Compliance Glossary

Influence Peddling

Influence peddling occurs when an individual who has real or apparent influence over someone else another person exchanges their influence for undue advantage. There are demand and supply sides to this act. The person holding an influential position solicits benefits in exchange for using his or her influence to unduly and unfairly advance the interests of a select third party. An influence peddler receives or accepts the benefit (usually a bribe) from the third party so that he or she can exert her/his influence on another party’s decision. 

What is Influence Peddling?

Influence peddling, also known as ‘traffic of influence’ or ‘trading in influence’, is the act of promising or giving a benefit or a payment to a person who has a real or potential influence on the decision-making of a public official. This act is done with the intent that the latter will persuade the decision-maker to act in a desired manner. Influence peddling can be considered a form of bribery. The beneficiary does not necessarily have to be an official and cannot make the decision, yet they hold a prominent position with the power to influence the decision-maker. Trading in influence is considered a violation as a person influencing the decision is seeking an undue advantage, thus influence peddling is different from lobbying or advocacy which are considered legal activities.

What is an Example of Influence Peddling?

A known example of influence peddling is the case of former French President Nikolas Sarkozy who will face trial for corruption. Reportedly, Sarkozy attempted to influence senior judge Gilbert Azibert, who was investigating claims that Sarkozy’s 2007 presidential campaign was illegally funded. Sarkozy and his lawyer Thierry Herzog were seeking information from the judge on developments in the case in return for a lucrative position in Monaco. If convicted, the former French president could face a prison sentence of up to ten years. Sarkozy’s trial is set to take place in October 2020.

What is the Difference Between Influence Peddling and Lobbying?

Influence peddling is the act of promising or giving a benefit or a payment to a person who has a real or potential influence on the decision-making of a public official for the benefit of a third party. On the other hand, lobbying is the action of influencing policies in favor of a particular cause or outcome. The difference between lobbying and influence peddling is the means by which influence is obtained. One method is via an undue benefit such as bribery or another advantage while the other isn’t. The other method is for personal benefit while the other is actually for the greater good. However, the line between the two activities can get blurred. Even if legal, lobbying, if not kept within the guardrails of transparency and integrity, can become corrupt and distortive, such as when lobbyists hold disproportionate levels of influence.

Can You Prevent Influence Peddling?

Influence peddling typically occurs when the decision-making process is opaque, unethical behavior is widespread, and the political system acts in favor of select interests. In order to prevent the traffic of influence, public and private establishments must increase the transparency of the decision making process. Companies, for example, should have clear policies around how to prevent and avoid influence peddling and equally train employees on the adequate procedures that should be followed to stay compliant with corrupt and anti-competitive practices.

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