Managing bribery and

corruption risks in the

oil and gas industry
The global nature and scale of the oil and gas sector,
and the complexity of the working and contractual
relationships with governments, venture partners,
suppliers and other contractors, make compliance with
anti-bribery and anti-corruption regulation something
that requires significant management focus.
Contents

Introduction 4
Why oil and gas? 5
Compliance pressure points 7
Responding to the challenge 11
Eight steps to an effective anti-corruption compliance program 13
How EY can help 17
Conclusion 19
Contacts 21

Managing bribery and corruption risks in the oil and gas industry 2
3 Managing bribery and corruption risks in the oil and gas industry
Introduction
Bribery and corruption risk is becoming
an increasing concern for businesses,
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operating in the oil and gas sector are
among those that have incurred the
egklka_faÕ[Yflh]fYdla]k&Afalkegkl
recent Bribe Payers Index, Transparency
Afl]jfYlagfYda\]flaÕ]\[gehYfa]kafl`]
oil and gas sector as being perceived to
be more likely to bribe than those in
other sectors; it was in the bottom
*-g^)1k][lgjk&1
Volatile commodity prices and a growing
energy demand, alongside a tightening
of access to reserves and advances in
technology, have seen oil and gas
companies increasing their exploration
activities, reinvesting in capital projects
and undertaking aggressive merger and
Y[imakalagf E9!Y[lanalq&L`]f]]\^gj
growth is driving companies to expand
further into markets that may have
traditionally been regarded as too
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As the commercial and operational risk
hjgÕd]kg^[gehYfa]k[`Yf_]$
consideration needs to be given to the
a\]flaÕ[YlagfYf\eYfY_]e]flg^
ZjaZ]jqYf\[gjjmhlagfjakc&
Adding to the importance of managing
corruption risk is the increase in
anti-corruption legislation with a global
j]Y[`&L`ak`Yk]pl]f\]\k]fagj
management’s accountability beyond
the functional, operational and
bmjak\a[lagfYdj]ealkg^l`]hYkl&
This trend is expected to continue as
more countries seek to refresh and
internationally align their anti-bribery
Yf\Yfla%[gjjmhlagf 9:9;!d]_akdYlagf&
1
Bribe Payers Index 2011, Transparency International
Managing bribery and corruption risks in the oil and gas industry
Not only does increased regulation Greater transparency of payments to
and scrutiny aid in protecting both governments is also demanded by the
hmZda[Yf\hjanYl]k][lgjÕfYf[]k$alYdkg US Dodd-Frank Wall Street Reform and
contributes to an organization’s social ;gfkme]jHjgl][lagf9[l&;gehYfa]k
da[]fk]lggh]jYl]&L`]]f\gjk]e]flY registered with the US Securities and
project receives from local stakeholders Exchange Commission (SEC) are
outside of regulatory approval is a required to disclose in their annual
relatively new concept, but one that is reports payments made to any non-US
gaining momentum, particularly in the government for purposes of the
gadYf\_Ykk][lgj&L`]hjgeglagfg^ commercial development of oil,
ethical conduct and contribution to the fYlmjYd_Ykgjeaf]jYdk&
well-being of local communities are
In this publication, we discuss why
critical factors in attaining this; failure
bribery and corruption are ongoing
to obtain local support has the potential
challenges for the oil and gas sector
lgZdg[chjgb][lk&
and outline practical considerations
Enforcement agencies are responding to for companies looking to manage
the mounting pressure for public and [gjjmhlagfjakck&
private sector organizations to take
steps to eliminate bribery and corruption
by pursuing prosecutions and imposing
kYf[lagfk&H]fYdla]k^gjnagdYlaf_9:9;
legislation are severe and include
aehjakgfe]fl$mfdaeal]\Õf]kYf\
j]hmlYlagfYd\YeY_]&L`]_dgZYdfYlmj]
and scale of the oil and gas sector, and
the complexity of the working and
contractual relationships with
governments, venture partners,
suppliers and other contractors, make
compliance with all the various ABAC
regulations something that requires
ka_faÕ[YfleYfY_]e]fl^g[mk&L`]
Bribery Act in the UK, for example, has a
wider reach than the US Foreign Corrupt
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already subject to the requirements of
l`]>;H9j][g_faraf_l`Yl[gehdaYf[]
oal`l`]>;H9\g]kfglYmlgeYla[Yddq
]fkmj][gehdaYf[]oal`l`]:jaZ]jq9[l&
4
Why oil and gas?
While ABAC enforcement actions have
been seen in a number of industries, the
oil and gas sector has been subject to
fme]jgmk`a_`hjgÕd][Yk]k&L`akakfgl
because individuals or companies who
operate in this sector are more corrupt
or susceptible to bribery, but there are
characteristics of the sector that
af[j]Yk]l`]jakck&
Conducting business in
emerging markets
As natural resources in more established
markets become scarce and companies
look to access new reserves, there is an
increasing requirement to explore and
operate in countries where there is
h]j[]an]\lgZ]Y`a_`d]n]dg^[gjjmhlagf&
Unstable political situations and the lack
of infrastructure and controls necessary
to combat corruption can make these
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For example, Africa, Latin America, Asia
and the Middle East are all key growth
eYjc]lk^gjl`]gadYf\_Ykk][lgj&Af
general, countries in these locations
tend to have lower rankings on
Transparency International’s Corruption
Perceptions Index, indicating that there
is perceived to be a higher level of
[gjjmhlagf&3
Operating in numerous and diverse
locations presents a challenge when
attempting to implement business
hgda[a]kYf\hjg[]\mj]k&Ogjcaf_Y[jgkk
3
Corruption Perceptions Index 2013, Transparency International
5 Managing bribery and corruption risks in the oil and gas industry
countries with differing cultures, as well
as differing access to technology, adds
lgl`][`Ydd]f_]&Af%[gmfljq]ehdgq]]k
and other stakeholders may be
accustomed to a particular way of
operating and, as a result, modify or
bypass global policies to proceed with
business activity that may be fraudulent
gj[gjjmhl&
Frequent dealings with
government officials
Many organizations involved in the
oil and gas sector are either wholly or
partially state-owned, and their
employees are likely to be considered
^gj]a_fg^Õ[aYdkmf\]jZjaZ]jqYf\
[gjjmhlagfd]_akdYlagfYjgmf\l`]ogjd\&
Emerging markets tend to be excessively
bureaucratic, which results in many
touch points with government where
ZjaZ]k[YfZ]\]eYf\]\&
Afkge]eYjc]lk$_gn]jfe]flg^Õ[aYdk
have relatively low salaries compared
with those in the private sector, raising
the temptation for them to take bribes to
kmhhd]e]fll`]ajaf[ge]k&:mll`akakfgl
bmklj]klja[l]\lg[Yk`ZjaZ]k&=n]fkeYdd
gifts, meals or entertainment that might
be considered de minimis in other
countries may be perceived as attempts
lgaehjgh]jdqafÖm]f[]\][akagf%eYcaf_$
requiring carefully considered policies,
ljYafaf_Yf\egfalgjaf_&
The high number of interactions with
government across all levels of the oil
and gas business increases the risk of
[gjjmhlhjY[la[]kafÖm]f[af_hgda[qYf\
g^Õ[aYdkmkaf_l`]ajhgkalagfkg^hgo]j
lgkgda[alZjaZ]k&
Heavy reliance on third parties
Oil and gas companies often hire
third parties to manage their on-the-
_jgmf\ljYfkY[lagfk&Mf\]jl`]>;H9af
the US and most other international
anti-corruption legislation, companies
may be liable for corrupt payments or
gl`]jZ]f]Õlkhjgna\]\lg_gn]jfe]fl
g^Õ[aYdkZql`gk]l`aj\hYjla]k&Mf\]jl`]
UK Bribery Act, the company will be
liable for an associated person’s bribery
if it is intended to obtain or retain
business, or a business advantage, for
l`][gehYfq&
Exercising control over third parties is a
ka_faÕ[Yfl[`Ydd]f_]&EYfq]f^gj[]e]fl
actions, particularly in the US, relate to
parent companies being held responsible
for the behavior of their agents and
intermediaries when performing services
gfZ]`Yd^g^l`]hYj]flgjdg[YdkmZka\aYjq&
Managing bribery and corruption risks in the oil and gas industry 6
Compliance pressure points
Companies in the oil and gas sector
operate in a high-pressure environment
where the potential payoffs from
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Conversely, delays or downtime in the
value chain have the potential to
ka_faÕ[Yfldq]jg\]l`]Zgllgedaf]&
This pressure can create an imbalance
between compliance and operations, and
has the potential to induce activities that
eYqZ]eakYda_f]\oal`[gjhgjYl]hgda[a]k&
Rationalization
Internal controls
Motivation Suitable target
(pressure) (opportunities)
Ethical culture
The model above is based on “The Fraud Triangle”
originally developed by Donald R Cressey.
Procurement
Hjg[mj]e]flakYc]qZjaZ]jqYf\
corruption risk area for the sector due to
the high levels of expenditure involved in
gadYf\_Ykhjgb][lk&
7 Managing bribery and corruption risks in the oil and gas industry
Locally sourced supplies
Often, there is a need for companies to
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can stem from the remote locations of
operations, mandated government
requirements or a commitment to
kmhhgjlaf_dg[Yd[geemfala]k&O`Yl]n]j
the reason, these contracts are often
potentially lucrative and highly sought
after by local companies, creating the
circumstances where there is a higher
risk of fraud, bribery, corruption and
gl`]jYZmk]k&
Sole-supplier sourcing
While the majority of companies
encourage competitive tendering, there
can be a propensity within the oil and gas
sector to source contracts with a sole
kmhhda]j&L`]j]Yj]g^l]fnYda\j]Ykgfk
for doing so, such as a limited selection
of technically skilled providers, providers
already mobilized within a region or a
f]]\^gj]ph]\al]\hjg[mj]e]fl&O`ad]Y
relationship may appear above board on
the surface, this type of contracting can
\ak_mak]mf\ak[dgk]\[gfÖa[lkg^afl]j]kl
Yf\ca[cZY[ck[`]e]k&9\\alagfYddq$
where the process has been improperly
[gf\m[l]\$ÕfYf[aYddgkk]k[YfZ]
incurred that can compromise the quality
g^_gg\kYf\k]jna[]khjgna\]\&
Split orders
An issue we often observe is the splitting
of orders within the procurement
hjg[]kk&L`ak[YfZ]\gf]lgdgo]jl`]
level of approval required or to avoid
l]f\]jaf_^gjYkmhhda]j&O`ad]l`ak
conduct can conceal fraudulent
activities, it is not always undertaken
oal`[gjjmhlafl]fl&O]g^l]fk]]klY^^
viewing it as necessary to bypass
“bureaucratic” internal controls or to
e]]lZmkaf]kk\]eYf\k&
Other factors
Companies in the oil and gas sector need
to be aware when third parties, such as
engineering, procurement and
[gfkljm[lagfeYfY_]e]flÕjek$Yj]
used to conduct procurement on their
Z]`Yd^&L`]hjg[mj]e]flY[lanala]kjmf
Zql`]k]ÕjekYj]kaeadYjdqkmk[]hlaZd]
to improper practices, and companies
eYqÕf\l`]ek]dn]kdaYZd]^gjl`]Y[lkg^
l`aj\hYjla]kmf\]j9:9;d]_akdYlagf&
Companies with remote operations are
egj]dac]dqlg^Y[]\a^Õ[mdla]ko`]f
egfalgjaf_hjg[mj]e]fl[gfljgdk&G^l]f$
these sites are not connected to
corporate systems and electronic
controls, which limits management’s
[gfljgd&?]g_jYh`a[akgdYlagfakYdkg
likely to limit internal audit monitoring,
thus creating opportunities for fraud,
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Bid and tender process
Because many organizations in the
extractive industries sector are
state-owned, service providers to the
sector must exercise caution when
Za\\af_^gj[gfljY[lk^jgel`]e&
Ka_faÕ[Yfl>;H9nagdYlagfk`Yn]
resulted from such service providers
paying bribes around tender processes
oal`klYl]%gof]\[gehYfa]k&
These service companies also need to be
aware of the risks associated with gifts
Yf\]fl]jlYafe]flhjgna\]\lgg^Õ[aYdk
from state-owned companies, and the
transparency and appropriateness of
such, especially when considering bid
Yf\l]f\]jhjg[]kk]k&
Customs
Hggj[mklgek[gfljgdk`Yn]YeYbgj
impact on the ability of an oil or gas site
lggh]jYl]]^Õ[a]fldq&<]dYqkafl`]
customs process can be costly to
companies; for example, staff and
equipment may already be mobilized but
unable to work as they await critical
equipment to be cleared through
[mklgek&L`]hj]kkmj]gjÉeglanYlagfÊlg
achieve results and meet development
timelines can create a heightened risk of
ZjaZ]jqYf\[gjjmhlagf&
Businesses are particularly vulnerable
when starting operations, as they
have to import drilling equipment and
Managing bribery and corruption risks in the oil and gas industry
af^jYkljm[lmj]&Af]e]j_af_eYjc]lk$ As a result, oil and gas companies are
customs clearance can be subject to subject to ever-increasing levels of
\ak[j]lagfYjqhjg[]kk]kYf\^]]k& _gn]jfe]flkmh]jnakagfYf\j]_mdYlagf&
;mklgekg^Õ[]jk[Yf`gd\Y`a_`d]n]dg^ Government licenses and permits are
control and may solicit bribes to perform critical to the operations of a company in
jgmlaf]\mla]k&>Y[adalYlagfhYqe]flk[Yf l`]gadYf\_Ykk][lgj&AfY\\alagflg
be routine practices in emerging ]f_Y_af_oal`dg[Yd_gn]jfe]flg^Õ[aYdk
markets, and company staff may to secure and retain leases and
consider these necessary in the course tenements, permits are often required
g^Zmkaf]kk&@go]n]j$l`]k]hYqe]flk for other activities, such as drilling,
are treated differently under various construction and the use of state-owned
ABAC statutes and could be considered af^jYkljm[lmj]&9\\alagfYddq$[gehYfa]k
illegal under some regulations, will also be scrutinized in areas such as
af[dm\af_l`]MC:jaZ]jq9[l& the environment, health and safety,
social impact and community
As a result of these challenges,
\]n]dghe]flhjgb][lk&
companies often engage third-party
agents with local knowledge, such as
[mklgekY_]flk$lgYkkakloal`aehgjlk&
Companies need to exercise caution in
monitoring the activities of their third
parties, as they can be liable for their
Y[lagfkmf\]j9:9;d]_akdYlagf&
Licenses and permits
Hgdala[Ydmfj]klafFgjl`9^ja[YYf\
the Middle East, high oil prices and the
subsequent growth of new state-owned
oil companies have led to many
governments of resource-rich nations to
seek increased control over the industry
(especially where foreign investors are
involved) in order to increase tax and
jgqYdlqj]n]fm]k&
8
In emerging markets, companies may be
]phgk]\lg_gn]jfe]flg^Õ[aYdkk]]caf_
ZjaZ]kafj]lmjf^gjl`]k]h]jealk&O`]j]
lucrative development agreements for
rights to reserves are available,
companies may come under pressure to
bribe high-ranking politicians in order to
k][mj]km[`[gfljY[lk&9\\alagfYddq$lYp]k
and other remittances on revenues and
royalties for extraction and production
agreements may bypass government
bank accounts and be diverted to
af\ana\mYdkogjcaf_af_gn]jfe]fl&
Bribes are not just payments to
af\ana\mYdkgj]flala]k&Af\aj][lZjaZ]jq
can include, for example, contributions to
scholarship funds, charitable donations,
or payments to local development funds
k]lmhlghjgna\]_gn]jfe]flg^Õ[aYdk
oal`Y\aj][lgjaf\aj][lZ]f]Õl&L`]k]
may in themselves appear to be valid
ljYfkY[lagfk$eYcaf_al\a^Õ[mdl^gj
[gehYfa]klg\]l][laehjgh]jhYqe]flk&
Joint ventures
Companies in the oil and gas sector are
often involved in joint ventures with
other companies, foreign governments
gjklYl]%gof]\]flala]k&>j]im]fldq$
these joint ventures will appoint
_gn]jfe]flg^Õ[aYdklgkalgfl`]
9 Managing bribery and corruption risks in the oil and gas industry
board of directors to protect the
afl]j]klkg^l`]klYl]&L`]k]
arrangements can increase the risk of
h]j[]an]\gjj]Yd[gfÖa[lkg^afl]j]klYf\
\YeY_]l`]j]hmlYlagfg^l`][gehYfq&
;gehYfa]k[YfYdkgÕf\l`]ek]dn]k
liable for the actions of joint venture
hYjlf]jko`gY[lgfl`]ajZ]`Yd^&
Misappropriation of assets
Oil and gas companies have substantial
holdings of assets — both inventory and
consumables — that can be of value to
others, and can be at risk of theft or used
YkYZjaZ]&Lqha[Yddq$l`]dYj_]klngdme]k
of leakage occur through the theft of fuel
and other resources used in day-to-day
gh]jYlagfk&O`ad]l`]k]eYqkge]lae]k
be low-value in isolation, the quantities in
which they can be misappropriated can
have a material impact to the bottom line
g^Yfgh]jYlagf&
In emerging markets, these consumables
are typically scarce or costly resources
^gjdg[Yd[geemfala]k&Dg[YdklY^^eYq
be incentivized to misappropriate these
assets, as they can either be used in
\Yadqda^]gjj]kgd\YlYhj]eame&
Alternatively, in the absence of cash,
these resources can be used to facilitate
ZjaZ]jq&>gj]pYehd]$^m]d[YfZ]mk]\
^gj_gn]jfe]fln]`a[d]k&;jala[YdkhYj]k
are held to enable the continued
operation of a site, and theft or improper
use of these assets can lead to downtime
Yf\aehY[lÕfYf[aYdh]j^gjeYf[]&
Cash-based economies
Oil and gas operations have a tendency,
particularly in emerging markets, to be
heavily reliant on cash for the payment of
local salaries, vendors and other ancillary
]ph]f\almj]&L`]k]ljYfkY[lagfkYj]egj]
challenging to validate, and employees
may be required to create their own
\g[me]flYlagflgkmhhgjl]ph]f\almj]&
<]n]dghaf_ZYfcaf_Yf\ÕfYf[aYd
systems in emerging markets make this
Y\a^Õ[mdlYj]Y^gjY[gehYfqÌk
[gjhgjYl]g^Õ[]lg[gfljgdj]egl]dq&
Companies need to be aware of the risks
cash presents, as it can enable the
payment of bribes or facilitation
hYqe]flklg_gn]jfe]flg^Õ[aYdk&
Frequently, cash passing through these
sites is not subject to rigorous
documentation standards and there
eYqZ]afkm^Õ[a]fl[gfljgdkafhdY[]lg
ensure it is spent for its intended
hmjhgk]&
People and culture
On-site teams are typically resourced
using a mixture of local and expatriate
klY^^&L`]kcaddk$imYdaÕ[YlagfkYf\
cultural differences, as well as the social
dynamic that on-site living creates, can
expose oil and gas companies to
af[j]Yk]\[gehdaYf[]hj]kkmj]k&
Expatriate staff and contractors
Expatriate cultures on-site can foster
[gfÖa[lkg^afl]j]kl&L`]j]akg^l]fdalld]lg
distinguish between employees and
contractor staff, and the realms of
business and personal relationships are
kmZb][llg\aklgjlagf&;gfljY[lgjk[Yf
often hold positions of authority while
bearing no real connection to the
[gehYfq&L`ak[Yfaf[j]Yk]l`]jakc
of abuse, as they may have a higher
propensity to deviate from company
hgda[a]k&
Managing bribery and corruption risks in the oil and gas industry
Expatriate staff typically operate
with a large degree of autonomy and
responsibility, providing them with the
opportunity to undertake improper
hjY[la[]k&Imal]g^l]f$hgda[a]kYf\
procedures on-site are newly embedded
or less rigorously enforced, enabling
expatriate staff to dictate their
Yhhda[Ylagf&L`ak[Yfd]Y\lghjg[]kk]k
that circumvent controls, either
intentionally for personal gain or
through a genuine desire for the
gh]jYlagflgkm[[]]\&KlY^^[YfZ][ge]
\aklYf[]\^jgel`][gjhgjYl]g^Õ[]k
and rationalize control violations as a
necessary way of conducting business
afl`]j]_agf&
Local staff and contractors
In small communities, local employees
may have a strong network of
relationships that have the potential to
[j]Yl][gfÖa[lkg^afl]j]klYf\af[j]Yk]
the risk of bribery and corruption, such
Ykl`gk]oal`hmZda[g^Õ[aYdk$n]f\gjk
Yf\[geemfalqd]Y\]jk&<a^^]jaf_
cultures and business standards may
d]Y\lg[gfÖa[lkj]eYafaf_mf\ak[dgk]\
and business or funds being
aehjgh]jdq[`Yff]d]\&
10
Responding to the challenge
Companies in the oil and gas sector need
to address their corruption risks
proactively by implementing an effective
Yfla%[gjjmhlagf[gehdaYf[]hjg_jYe&
Although this measure cannot guarantee
that a company will eliminate all risk of
corruption occurring, it can notably
mitigate these risks through their timely
a\]flaÕ[YlagfYf\lj]Yle]fl&:qY\ghlaf_
such a program, companies may also be
in a better position to demonstrate the
measures that were taken to manage
such risks, should a potential corruption
Zj]Y[`Z]a\]flaÕ]\Yf\k[jmlafar]\Zq
Yml`gjala]k&
A step-by-step approach to
evaluate and address
corruption risks
EY has conducted numerous corruption
risk assessments and has assisted
companies with the development of
anti-corruption compliance programs,
af[dm\af_\]ka_faf_hgda[a]k$ÕfYf[aYd
controls, training, anti-corruption
11
compliance internal audits and other The UK Bribery Act appears to have
egfalgjaf_e][`Yfakek&L`jgm_`gmj an even broader jurisdictional reach
work, we have developed a view of what l`Yfl`]>;H9$[gn]jaf_YfqY[l
companies should be doing to detect committed anywhere in the world by any
and deter corruption and protect commercial organization that conducts
l`]ajk`Yj]`gd\]jk& Zmkaf]kkafl`]MC&AlYdkg]phda[aldq
gmldYok[gee]j[aYdZjaZ]jq&
Key anti-corruption laws and
Businesses should be familiar with these
accepted standards
laws and the related guidance issued
Although anti-corruption laws have been by the enforcement bodies, but should
]fY[l]\ZqeYfq[gmflja]k$l`]>;H9 Ydkgmf\]jklYf\Yfqka_faÕ[Yfl
and the UK Bribery Act are generally the differences in local anti-corruption laws in
most expansive in terms of proscribed l`]bmjak\a[lagfko`]j]l`]qgh]jYl]&
Y[lanala]kYf\bmjak\a[lagfYdj]Y[`&L`] Individuals responsible for anti-corruption
>;H9j]eYafkl`]egklY__j]kkan]dq programs should also be familiar with the
]f^gj[]\Zqk]n]jYdgj\]jkg^eY_falm\]& key guidance documents that exist,
The UK Bribery Act contains provisions including the OECD Good Practice
that arguably expand the reach of that Guidance on Internal Controls, Ethics and
dYoZ]qgf\l`]>;H9&9[[gj\af_dq$l`]k] Compliance&
are the laws that most global companies
are using as the standards for their These reference documents provide a
Yfla%[gjjmhlagfhjg_jYek& broad overview of the necessary
components of a robust anti-corruption
Dac]l`]>;H9$l`]MC:jaZ]jq9[l program, from setting the tone and
outlaws bribery of foreign public values of the organization to designing
g^Õ[aYdk$ZmlalYdkg`Ykoa\]jk[gh]& Yf\[geemfa[Ylaf_[gfljgdk&O]k]]
For example, it has no exception for eight steps to building such a program
facilitating payments — small “grease K]]hY_])+!&
payments” — paid to government
employees and no “books and records”
hjg`aZalagfk&
Managing bribery and corruption risks in the oil and gas industry
Managing bribery and corruption risks in the oil and gas industry 12
Eight steps to an effective anti-corruption
compliance program

Taking the time to identify and analyze risk is essential to developing an effective
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\]egfkljYl]l`Ylalmk]\\m][Yj]afYkk]kkaf_alkjakc$k`gmd\mf^gj]k]]fakkm]kYjak]&
The corruption risk assessment should focus on actual risks posed by the nature of a
company’s operations, the degree of business with governmental entities, its use of agents
and other intermediaries (for example, freight forwarders and customs agents), the

1
Conduct a risk
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It should identify what policies and controls the company has in place to mitigate its
assessment program [gjjmhlagfjakcYf\YfYdqr]l`]aj]^^][lan]f]kk&
A plan for an anti-corruption program responsive to the present risks and current controls
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L`]\]hl`g^l`]jakcYkk]kke]floaddnYjqZq[gehYfq&L`]hjg[]\mj]kafngdn]af^gjeYlagf
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YfYdqkak&Egj]\]lYad]\jakcYkk]kke]flkYdkgafngdn]ljYfkY[lagfl]klaf_l`Yl[YfZ]
h]j^gje]\Yll`][gjhgjYl]d]n]dYf\af`a_`%jakcdg[Ylagfk&

Companies should develop a company-wide anti-corruption policy based on the

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j]imaj]e]flk$dg[YddYo&L`]gn]jYdd[gehdaYf[]hgda[qk`gmd\Z]Y[d]YjYf\mfYeZa_mgmk

2
Develop a corporate
statement of the company’s position that both governmental and commercial bribery on
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reporting and recording transactions, and having in place internal controls to ensure proper
anti-corruption policy [gfljgd$Y[[gmflYZadalqYf\kY^]_mYj\af_g^k`Yj]`gd\]jYkk]lk&
The policy should also encourage employees to report violations or seek guidance, and offer
]pYehd]kg^Éj]\ÖY_kÊlg]fYZd]]ehdgq]]klgj][g_far]Yf\Ynga\hjgZd]ekalmYlagfk&

13 Managing bribery and corruption risks in the oil and gas industry

3
Implement anti-corruption
policies and controls
4
Implement anti-corruption
financial controls
Managing bribery and corruption risks in the oil and gas industry
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eYfq[gehYfa]kÌYfla%[gjjmhlagf[gehdaYf[]hjg_jYek&AlakYdkgh]j`Yhkl`]egkl[gkldq
afl]jekg^]^^gjlYf\j]kgmj[]kf]]\]\lgY\\j]kkl`]jakckhgk]\Zqafl]je]\aYja]k&
Giving gifts or providing meals, entertainment or travel to government employees could,
mf\]j[]jlYaf[aj[meklYf[]k$nagdYl]l`]>;H9gjMC:jaZ]jq9[l&Km[`]ph]f\almj]kf]]\
lgZ]egfalgj]\[Yj]^mddqlgYnga\]n]fl`]Yhh]YjYf[]g^aehjghja]lq&L`akakYfYj]Yg^
special concern in certain countries, where the culture of gift giving and business
]fl]jlYafe]flakÕjedqaf_jYaf]\Yf\_gn]jfe]flYf\hjanYl]k][lgjg^Õ[aYdkYlnYjagmk
d]n]dk]ph][lkm[`[gmjl]ka]k&
9ke]flagf]\hj]nagmkdq$o`ad]d]_Ydmf\]jl`]>;H9$^Y[adalYlaf_hYqe]flkYj]add]_Yd
mf\]jl`]MC:jaZ]jq9[l&L`]qYj]Ydkgdac]dqlgZ]add]_Ydafl`]dg[Yd[gmfljqo`]j]l`]q
Yj]eY\]&?an]fl`]\a^^]j]fld]_Ydlj]Yle]flY[[gj\]\km[`hYqe]flkZql`]nYjagmk
Yml`gjala]kYf\l`]af`]j]fl\a^Õ[mdla]kaf]f^gj[af_Yhgda[ql`Ylhjg`aZalkZjaZ]jqZml
allows facilitating payments, many companies are banning them altogether, with limited
]p[]hlagfk^gjkalmYlagfkafngdnaf_hgl]flaYdaeeaf]fl`Yjelgda^]gjhjgh]jlq&
Guidelines for charitable giving should be designed to ensure that donations are received
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?gg\[gfljgdd]jk`ahakl`]Õjkldaf]g^\]^]fk]Y_Yafkl[gjjmhlhYqe]flkYf\daealkl`]
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enforcement of travel and expenses rules related to meals and entertainment, and the
detailed reporting of the people entertained and the business purpose, supports
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ZggckYf\j][gj\knagdYlagfk&G^l]f$l`ake]Yfk]f`Yf[af_ÕfYf[aYd[gfljgdkZ]qgf\l`gk]
fgjeYddq[gfka\]j]\Y\]imYl]lge]]lÕfYf[aYdj]hgjlaf_j]imaj]e]flk&L`akakZ][Ymk]
there is the additional purpose of deterring and detecting illicit or improper payments for
o`a[`l`]j]akfgeYl]jaYdalqYhhda[YZd]&Km[`[gfljgdkaf[dm\]]f`Yf[]\ljYfkY[lagfj]na]o$
approval and accounting procedures, controls around bank accounts and petty cash,
enhanced vendor approval and payment processes, and increased scrutiny of
`a_`%jakcljYfkY[lagfk&
14
 Anti-corruption training is imperative, especially for global organizations employing
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to obtain business through bribery or other improper means should receive anti-corruption

5
[gehdaYf[]ljYafaf_&;gehYfa]kk`gmd\Ydkg[gfka\]jljYafaf_Yddafl]jfYdYm\al$Y[[gmflaf_$
ÕfYf[aYdYf\d]_Yd]ehdgq]]k&9\]imYl]ljYafaf_lggdkeYqZ]dan]ljYafaf_Yf\o]Z%ZYk]\
Conduct anti-corruption ljYafaf_^gjk]fagj]ehdgq]]k$Yf\o]Z%ZYk]\ljYafaf_^gjYdd]ehdgq]]k&=f`Yf[]\ljYafaf_
compliance training eYqZ][gfka\]j]\^gjkh][aÕ[_jgmhk3^gj]pYehd]$k]fagjeYfY_]e]fl$Y[[gmflaf_$kYd]k
Yf\eYjc]laf_Yf\ÕfYf[]&9[gehYfqk`gmd\`Yn]Yhjg[]kkafhdY[]lg]fkmj]l`Yl
ljYafaf_eYl]jaYdak[gflafmgmkdqj]^j]k`]\&EYfq[gehYfa]k[gehd]e]fll`]ajljYafaf_
oal`Y[]jlaÕ[Ylagfhjg_jYe&

Egfalgjaf_e]YfkYfla%[gjjmhlagf[gehdaYf[]Ym\alk&L`akY[lanalq[YfYdkgaf[dm\]\YlY
eafaf_Yf\^gj]fka[\YlYYfYdqla[k&L`]hmjhgk]g^Yfla%[gjjmhlagf[gehdaYf[]Ym\alk
should be to test for substantive compliance by seeking to identify potential violations or
j]\ÖY_k&9m\alkYdkgg^l]fmf[gn]jf]ojakckfglhj]nagmkdqk]]fgj^mddqYhhj][aYl]\&
Afl`akoYq$l`]qY[lYkhYjlg^Yfgf_gaf_[gjjmhlagfjakcYkk]kke]flhjg[]kk&

6
Monitor the program
Anti-corruption audits should be stand-alone audits that are not integrated with a larger set
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into larger audit programs is ineffective; it inevitably leads to situations where the auditor
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9fla%[gjjmhlagfYm\alk`Yn]Yhgo]j^md\]l]jj]fl]^^][l&L`]qk]f\Ye]kkY_]l`Yll`]
k]fagjeYfY_]e]flak[geeall]\lg[gehdaYf[]&9hhjghjaYl]^gddgo%mhYf\\ak[ahdafYjq
Y[lagfkYj][jm[aYdlg[j]Ylaf_YfYfla%[gjjmhlagf[mdlmj]&

15 Managing bribery and corruption risks in the oil and gas industry
 ;gehYfa]kk`gmd\\]n]dghYhgda[qYf\kh][aÕ[hjg[]\mj]k^gjYfla%[gjjmhlagf\m]
\ada_]f[]afYfq[gfl]ehdYl]\e]j_]j$Y[imakalagfgjbgafln]flmj]&
EYfq>;H9hjgk][mlagfk`Yn]Yjak]fafl`][gfl]plg^E9$o`]j]hYklY[lagfkg^
[gjjmhlagf[Ye]lgda_`lafl`]\m]\ada_]f[]&L`]Mfal]\KlYl]k<]hYjle]flg^Bmkla[]`Yk

7
taken the position that companies must conduct thorough due diligence on the issue of
hYkl[gjjmhlagflgYnga\af`]jalaf_daYZadalq^gjkm[`Y[lagfk&
Anti-corruption procedures The amount of anti-corruption due diligence that can be performed in the context of M&A is
in M&A
subject to negotiation between the buyer and the seller, and is often conducted under
afl]fk]lae][gfkljYaflk&>gddgoaf_l`][dgkaf_g^l`]ljYfkY[lagf$l`]Y[imajaf_[gehYfq
should put anti-corruption compliance high on its integration plan and conduct further risk
assessment procedures as necessary to ensure it has a good grasp of, and is addressing,
l`][gjjmhlagfjakckhgk]\Zql`]f]ogj_YfarYlagf&

Comprehensive corruption risk assessments should be conducted periodically, to make

sure that the anti-corruption program is evolving to meet new risks posed by the changing
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8
Reassess risk and
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Companies can also combat the risk of fraud, bribery and corruption through collective
modify program Y[lagf$a&]&$Õ_`laf_[gjjmhlagf[gdd][lan]dqoal`YddklYc]`gd\]jk3^gj]pYehd]$_gn]jfe]flk$
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Yfla%[gjjmhlagf[geeale]flkZ]lo]]fYf\Yegf_\a^^]j]flklYc]`gd\]jk&

Managing bribery and corruption risks in the oil and gas industry 16
How EY can help
With a network of more than 2,500
professionals in over 60 countries, we
have substantial investigation experience
and deep knowledge of forensic
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companies in the oil and gas industry to
address the risk of bribery and
corruption and investigate cases of
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Investigations
We investigate allegations of bribery and
corruption, and attempts to conceal such
Y[lanalq&GmjogjcjYf_]k^jgeakgdYl]\
incidents involving a few employees, to
more pervasive conduct across multiple
[gmflja]k&
Anti-corruption due diligence
With companies increasingly held
responsible for the past business
practices of newly acquired subsidiaries,
companies acquiring foreign operations
should consider anti-corruption due
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assessment and investigative procedures
to help companies understand the risks
Yf\aehd]e]flj]e]\aYdY[lagfk&
17
Compliance assessments and Anti-fraud analytics
program advisory O]Ykkakl]\YdYj_]gadÕ]d\k]jna[]k
We provide ABAC compliance company to analyze complex data from
assessments for companies taking various sources to build an anti-fraud
proactive measures to understand their YfYdqla[khjg_jYe&L`]hjg_jYeoYk
risks, and for those contemplating designed to assist with the data
voluntary disclosure or settlement with a\]flaÕ[Ylagf$YfYdqkak\]ka_fYf\
j]_mdYlgjk&O]j]na]o[gehYfq execution of anti-fraud tests across
operations, consultant and agency emdlahd]Zmkaf]kk_jgmhk&GmjdaZjYjqg^
relationships, cash movements, fraud tests focused on oil and gas risk
marketing and sales practices, and areas was applied on the accounts
accounting records to identify suspect payable and travel and entertainment
ljYfkY[lagfk& [gehgf]flkg^l`]ajÕfYf[aYdY[[gmflaf_
kqkl]e&Afl]_jYlaf_nakmYdYfYdqla[k$l]pl
We help companies develop, assess and
mining and risk-scoring algorithms, we
improve their ABAC compliance
a\]flaÕ]\hgl]flaYddq`a_`%jakc
hjg_jYekYf\hjg[]\mj]k&O]j]na]o
transactions from a population of over
corporate compliance policies and
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assessment procedures, and assist with
included duplicative payments, kick-back
education, training and internal
schemes, false inspection reports, and
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other asset misappropriation and
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Forensic Technology and
Discovery Services
We continually invest in leading
technology and infrastructure that allows
us to interrogate large data sets to unlock
the intelligence embedded within client
data, allowing businesses to understand
l`]ajjakckYf\nmdf]jYZadala]kZ]ll]j&
Below are examples where our
technology solutions have been applied in
the oil and gas sector:
Managing bribery and corruption risks in the oil and gas industry
ABAC analytics
We assisted a Fortune 50 company with
the design of an ABAC analytics program
for one of their high-risk countries in
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Leveraging our library of fraud tests and
[gmfljq%kh][aÕ[c]qogj\l]jekYjgmf\
corrupt payment descriptions, our
professionals teamed with compliance
Managing bribery and corruption risks in the oil and gas industry
and internal audit to analyze vendor and
procurement-related data, as well as
employee and agent expense-related
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dashboards and risk-scoring models to
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high-risk vendors, employees and agents
for further substantive testing in the
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teamed with the client to identify and
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18
Conclusion
As business in emerging markets
continues to grow for the oil and gas
sector, companies will become
increasingly challenged by bribery
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g^`a_`>;H9h]fYdla]kafl`]k][lgj$
coupled with new, wide-ranging
legislation such as the UK Bribery Act,
means that companies will be subject to
continuing intense scrutiny from
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Leading companies in the sector are
undertaking thorough reviews of their
ABAC systems and controls, especially
19
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geographic differences are crucial, and a
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[YfZ]af]^^][lan]Yf\ZqhYkk]\&:q
undertaking a risk assessment at country
level, key factors relating to interactions
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and third-party relationships can be
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]^Õ[a]fleYff]j&
Managing bribery and corruption risks in the oil and gas industry
Managing bribery and corruption risks in the oil and gas industry 20
EY Fraud Investigation &
Dispute Services contacts

For further help and information, please contact one of our industry sector or local area
representatives, or log on to www.ey.com/fids.

Name Role Office telephone Email

Global Leader

David Stulb Global Leader + 44 20 7951 2456 david.stulb@ey.com

Oil and gas sector

David Lister UK + 44 131 777 2308 dlister@uk.ey.com

Doug Tymkiw US + 1 504 592 4837 douglas.tymkiw@ey.com

Brenton Steenkamp Australia + 61 8 9429 2244 brenton.steenkamp@au.ey.com

Andrey Novikov Russia + 7 495 648 9618 andrey.novikov@ru.ey.com

Jose Compagño Brazil + 55 11 2573 3215 jose-francisco.compagno@br.ey.com

Regional leaders

Brian Loughman Americas + 1 212 773 5343 brian.loughman@ey.com

John Smart Northern Europe + 44 20 7951 3401 jsmart@uk.ey.com

Ricardo Noreña Western Europe + 34 91 572 5097 ricardo.norenaherrera@es.ey.com

Stefan Heissner Central and Eastern Europe + 49 211 9352 11397 stefan.heissner@de.ey.com

Michael Adlem Middle East + 971 4701 0524 michael.adlem@ae.ey.com

Arpinder Singh India + 91 22 6192 0160 arpinder.singh@in.ey.com

Charles de Chermont Africa + 27 11 502 0426 charles.dechermont@za.ey.com

Chris Fordham 9kaYHY[aÕ[ + 85 22 846 9008 chris.fordham@hk.ey.com

Ken Arahari Japan + 81 3 3503 2510 arahari-kn@shinnihon.or.jp

21 Managing bribery and corruption risks in the oil and gas industry
Managing bribery and corruption risks in the oil and gas industry 22
EY | Assurance | Tax | Transactions | Advisory

About EY
EY is a global leader in assurance, tax, transaction and
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outstanding leaders who team to deliver on our promises
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role in building a better working world for our people, for
our clients and for our commmfala]k&

EY refers to the global organization, and may refer to

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Ernst & Young Global Limited, a UK company limited by
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About EY’s Fraud Investigation & Dispute Services

Dealing with complex issues of fraud, regulatory
compliance and business disputes can detract from
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risk and compliance exposure is a critical business
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our more-than-2,500 fraud investigation and dispute
professionals around the world, we assemble the right
multidisciplinary and culturally aligned team to work
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the benefit of our broad sector experience, our deep
subject matter knowledge and the latest insights from
our work worldwid]&

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EMEIA Marketing Agency

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ED None

In line with EY’s commitment to minimize its impact on the

environment, this document has been printed on paper with a
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This material has been prepared for general informational purposes

only and is not intended to be relied upon as accounting, tax or other
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