The first version of the Code was developed by the IMM in relation to the reform of the Swedish anti-corruption legislation in 2012. This year, the IMM updated the Code to assist organisations in adapting to the changing business environment.
In this context, its authors stress that the objective of the measures suggested in the Code is not only to prevent crimes established as such in accordance with the law, but also to prevent other practices that contradict the principles of ethical business conduct.
The authors state that the Code is intended for companies, regardless of whether they are privately or publicly owned, as well as for Swedish companies’ branches and group companies abroad. The Code can also be used by public authorities and municipalities.
The introductory part of the Code briefly describes the existing national anti-bribery provisions. The respective crimes are governed by Chapter 10 of the Swedish Criminal Code and include:
- taking of a bribe – article 5a,
- giving of a bribe – article 5b,
- trading in influence – article 5d,
- negligent financing of bribery (when a business operator supplies money or other assets to a person representing it in a particular matter and thereby promotes giving of a bribe) — article 5e.
Besides bribery, the country equally prohibits facilitation payments.
In Sweden, only natural persons can be held criminally liable. However, the Code highlights that if a natural person committed a crime, the related organisation may be held liable in the event that it had not taken appropriate measures to prevent the crime or if the crime was committed by a person in an executive position or with responsibility for supervision or control in the company: it can be ordered to pay a corporate fine and the profit gained from the offence can be confiscated.
The main part of the Code consists of three sections, each of which is centered on key components of the development of anti-corruption policy in business entities: 1) preventive measures, 2) benefits, and 3) intermediaries. Each section is supplemented with examples that facilitate the understanding of practical application of certain provisions.
I. Preventive measures
The first section of the Code, focused on creation of a system of measures to prevent corruption offences in organisations, highlights that each company should develop and adopt relevant measures based on its size and ownership structure, the business activities carried out and the specific risks of corruption faced by the company.
Here are the several key components that should form part of preventive work, as outlined in section one of the Code:
- Top-level commitment. The management should have a crucial role in the development and functioning of anti-corruption measures, ensure that there are adequate resources and expertise to this end, and that the Board of Directors is kept regularly informed of the company’s anti-corruption work.
- Analysis of the risk of corruption. Companies must carry out regular risk analyses, answering the following questions: what corruption risks does the company face and in which areas? What will the consequence be if a risk materializes? Are there any deficiencies in how identified corruption risks are managed at present? The Code stresses that it is risk analysis that the respective measures should be based on: it is extremely important that the adopted measures are proportionate to the identified risks.
- Internal anti-corruption rules. Organisations must have internal anti-corruption rules, anti-corruption policy and a system of anti-corruption standards. Besides that, companies must clearly state which person is responsible for control over the compliance with these rules and what happens in the event of their breach.
- Communication and training. Companies must ensure that there are mechanisms for publicising the established rules, and that its employees and intermediaries regularly receive anti-corruption training.
- Systems for due diligence of intermediaries and other third parties. Companies must have systems for due diligence of intermediaries (this issue is covered in further detail in section three of the Code) and management of corruption risks associated with third parties.
- Systems for reporting (whistleblowing). Companies must have in place mechanisms for reporting suspicions of corruption and protecting whistleblowers. They must also have procedures for following up reports.
- Tools for checking and monitoring. Companies must have the internal control systems required to ensure implementation of the preventive measures. The adopted measures must be regularly monitored, evaluated and updated if necessary.
Section two of the Code provides guiding principles on receiving and giving gifts and other benefits. The latter may take such forms as cash, gift cards, goods, services, discounts, travel, loans of money or objects, tickets to events, sponsorship, commission, employment or assignments, priority in a queue or a prestigious award, i.e. benefits that are of tangible and intangible value to the recipient.
In this context, the Code addresses the regulation of a benefit that:
а) is given to an employee by someone other than the employer;
b) is something that the employee would have paid for;
c) is given in connection with the performance of the employee’s work;
d) is given directly to an employee or through someone else.
Benefits with an insignificant value that occur in a normal work-related relationship, e.g. coffee and pastries/fruit at a work meeting, do not count as benefits within the meaning of the Code.
The Code distinguishes between three types of individuals subject to the restrictions on gift-receiving:
- Recipients in the exercise of public authority [with respect to the giver] and public procurement [with the participation of the giver];
- Other individuals in the public sector or in publicly-financed activities;
- Recipients in the private sector.
1) Giving a benefit to the recipients of the first category in the exercise of respective functions is prohibited: the prohibition applies in relation to recipients who directly make decisions on or who are able to influence them. Examples of the exercise of public authority regard, in particular, decisions on granting restaurant or construction permits. However, in spite of the fact that in most cases the functions to exercise public authority are assigned to public bodies, the aforementioned category of recipients may also include employees of private companies that can by law be entrusted with the exercise of public authority, e.g. in vehicle inspections.
If a gift is not given in relation to the exercise of the above-mentioned functions (for instance, a bouquet of flowers as a thank-you in an event held by an organisation in relation to which the employee does not make respective decisions), it can be accepted.
2) The second category of recipients is comprised of individuals in the public sector, meaning that their activities are financed by taxes and charges, and publicly-financed activities, meaning activities in which the State provides financial compensation for the operation itself. Examples of publicly-financed activities include activities carried out privately in health care, education and social care.
In assessing the possibility to accept a gift, the Code recommends that these individuals take into account the following factors:
1. Whether the benefit influences (or risks influencing) the recipient’s decision or way of performing his or her duties because of the economic or personal value of the benefit to the recipient. In this context, at least the following benefits are considered as inacceptable because of their value:
- monetary gifts and loans of money,
- testamentary dispositions,
- goods and services for private purposes and private discounts on goods and services,
- the right to use a vehicle, boat, holiday home or similar for private use,
- leisure or holiday travel,
- purchase of sexual services or visits to strip clubs and pornographic clubs,
- benefits that may result in the giver gaining a hold over the recipient.
2. Whether the benefit was given transparently, i.e. if the recipient has informed his/her principal about the benefit or has taken other actions as provided for by the corporate policy on benefits.
3. Whether the benefit is “moderate” meaning how important it may be for the recipient from the point of view of its financial or personal value and may influence his/her actions; in this context, the assessment of the moderate character should be conducted for all benefits received from the same giver: the Code stresses that a benefit that may appear “moderate” when looked at individually may not be moderate together with other benefits. When it comes to assessing whether a benefit is moderate, the following circumstances are to be taken into account:
- Position of the recipient: more severe restrictions on benefits are applied to certain employees, for instance, to the individuals who make or may influence the decisions regarding public contracts, work in certain sectors such as health and social care; besides that, it is necessary to take into accounts the position of the receiver as related to the giver: benefits to the individuals somehow related to decision making affecting the giver is a red flag;
- Personal value of the benefit: the risk of a benefit being considered improper increases according to the economic or personal value of the benefit, as well as to the number of benefits given to the same recipient. The Code, in particular, highlights that offering on several occasions of lunch and coffee to a public employee will be considered as a form of bribery in a court;
- Work connection: the risk of a benefit being considered improper also increases if it is of a type that is “unrelated” to the recipient’s duties. For example, gatherings to which a wide circle of people are invited with the aim of generating contacts and providing information on business activities are in general permitted, even if food and drink are offered.
3) As regards the recipients of the third category - in the private sector - the provisions concerning improper benefits are generally similar to those established by the Code for the second category. In addition, when assessing the “moderate” character of a benefit in the private sector, it is necessary to take into account the occasion on which it is given. For instance, a benefit is not permissible in the case of ongoing business negotiations with the recipient’s employer or principal or during an on-going assignment. For example, inviting the other party to a Christmas dinner or other similar event which would be considered as a normal practice during the negotiation of an agreement is not permitted.
Section three of the Code is centered on due diligence of intermediaries. According to the Code, an “intermediary” means a person appointed by a company to represent it in a particular matter and to whom it supplies money or other assets. Intermediaries can consist, for example, of agents, consultants, representatives, subsidiaries, brokers, business intermediaries, suppliers, etc.
Both the national and international anti-bribery laws require that the Swedish companies conduct a complex due diligence assessment of the individuals and entities representing them. Otherwise companies may be held liable for a negligent financing of bribery which is a crime under the Swedish law.
Therefore, a company should have a tailored system for evaluating intermediaries which takes into consideration its particulars (size, ownership structure, business operations, etc.) and a person (persons) specifically appointed within the company to ensure that such a system exists and that risk assessments are carried out. The system must ensure that the company:
- carries out risk assessments of intermediaries, including risks related to the country where the intermediary operates or is registered, industry risks, the reason why this specific intermediary is selected (for instance, whether the intermediary has been recommended by a customer or by a public official), contract amount, type of contract and compensation structure, as well as relationships of the intermediary with officials in public bodies and organisations. Taking into account different factors, the risk assessment of intermediaries may result in splitting them into three categories in accordance with the level of risk associated with them, namely low, medium and high;
- check of every single intermediary, whose aim is to decide whether there is a real need to use an intermediary and whether it is justifiable to use the intended intermediary. The check must be proportionate to the risk category (low-medium-high) in which the intermediary has been placed according to the risk assessment. It includes: analysis of general information about the intermediary, structure of its beneficial ownership, assessment of the financial background and form of remuneration of the services of the intermediary, its expertise, as well as corruption prevention measures adopted by the intermediary and its reputation (including cases of liability and involvement in legal proceedings regarding violations of anti-corruption legislation);
- evaluation of intermediaries based on the results of checks: if checks of an intermediary do not conclude with the identification of red flags, it is possible to proceed with the conclusion of an agreement; if red flags are identified, an evaluation needs to be carried out on how these should be reduced, and if it is not feasible the process of entering into an agreement with the intermediary must be interrupted.
The corporate system for conducting due diligence checks of intermediaries should provide for an obligatory risk assessment before engaging with a new intermediary as well as a recurring re-evaluation of existing intermediaries. In this context, the re-evaluation of existing intermediaries is recommended in the event that any material change takes place with regard to the intermediary (for example, if its ownership structure changes or any suspicions of irregularities linked to the intermediary arise) according to the level of risk. For example, for the intermediaries posing a low risk checking and evaluation takes place in the operational activities; in the event of a medium risk the support of a compliance officer or a person in the organisation outside the operational activities who has specific responsibility for the system for intermediaries may be required; if the risk is high (large contract amounts in highly corrupt markets), then the evaluation may need to be carried out at the level of the board of directors.
*The Swedish Anti-Corruption Institute (Institutet Mot Mutor) – is a Swedish non-profit organisation founded in 1923. Its activities are focused on the promotion of standards of ethical business behaviour and the fight against bribery and other forms of corruption primarily through awareness-raising, communication and consulting support to companies, trade confederations, media and authorities. The Stockholm Chamber of Commerce (Stockholms Handelskammare), the Swedish Association of Local Authorities and Regions (Sveriges Kommuner & Regioner) and the Confederation of Swedish Enterprise (Svenskt Näringsliv) are the principals of the Institute.