2014 Trends: #2 Navigating the Myriad Anti-Corruption and Bribery Laws

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Earlier this week we began discussing the top ten trends in ethics and compliance we identified for 2014. Third party risk as the ethics and compliance “Achilles heel” dominated the conversation in our first trend. In this post, corruption and bribery trends continue to lead the risks as we look at the myriad anti-corruption and bribery laws and how to navigate through them.

Our complete list has been gathered into our annual trends whitepaper, but we thought we’d share a bit from each of the trends we covered in the whitepaper over the next few days on our blog.

#2: Navigating the myriad anti-corruption and bribery laws

In recent years there has been dramatic change to the global anti-corruption landscape. While the U.S. FCPAand the U.K. Bribery Actare well known, at least 26 countrieshave their own anti-corruption laws and nearly all of them include some degree of extraterritorial jurisdiction, which means their laws can apply to individuals who are resident in the jurisdiction but commit acts of bribery elsewhere. And, while there is no international anti-corruption law or standard, more and more countries are modeling their laws and/or are agreeing to abide by international conventions including the OECD Anti-bribery Conventionand the United Nations Convention against Corruption. We have also begun to see novel approaches to combatting corruption such as the website launched by Kenyan’s President Kenyattato allow citizens to anonymously report bribes.

The result of all this activity is that the global business landscape is now covered by a quilt of overlapping anti-corruption and bribery standards, many of which have subtle and not-so-subtle differences as to how they interpret what is an offense, who is liable, the penalties for offenses and what are the prescribed defenses.

The good news is that increasingly, national laws and global standards are converging on one common defense for organizations. Like the U.S., the U.K. includes language that encourages organizations to create policies and procedures to prevent corruption. Similarly, in Italy and Portugal, an organization can reduce penalties if it can prove that an employee acted contrary to established corporate rules. And in Russia, the law has been updated to require companies to put in place anti-bribery procedures.

The value of being proactive was evident earlier this year when Ralph Lauren Corporation was not prosecuted after FCPA violations were uncovered in the Argentinian operations. From the SEC press release:

“The SEC took into account the significant remedial measures undertaken by Ralph Lauren Corporation, including a comprehensive new compliance program throughout its operations. Among Ralph Lauren Corporation’s remedial measures have been new compliance training, termination of employment and business arrangements with all individuals involved in the wrongdoing, and strengthening its internal controls and its procedures for third party due diligence. Ralph Lauren Corporation also conducted a risk assessment of its major operations worldwide to identify any other compliance problems. Ralph Lauren Corporation has ceased operations in Argentina.” – Ralph Lauren

In light of these developments on the anti-corruption front, it is vitally important that all organizations are familiar with the relevant laws governing their operations wherever they do business – and that they help employees and business partners navigate the terrain and know where to go to get answers. In addition, the best defense is to be proactive in assessing risks, and to create an ethics and compliance program that treats anti-corruption and bribery as a key risk area through:

  • Codes of conduct
  • Policies
  • Oversight
  • Communications
  • Training
  • Internal reporting systems
  • Investigations
  • Audits
  • Monitoring
  • Consistent follow-up when problems are discovered

Stay tuned for trend #3, the rise of whistleblowing and retaliation, later this week.  Also, feel free to download the whitepaper for the whole list at any time.