ETHIC Intelligence hosts second annual international conference
on corruption prevention Standards and Guidelines


Click above to see highlights from the 2016 conference

OECD Conference center, Paris, Monday September 11, 2017

ETHIC Intelligence is very pleased to host its second annual international conference on Standards and Guidlines: Recent developments in Anti-Corruption Compliance, September 11, 2017 at the OECD conference centre in Paris. Join experts from business, civil society and government for a day of presentations, exchanges, updates and debate on how to progress in the fight against corruption worldwide!

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Supporting African Companies’ Efforts to Strengthen Anti-Bribery Compliance 

Sandrine Hannedouche-Leric

Senior Legal Expert

Anti-Corruption Division, Directorate for Financial and Enterprise Affairs

OECD, Paris

Melissa Khemani

Principal, Office of the Chief Compliance Officer

European Bank for Reconstruction and Development (EBRD)

London

  

The African Development Bank estimates that USD 148 billion is lost to corruption in Africa every year. While sub-Saharan Africa has become a commercially significant market, bribery and corruption risks are deterring higher rates of investment and the ability of companies to conduct business fairly on a level playing field. The Organisation for Economic Cooperation and Development (OECD) together with the African Development Bank (AfDB) recently published an Anti-Bribery Policy and Compliance Guidance for African Companies (‘Guidance’) as a practical tool to help raise awareness of anti-bribery compliance measures. It was officially launched on 28 October 2016 at the African Development Bank headquarters in Abidjan during a workshop on fighting corruption and tackling illicit financial flows from Africa. In this Experts’ Corner, two anti-corruption experts who helped develop this Guidance, Sandrine Hannedouche-Leric and Melissa Khemani, discuss what prompted its publication, insightful “take-aways”, areas for further focus and next steps.

There are a number of anti-bribery guidance and best practice documents that have been published by various international, non-governmental and domestic organisations and agencies. What prompted the development of this Guidance?

Sandrine Hannedouche-Leric: This Guidance was developed by a Joint Initiative established in 2008 by the OECD and AfDB to Support Business Integrity and Anti-Bribery Efforts in Africa. The Joint Initiative was launched to support African governments in their efforts to fight bribery and corruption, and brings together the public and private sectors of 21 African member countries.* More broadly, it aims to increase the capacity for effective anti-bribery enforcement, support international anti-bribery efforts, enhance public and private sector integrity, and contribute to transparent and accountable business conduct in Africa. The development of this Guidance was very much prompted by the request of Joint Initiative member countries for more practical tools on preventive measures tailored to the bribery risks confronting African companies. The content and scope was informed by responses to a questionnaire submitted by member countries and representatives from business and civil society to help ensure it was sufficiently tailored to meet their needs.

Melissa Khemani: Indeed, there are a myriad of anti-bribery and anti-corruption compliance best practice documents that have been published. But what we heard loud and clear in the context of this Joint Initiative was a continued lack of awareness of anti-bribery compliance measures among the private sector in Africa, which is largely comprised of SMEs with limited resources and access to information. There are also specific bribery risks which are unique or perhaps more prevalent among African companies, and there was a request to have a more regionally-specific, tailored tool available. Importantly, the Guidance does not seek to duplicate but rather complement broader and more comprehensive anti-corruption compliance tools developed by the OECD, UNODC, World Bank and others, including international NGOs and business associations. It is high level, with the view to be a user-friendly starting point from which companies can embark on their efforts to adopt or enhance their approach to prevent bribery in their business transactions.

Why should African companies care about introducing corporate compliance and corruption prevention measures?

Sandrine Hannedouche-Leric: The Joint Initiative comprises the most advanced economies in Sub-Saharan Africa whose companies are increasingly active on the international market. The region attracts a significant amount of foreign investment, mainly due to its natural resources. As such, a number of companies from Parties to the OECD Working Group on Bribery operate in Africa and engage with African companies as business partners, subcontractors etc. Under their national anti-bribery laws, OECD companies’ liability can be triggered if bribery is committed in the business chain. Having in place a corporate compliance program can help make African companies more reliable business partners.

Melissa Khemani: Many Sub-Saharan African companies have yet to establish effective internal control mechanisms to prevent and detect bribery in their business transactions. Bringing African companies up to speed with internationally recognised good practices can help foster an environment conducive to attracting increased foreign investment – not just from major foreign companies, but also from the MDB community. At the EBRD, for example, the integrity due diligence we apply when assessing the suitability of prospective clients pays close attention to the overall approach a company undertakes towards ethical business conduct. Having in place robust anti-bribery compliance measures which are meaningfully implemented are looked upon positively when assessing a potential client for financing.

Who is the target audience for this Guidance?

Sandrine Hannedouche-Leric: The Guidance is the first ever anti-bribery practical guidance, tailored specifically to the corruption risk profiles of African countries. It is intended for both the public and private sectors and both large and small companies. It is of course primarily targeted to companies who are looking to educate themselves on the essential aspects of anti-bribery measures and to “get started”, so to speak. It is also targeting companies looking to undertake concrete steps: the compliance checklists within the Guidance – while certainly non-exhaustive – will nevertheless help guide companies throughout the process and assist with the monitoring of their progress. And, of course, it is also intended to be an awareness-raising tool for governments to promote among the private sector, setting out their expectations of companies when it comes to bribery prevention in their business conduct. Prosecutors and judges may also use it as a tool to help assess the robustness of preventive measures taken by a company, in the countries where such measures may mitigate the liability of an individual or a company in the event of bribery of public officials.  

Melissa Khemani: This Guidance can also be particularly useful for those working in the sphere of anti-corruption capacity building. A number of IFIs are increasingly making their lending conditional to anti-bribery compliance reforms by clients and prospective clients. For example, my current employer, the Office of the Chief Compliance Officer of the European Bank for Reconstruction and Development (EBRD), is focusing more on working with clients, including state-owned enterprises, who demonstrate a willingness to meaningfully adopt or enhance their compliance regime, and is actively helping such companies improve their anti-bribery internal control measures. A first question we almost always get from clients and prospective clients is “where can I learn more about this”? The Guidance can be a very useful tool in this sense to send to companies to give them a preliminary idea of anti-bribery best practices upon which more robust capacity-building can be built.

What are some of the more striking issues that came out of this research?

Melissa Khemani: The broader scope of who could be considered as public officials is particularly worth noting. One group of persons who could potentially be considered as public officials, especially in the sub-Saharan African region, are tribal leaders and village elders. In Nigeria, for example, each of its 36 states is comprised of local tribes, with some chiefs having considerable power and influence. An important dimension of the influence of traditional leaders is the control they may have over community land and natural resources. Research has shown that traditional leaders may serve as unofficial advisors to elected and appointed public officials. Others may be appointed themselves by elected or appointed government officials. Unlawful payments to such individuals could potentially trigger liability under the U.S. Foreign Corrupt Practices Act (FCPA), for example. So, for the purposes of complying with domestic and international laws prohibiting the bribery of public officials, it is important to note the functionally public role which, at least by Western standards, certain individuals can play. The Guidance highlights some of the research conducted on this topic; this includes a high-risk case example where a request by local tribal officials in a sub-Saharan African country involved asking a company to contribute to a community fund managed by those officials. The Guidance also sets out appropriate due diligence questions to ask, drawn from expert research conducted on existing case law, enforcement actions and DOJ opinion procedure releases.

Sandrine Hannedouche-Leric: Risks associated with accurate books and records-keeping can also be heightened in the region. This emanates from the fact that the majority of African countries remain primarily cash-based economies. According to World Bank research, in sub-Saharan Africa, only 24% of the adult population has an account with a formal financial institution. What we know is that it is not uncommon for companies – both large and small – to settle payments in cash. Bribery and corruption can thrive in such environments as cash payments can be easily concealed and leave no audit trail. The Guidance sets out a number of good practices for books and records-keeping for the purposes of preventing bribery, which can be useful for companies looking to reform or improve their internal controls. Attention should also be paid to managing third party risks. The use of third parties is common in Africa. Middlemen, such as agents or consultants, are often used to make introductions to public officials to facilitate business – what we sometimes see is that these can be wider family members of high level politicians or government officials and therefore carry political exposure risks. What companies want to ensure is that bribery is not “outsourced” through the actions of third parties, who can act as conduits for bribe payments. Due diligence risks on third parties can also be heightened due to limited access to reliable sources of information. The Guidance addresses these risks by setting out steps to help mitigate third party bribery risks, including the importance of reference checks, in-person interviews and periodic on-site visits.

Are there any areas where more attention should be placed to help improve the anti-bribery landscape in the region?

Melissa Khemani: More focus could be placed on state-owned enterprises. This is certainly not unique to the African region, but the important role SOEs play in Africa is worth noting. According to the OECD, in the Democratic Republic of the Congo, major SOEs employ between 4 000 and 12 000 people each. In Tanzania, there are 238 SOEs in operation, and over 300 in South Africa. Recent findings in the OECD’s Foreign Bribery Report show that bribes were offered, promised or given most frequently to employees of SOEs (27%) and that 80% of total bribes were paid to SOE officials. Bribery risks are heightened with SOEs. They tend to operate in higher risk sectors. Their proximity to government also raises risks of political influence and more overt interference. They can also have weak reporting and oversight systems and complex accountability chains, which can be a breeding ground for unchecked bribery and corruption.  The Guidance, like for all companies, can certainly help SOEs get started in adopting good practices in preventing bribery. However, there are many broader issues which relate to SOEs on which the Guidance does not focus. These emanate from the role of the state and the relationship with government ownership bodies, as well as some common corporate governance characteristics which can impact the SOE’s business integrity. There is some movement by the international development community to focus on anti-bribery compliance within SOEs. A number of IFIs, including the EBRD, have long been doing excellent work in supporting corporate governance reforms within SOEs. In the EBRD’s case, this is expanding to specifically include anti-corruption compliance measures as well. The OECD, which has developed the leading guidance on corporate governance of SOEs, is now also looking to broaden this scope to cover anti-bribery policy guidance for government owners of SOEs. Transparency International is also in the process of adapting its Business Principles for Countering Bribery for SOEs. Watch this space!

 

Sandrine Hannedouche-Leric: Industry collective action measures can also make a difference: like-minded companies operating in the same sector can join forces to commit to prohibiting bribery in order to create a level playing field.  Some examples of well-established industry collective action initiatives include the Extractive Industries Transparency Initiative (EITI), the Construction Sector Transparency Initiative (CoST) and the Maritime Anti-Corruption Network (MACN). While these are international initiatives, collective action can also work effectively in a domestic market among local players. It could be a particularly useful tool for the region’s large number of SMEs.

What are the next steps for this Guidance, or the Joint Initiative more broadly?

Sandrine Hannedouche-Leric: The next step is to ensure that compliance measures effectively penetrate the corporate structure of African companies and become part of the business environment in Africa. The Guidance will only become a truly powerful tool if it is known, used and implemented. The Guidance should first be disseminated by Country representatives and anti-corruption commissions to businesses of all sizes, as well as to prosecutors and judges. It should also be the basis of capacity-building trainings on corporate compliance measures for African companies. A regional event on the Initiative to Support Business Integrity and Anti-Bribery Efforts in Africa, is scheduled in the second half of 2017. This regional event program will be twofold: it will build on the success of the Guidance for African Companies launched in October 2016 in Abidjan by developing a training program for Companies operating in the sub-Saharan region; and it will discuss and decide on a concrete program of work for the next two years based on the Initiatives’ Course of Action approved in Malawi in 2011. We are also exploring the possibility of developing and implementing such training modules in cooperation with the OECD/AfDB Initiative and business representation.

 

* Member countries include: Benin, Burkina Faso, Cameroon, Ethiopia, Ghana, Kenya, Madagascar, Malawi, Mali, Mauritania, Mozambique, Namibia, Niger, Nigeria, Rwanda, Senegal, Sierra Leone, South Africa, Tanzania, Uganda and Zambia.

 

 

 

Sandrine Hannedouche-Leric

Senior Legal Expert

Anti-Corruption Division, Directorate for Financial and Enterprise Affairs

Organisation for Economic Co-operation and Development (OECD)

Paris

Melissa Khemani

Principal, Office of the Chief Compliance Officer

European Bank for Restrucuring and Development (EBRD)

London

 

 

March 2017

Sandrine Hannedouche-Leric is a Senior Legal Expert in the Anti-Corruption Division, Directorate for Financial and Enterprise Affairs, with the Organisation for Economic Co-Operation and Development. Since 2005, she has been closely involved in the monitoring and follow-up of the OECD Anti-Bribery Convention on Combating Bribery of Foreign public officials in International Business Transactions. Most recently, she has led the examining teams performing on-site visits in a number of G20 Countries including South Africa and Brazil. She is responsible for a Joint Initiative with the African Development Bank to fight corruption in business in Africa. She is also in charge of horizontal projects within OECD in particular in the Multilateral Aid and Development areas. Sandrine is a French national. Prior to joining the Anti-Corruption Division, she was a Legal Adviser in the OECD Directorate for Legal Affairs. She holds two Master’s Degrees in law, with a specialization in international law, from the University Panthéon-Assas, Paris II (Paris, France).

 

 

Melissa Khemani is currently a Principal in the EBRD’s Office of the Chief Compliance Officer, where she is responsible for integrity due diligence on the Bank’s projects and transactions in the North African and Middle Eastern regions, and for advising banking teams on managing integrity risks during the life-cycle of a project, including through capacity-building and the introduction of anti-corruption reforms within Bank clients. Prior to joining the EBRD, Melissa was an Anti-Corruption Legal Expert with the OECD’s Anti-Corruption Division (Paris, France) where she worked on country monitoring of the implementation of the OECD Anti-Bribery Convention and supporting the work of the OECD Working Group on Bribery. In this capacity, she also conducted anti-corruption capacity-building outreach work in Asia and Africa, in cooperation with the Asian Development Bank and the African Development Bank. Prior to joining the OECD, Melissa was with the Commonwealth Secretariat, London, where she assisted Commonwealth member countries domestically implement the United Nations Convention Against Corruption (UNCAC) and train law enforcement officials on mutual legal assistance in corruption investigations. Melissa is a Canadian national. She holds law degrees from Georgetown University (Washington, DC) and King’s College London, and a Bachelor of Arts in Political Science from McGill University (Montreal, Canada).

 

The ETHIC Intelligence Expert’s Corner is an opportunity for specialists in the field of anti-corruption compliance to express their views on approaches to and developments in the sector. The views expressed in these articles are those of the authors.




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