Is anti-corruption compliance a business issue or a legal issue?
Clearly, anti-corruption compliance is first and foremost a business issue which must be integrated not only into day-to-day operations, but also into business strategies.
The legal enforcement of international conventions which combat foreign bribery has created an environment where companies are compelled to address this issue seriously. High fines, debarment from public calls for tender and prison terms for executives are now a reality which no CEO can ignore. The recent upholding on appeal by the 11th Circuit Court of a 15 year prison term for M. Esquenazi, former head of Terra Telecommunications, for violation of the US FCPA in Haiti, indicates that the trend is more towards the reinforcement of sanctions rather than on leniency. The definition of “instrumentality” by this 11th Circuit Court as detailed by Charles Duross, head of the global anti-corruption practice with Morrison & Foerster in Washington, demonstrates that US authorities are defining “foreign public officials” very broadly in order to extend the reach of the FCPA even beyond its current extraterritorial capacity.
Needless to say, appropriate and effective compliance programs are needed to address corruption challenges and to mitigate legal risks. Compliance programs help to identify risks, offer guidelines on dealing with grey areas and contribute to the detection of misconduct. One component of these programs is that of whistleblowing lines as described by Louise Brown, ETHIC Intelligence accredited Anti-corruption auditor with DNV-GL in Stockholm.
But stand-alone compliance programs are not sufficient. To be really efficient they need to be embedded in the company’s management system as indicated by Dirk Hortensius, Senior Standardization Consultant in the Netherlands, in his article on the proposed new ISO 19600 standard on Compliance. When compliance is organized as a management system it can then be effectively incorporated into day-to-day operations.
But even this might not be sufficient if corruption issues, in terms of their strategic dimension, are not addressed seriously by the highest level of the company. Having a veritable zero tolerance policy on corruption implies decisions that can be taken only at the highest level as those decisions will undoubtedly have a direct impact on the company’s international expansion. These decisions are on countries of operation, strategic partnerships and product development. Richard Bistrong, experienced businessman and currently a “FCPA real-world compliance blogger” offers food for thought when he describes “what happens when business strategy becomes a red-flag for bribery.”
We have to be realistic, however. No company can fight alone in a world where corruption continues to be endemic. Mark Pieth, former chair of the OECD working group on corruption, and President of the Basel Institute on Governance, proved himself to be a man of vision when, more than 10 years ago, he identified “collective action” as the most effective way to combat corruption whether at the sectorial or national level. This vision led to the creation of the International Centre for Collective Action in Basel in October 2012. Gemma Aiolfi, Head of Compliance, Corporate & Collective Action at the Basel Institute on Governance outlines the goals of the next conference to be held in June in Basel, Switzerland and those of the Institute.
I have had the opportunity to address Executive Committees of companies all over the world on issues of anti-corruption and I have concluded that only the companies that are integrating corruption risks into their strategic decisions are really serious about compliance. The others, with purely legal compliance programs, continue to be perceived by employees and other stakeholders as providing window dressing only.
-Philippe Montigny is the President of Ethic Intelligence
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