The authorities may discuss these issues between them but there is no obligation on them to reach agreement. They may each decide to prosecute and seek asset forfeiture. Whether they can do this will depend on their domestic law and the extent to which their courts take account of convictions or acquittals in other states.
Most business managers disapprove of corrupt practices. But at the same time, the perception often prevails that acting against corruption will either result in a short-term loss of opportunity or that corruption is seen as a necessity of doing business. So how can companies and their managements be persuaded to act against corruption by committing to a zero-tolerance of corruption and establishing an anti-corruption ethics & compliance program? The typical first reaction is to call for more punishments (sanctions) for companies and their representatives when violating anti-corruption standards, such as a national anti-corruption law or a company’s Code of Conduct for its suppliers.
Anti-bribery and corruption (ABC) legislation is similar across many jurisdictions. The prohibitions are deliberately broad and typically follow standards set forth in the OECD Anti-Bribery Convention, which in turn was largely modelled on the U.S. Foreign Corrupt Practices Act (FCPA). The US FCPA allows for facilitation or ‘grease’ payments, however most other ABC laws do not. Indeed we are not aware of any jurisdiction which allows for bribery of its own government employees, even if they might constitute “facilitation payments” under the FCPA. What does change dramatically from jurisdiction to jurisdiction is the level of Government enforcement. This can be summarised as:
It is a commonly known fact that corruption has its roots stretching back into antiquity. Over the years, American and European companies have built their businesses based on principles of compliance and integrity, whereas in the CIS such practices were known only in the CIS subsidiaries of international companies.
The concept of functional equivalence is a derivative of a theory of comparison of law: Comparatists have over time moved away from mere comparison of institutions, they have developed an idea what institutions mean in their specific context. Seen from there the emphasis lies on how the different parts of a legal system interact. This concept has been used in the context of the OECD for a normative purpose: to establish whether a standard has been achieved.
C5 has been organising anti-corruption conferences for over 20 years, and although every conference is different, our approach of working closely with business leaders to determine the content most relevant and useful to potential participants at any given time, remains unchanged. All of our anti-corruption conferences start with approximately 100 hours of interviews with Chief Compliance Officers, General Counsel and their advisors (including companies currently under investigation).
Western businesses are expanding their presence in the growing markets of the New Independent States (NIS). Natural resources, a vast population and low labor costs are attracting major players who form ventures or sell their products to almost 280 million people. At the same time these emerging economies are being eroded by corruption (one just needs to look at the Transparency International Corruption Perception Index), suffer from underdeveloped business legislation (which, in any event, is often not respected) and selective justice. When cultural differences and the heritage of a 70 year Soviet regime are added it is possible to fully appreciate the challenges that the US or European investor faces in the new markets. Constant regulatory threats for breach of anti-corruption laws from Western enforcement agencies complement this picture.
Australia has had a Compliance standard since 1996 (AS/NZS2806). The standard was then updated in 2006 and forms the basis of ISO 19600. As more and more countries implemented more complex regulations some with extraterritorial reach the potential benefits of a uniform standard became evident. In 2001 the British Standards Institute published its own anti-bribery standard.
As research demonstrates industry reaps the benefits of a high representation of women in the compliance function; companies with the most female leaders, on average, generate a 35% higher return on equity and 34% higher return for shareholders than those with the fewest, according to an article published by the Healthcare Businesswomen’s Association referencing a recent Catalyst study. C5, as an integral part of the compliance community, is responding to and reflecting the dynamic growth and development of the indsutry and the key role that women play in it.
Public pressure and international anti-corruption laws and, in particular, their element of extraterritoriality, have forced companies to become more stringent in their anti-corruption compliance programs. The US Foreign Corrupt Practices Act and UK Bribery Act are examples of national laws which can have significant impact on any company with even the most tenuous link to doing business in either one of those countries.
For a long time, Chinese anti-corruption rules were seen by foreign companies doing business in China as irrelevant in a culture embedded with gift-giving. Since the beginning of this year, however, a change in the anti-corruption enforcement landscape in China has forced foreign companies to reassess their initial judgment. The investigation of the British pharmaceutical company GlaxoSmithKline (GSK) earlier this year, and the subsequent investigations of other foreign drug manufacturers, demonstrate an unprecedented anti-corruption crackdown in China.
In the past three years, major French companies have entered into deferred prosecution agreements (“DPAs”) with the United States Department of Justice (“DOJ”) in connection with charges relating to the U.S. Foreign Corrupt Practices Act (FCPA). As a result, DPAs have made a noticeable entrance onto the French anti-bribery enforcement landscape.
The recent Italian Anti-Corruption Law (Law No. 190 which entered into force on November 28, 2012) imports new concepts and instruments into the Italian legal system for the prevention of the crime of corruption. This law expands the definition of the crime of corruption, increases penalties and strengthens requirements for transparency and disclosure within the public sector.
“Because Procedures are almost worthless if not managed and communicated effectively.” It will not have escaped your notice that a major Pharmaceutical organisation is under investigation for alleged ethical misconduct in China. If the allegations are proven, and fall under the jurisdiction of the UK Bribery Act (UKBA) and/or US Foreign Corrupt Practices Act (FCPA), those involved could face penalties that include substantial fines, even imprisonment, and possible exclusion from future Government supply contracts.
Any time a prosecutor or administrative investigator in one country is investigating conduct that occurred in another, or a person or corporation located in a different country, there will be a trans-border investigation to some degree.
Although it is unimaginable today, as recently as 2000 some large publicly traded U.S. and non-U.S. companies did not have a corporate compliance program, a compliance officer, a Code of Business Conduct, or any written policies and procedures to help detect and prevent misconduct, and ensure the company’s compliance with applicable laws and regulations around the world.
When I am asked this question by a Compliance officer, legal director or General Counsel it is invariably followed by a second question which is: “should my anti-corruption compliance program in China be different in order to take into account the Chinese culture?” My answer never varies: “no, your anti-corruption program must be the same in all countries including China”; however, the implementation of this program must take into account the specificities of the country of implementation therefore the unique political, economic and social systems of China.
Daniel Lucien Bühr was Regional Counsel for Europe, Russia, Near East and Africa with Schindler Group (Elevators and Escalators). Since 2011 he has been Counsel with LALIVE (www.lalive.ch). He advises clients on Corporate Law, with a focus on corporate governance and compliance management systems. He is, among others, a member of the ISO Technical Committee on Compliance Management Systems.
The SFO’s stated approach in each of these areas is that it will prosecute if on the evidence there is a realistic prospect of conviction and if it is in the public interest to do so.
Charlie Monteith is the Head of Legal and Case Consultancy at the International Centre for Asset Recovery of the Basel Institute on Governance. He was formerly Counsel with White and Case in London. Mr Monteith is a member of the ETHIC Intelligence Certification committee. The Basel Institute is an international, multi-disciplinary body which encourages links between the public and private sectors as well as links between solid business practices and academia. Its expertise lies in the fields of financial investigation, corruption prevention and anti-bribery compliance and business ethics.