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.
Frederick T. Davis is Of Counsel in the Paris office of Debevoise & Plimpton LLP. He served as an Assistant United States Attorney in the Southern District of New York and worked in private practice in New York before moving to Paris, where he is now a member of the Paris Bar and appears in French courts. He is an elected Fellow of the American College of Trial Lawyers, and the French government named him a “Chevalier” of the National Order of Merit of France.
The current economic climate, increasingly comprehensive global legislation and regulations, combined with ongoing extraterritorial enforcement have all increased the importance of managing bribery and corruption risks in the life sciences industry. In Ernst & Young’s 2013 EMEIA Fraud Survey, 46% of the respondents working in the life sciences industry indicated that offering improper advantages to secure business would be justified if it helped a business survive an economic downturn. In recent years, numerous pieces of legislation, regulations and guidelines have been issued or implemented on the topic of anti-corruption compliance, some of which include:
A plethora of slogans like “supersize and radicalise transparency” and “proactive engagement” were tossed around at the third high-level meeting of G20 government, business and civil society representatives on April 25 & 26 that have teamed up for a global relay against corruption. Hosted by the OECD and the Russian Presidency in the G20 and supported by UNODC, G20 and B20 representatives gathered to share best practices and advance the G20B agenda. The buzzword was collective action: governments, business and civil society joining forces on a macro and micro level to tackle a global phenomenon with a global game plan.
There is little doubt in the business world today that the Middle East is becoming an increasingly-important market for the products and services of companies from around the world. This is particularly true of the cash-rich sovereign wealth funds holders such as Abu Dhabi, Kuwait and Qatar, which have become a stabilising influence during the most recent financial crisis. Dubai, also, is quickly bouncing back from the global recession.
Given globalization, increased competition, ever increasing objectives on the one hand and increasingly complex and sophisticated international laws and standards on the other, the issue of non-compliance has become critical. One small act or incident can put a company’s reputation at risk and potentially call into question its performance and ultimately its existence. Certain functions emerge as central and become strategic for the Group. This is the case for the Compliance Officer whose role has been developing over the last few years, first in the United States and then in Europe.
Over the past few years more and more cases initiated in the United States for offenses of international corruption (Foreign Corrupt Practices Act, FCPA) by both American and foreign companies are settled by an original legal instrument, the Deferred Prosecution Agreement (DPA). Currently, close to 40% of these signed agreements are the result of infractions of the FCPA.
It is often said that conducting business ethically in China while making a decent profit is impossible. The business climate is allegedly so riddled with corruption that companies which comply with the FCPA and other similar restrictive regulations are simply unable to compete effectively. While typical methods of managing risks arising from corrupt practices in China are essential – for example, compliance policies and procedures, internal training, investigations and audit procedures – in order to really get ahead of the challenges, organisations are well advised to address ethics and compliance at a strategic level through developing relationships with key national and local Chinese Communist Party and government officials in China.
Judge Bao was a much-praised official in ancient China who was particularly known for his strong position against bribery. In fact, he had thirty high officials demoted or dismissed for corruption, bribery, or dereliction of duty, and before his death, he warned his family: “Any of my descendants who commits bribery as an official shall not be allowed back home nor buried in the family burial site. He who shares not my values is not my descendant.” Today, Judge Bao is still revered as the symbol of justice in China.
Firstly, the Director of Internal Audit must determine who, within the company, is in charge of managing this particular risk in terms of identification, evaluation and treatment. Those involved could be numerous (legal, purchasing, sales, ethics and compliance, risk management and/or communications…), a fact which could potentially lead to problems.
Forensic Risk Alliance is a provider of international eDiscovery solutions, data protection advice and forensic accounting services
With an estimated 3.3 billion active email accounts worldwide, of which approximately 25% are business accounts, the application of data forensics is far broader than the name might suggest. “Data Forensics deals with methods for extracting digital evidence after a computer crime has been committed.” (http://www.ics.uci.edu/~goodrich/pubs/forensics.pdf).