TRACE Introduces Global Business Bribery Risk Index

11 Nov, 2014, 08:00 ET from TRACE International

The TRACE Matrix, developed with RAND Corporation, is the first global business bribery risk index for the compliance industry.

ANNAPOLIS, Md., Nov. 11, 2014 /PRNewswire/ -- TRACE International today announced the launch of the TRACE Matrix, the first business bribery risk index specifically tailored to the needs of the compliance community. Developed in collaboration with RAND Corporation, the TRACE Matrix provides the business community with a powerful new tool for anti-bribery risk assessment. 

The lack of reliable information on the risk of business bribery in foreign countries exposes a company to the possibility of violating anti-corruption laws such as the Foreign Corrupt Practices Act (FCPA) and other international anti-bribery regulations which prohibit bribery of foreign government officials.

The TRACE Matrix was designed to help companies assess the propensity for public-sector bribery and its associated business risk while providing actionable intelligence to inform a company's compliance processes.

"We have heard from the business community for years that a tailored tool to gauge levels of commercial bribery was needed.  There are some excellent indices currently available, but these are either very broad, measuring perceived corruption across all spheres of society, or very narrow, measuring just one factor," said Alexandra Wrage, President of TRACE. "The TRACE Matrix provides the compliance community with a clear guide to business bribery, focusing specifically on the data that is relevant to business activity."

Interviews with U.S. regulators and global law firms conducted as part of the research to create the TRACE Matrix also cited the need for additional tools and analysis focused on business bribery.

"Assessment of country risk is fundamental to developing an effective compliance program and risk-based due diligence procedures," said Charles Duross, Partner at Morrison & Foerster LLP and former Deputy Chief in the Fraud Section in the Criminal Division of the U.S. Department of Justice. "Multinational companies need additional tools beyond those currently available to more effectively measure country risk."

William B. Jacobson, former Senior Vice President, Co-General Counsel and Chief Compliance Officer of Weatherford International Ltd. and current Partner at Orrick, Herrington & Sutcliffe LLP, notes that, "as anti-bribery enforcement continues to be a top priority for US regulators, and increasingly foreign regulators, it's important that companies conduct a thorough analysis of country risk before establishing local compliance procedures." Mr. Jacobson added that "access to an index focused on business bribery risk is a big step forward for the compliance community."

The TRACE Matrix calculates a composite score for each country around the globe, with a range from 1 to 100: the higher the score, the greater the business bribery risk.  The Matrix assesses countries across four domains – business interactions with government, anti-bribery laws and enforcement, government and civil service transparency, and the capacity for civil society oversight, including the role of the media – as well as nine sub-domains.

Although the resulting index can be used to rank countries by their composite scores, it is also possible to view the results for specific risk factors included in the composite score and identify what drives the overall score. This allows firms not only to identify where a country falls in terms of overall business bribery risk, but also to use the domain and subdomain scores to tailor their compliance practices appropriately.

The 10 countries with the highest business bribery risk score according to the TRACE Matrix are: Nigeria, Yemen, Angola, Uzbekistan, Cambodia, Guinea, Burundi, Chad, South Sudan and Vietnam. The 10 countries with the lowest business bribery risk scores are: Ireland, Canada, New Zealand, Hong Kong, Sweden, Finland, Singapore, Japan, Germany and the United States.

The TRACE Matrix sheds new light on business bribery risk in several countries, occasionally citing very different scores from other corruption scales, including Transparency International's Corruption Perception Index (CPI). For example, if the CPI is translated to the same scoring scale as the TRACE Matrix, Brazil would have a score of 58, compared to the TRACE Matrix score of 69. Brazil's TRACE Matrix score is higher primarily because of a high score – 77 – in Domain 1, business interactions with government. This domain measures risk associated with the number of "touches" with the government, the likelihood of a bribe transaction arising through these interactions and the overall regulatory burden.

The TRACE Matrix is publicly available at http://www.traceinternational.org/trace-matrix/. The report discussing the development of the TRACE Matrix, "Business Bribery Risk Assessment," published by RAND Corporation, is also available at http://www.traceinternational.org/trace-matrix/. A live webinar for journalists will be held today, November 11, at 10:00 am EST, please register here.

About TRACE International

TRACE International is a non-profit business association that pools resources to provide practical and cost-effective anti-bribery compliance solutions for multinational companies and their commercial intermediaries. TRACE members include hundreds of multinational companies, as well as thousands of small and medium-sized enterprises throughout the world. TRACE is committed to advancing commercial transparency worldwide by providing members with pragmatic alternatives to increasingly time-consuming and expensive corporate compliance. For more information, visit www.TRACEinternational.org.

About RAND

The RAND Corporation is a research organization that develops solutions to public policy challenges to help make communities throughout the world safer and more secure, healthier and more prosperous. RAND is nonprofit, nonpartisan, and committed to the public interest. RAND is a global organization with offices throughout the world. RAND's North American locations include Santa Monica, California, the home of its headquarters campus and the Pardee RAND Graduate School; Arlington, Virginia; Pittsburgh, Pennsylvania; and Boston, Massachusetts. The RAND Gulf States Policy Institute has offices in New Orleans, Louisiana. RAND Europe is located in Cambridge, United Kingdom, and Brussels, Belgium. RAND Australia is located in Canberra.

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