating developments that influence bribery and corruption risk.

By Dan Brunt, Irwin Mitchell