Survey: Anti-Corruption Laws Have Major Impact on Corporate Compliance Policies

With over $1.5 billion in fines assessed by the U.S. Securities and Exchange Commission for violations of the Foreign Corrupt Practices Act (FCPA) since 2010, corruption concerns are playing a larger role in corporate decisions, according to this year’s State of Anti-Corruption Compliance Survey from Dow Jones Risk & Compliance.

Responses from 383 compliance professionals worldwide expressed concerns about complex global markets, the time and effort required for compliance and corrupt competitors.

Survey results show that anti-corruption legislation—particularly the UK Bribery Act (52%), local regulations (49%) and the FCPA (49%) — has a major impact on organizations’ anti-corruption policies Concerns over violating these laws prevented or delayed 67% of respondents from working with a business partner. Half of those surveyed say stopped or delayed entering an emerging market for the same reason.

For 54% of respondents, the main reason for delaying or stopping a business venture was a lack of information to properly assess the corruption risk — most often when dealing with companies in Russia, China, Iran and India.

Other key findings include:

  • Most companies (82%) have implemented anti-corruption training programs, and almost three-quarters of those programs have been in place for more than two years.
  • Many businesses without anti-corruption programs (47%) believe that other policies already cover anti-corruption issues.
  • One-third of respondents report losing business to unethical competitors, with 60% of those losses occurring because the competitor was not subject to anti-bribery regulations.
  • Only 28% of companies believe it is realistic to ban facilitation payments entirely, largely due to cultural expectations of facilitation payments, particularly in countries where these payments are considered a regular supplement to income.
  • Thirty percent of respondents spend $1 million or more a year on their anti-corruption compliance program.

Despite its growing importance, due diligence continues to be an issue for most companies.

  • Although over half of respondents (51%) are confident in their due diligence processes, only 5% are "extremely" confident. Confidence is highest among finance companies.
  • Fewer than 20% of companies monitor business partners at least quarterly.
  • Preliminary due diligence most often involves reviews of company ownership (85%), financial performance (79%) and reputation (79%).
  • Finance companies are the most likely to conduct monitoring on at least a quarterly basis.
  • Due diligence updates are most often performed in response to reputation issues (81%) and government sanctions (79%).
  • Difficulty accessing information (51%) and evaluating its credibility (59%) are the main factors hindering due-diligence confidence.
  • Time (26%) and cost (21%) are the main factors limiting due diligence.

Compliance training programs are essential to avoiding violations of anti-corruption laws now in place in 37 countries. Some best practices for FCPA compliance include —

  • Creating a culture of compliance with the appropriate tone at the top;
  • Clearly articulating and visibly posting a policy against bribery and corruption;
  • Assigning one or more senior officers to be in charge of the compliance program. They should report directly to the board of directors or appropriate board committee;
  • Designing a compliance program to both prevent and detect bribery and corruption;
  • Applying the compliance program to third-party business partners;
  • Implementing a system of internal financial controls to ensure that bribery and corruption cannot be hidden;
  • Scheduling regular communications, training, guidance and advice for employees on the compliance program;
  • Providing employees with positive support to ensure they comply with  anti-corruption and anti-bribery policies;
  • Enforcing consistent discipline of employees who violate the compliance program; and
  • Conducting periodic assessments and evaluations of the program to determine its effectiveness and address new developments.

 

 

Topics:  Anti-Corruption, Chief Compliance Officers, Compliance, Corporate Counsel, Corporate Governance, Enforcement, Enforcement Actions, FCPA, SEC, UK, UK Bribery Act

Published In: General Business Updates, International Trade Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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