82 per cent of board members at power firms are more worried about damage to their institution’s reputation from potential bribery than they are of the financial costs associated with the malpractice.

Clifford Chance Italy’s Umberto Penco Salvi told a POWER-GEN Europe conference discussion on finance and risk of a recent survey by the company on the subject of bribery and money laundering crimes (A Risk that Companies Operating in the Power Generation Sector Face and Must Prevent.)

The global survey of 320 executive and non-executive board members with annual revenues over $50m found that 60 per cent of those interviewed are concerned about an incident or scandal arising out of bribery and corruption practices, while 74 per cent have increased time on risk management

Salvi said the power generation sector is similar to oil and gas and construction in being ranked as a high risk industry when it comes to bribery and money laundering.

Common areas where occurrences of the offences are likely to be experienced are whenever licenses and permits are issued; these tend to be lengthy processes with officials using power and influence in was that tend towards bribery.

Salvi also pointed to the potential for malpractice during bids, tenders and procurement and said the practive was prevalent in cases of unerdeveloped financial systems in developing countries, which tend to be heavily reliant on cash.

As a result of the preference in certain regions for cash payments, “companies face difficulties in controlling the cash flows connected to the development of projects; it’s hard for a foreign investor to check to the provenance of the money.

“Money payments are always the easiest because there is a minimised risk for the payment receiver. The kickback remains the most used way because money is easier to launder

More sophisticated practices have now emerged, including paying an agent in a tender a higher commission than usually agreed. False invoicing and a more recent phenomenon of paying an unofficial fee for additional technical support were also cited as evidence of illegal payments.

Salvi emphasised the need for firms to try to create a corporate awareness through specific guidelines on the area, such as enshrining it in a code of conduct.

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