Anti-corruption regulations - A global perspective

Anti-corruption regulations - A global persective


 You can download a full copy of the slides from this webinar. 



Full video transcript available below:


Welcome and thank you for joining today's webinar, hosted by me, Bethany Sirven of MyComplianceOffice and Robin Singh. Today's webinar will cover reasons why anticorruption programs fail, practical ways to strengthen an anticorruption practice that needs to be incorporated, advise on how to improve your existing program, and we'll end with a live Q&A section to answer your questions.

Now, allow me to introduce my co-host today, Robin Singh

Do you have a anticorruption framework in place? I believe you would have about 10 to 15 seconds before we close the polls.

Okay, so interesting to see these numbers. Hopefully, by the end of this presentation, those who do not have a program will be able to have one. While the people who already have a program might be able to identify some additional loopholes to make sure that they can do a better work as we go along.

It all comes down to the business. Every company around the world is basically plagued with the challenges associated with corruption. The survey that you see on your screen was carried out by control risk based on the opinion of legal and compliance specialist across 800 odd firms worldwide. The chart type you see on your screen on the left hand side gives you a bird's-eye view of the companies that have filed a contract and we're not able to win because bribe is being paid by their competitors. If you see the numbers, the emerging market shows a very high trend. In emerging market, the demand for this so-called facilitation payment, which is a word used as a euphemism to bribe, is a way of life, and it comes with an implicit threat that if you pay it, it's good, else, your business is going to suffer.

From the stats provided, it appears that 50% overall, the last bar shows that 30% of the respondents believe that they have lost their contract due to strong circumstantial evidence of bribing present or being paid by their counterparts. That is a huge number and we will understand that the next slide as to what is the reason.

Moving onto the next slide. The same survey had another question, do anticorruption laws serve as a deterrent? Now, this is actually the tricky part. It is true that anticorruption laws make it easier for good companies to operate in high risk or emerging markets, but at times, business people believe that laws act as a hindrance, a roadblock, so it's kind of a double-edged sword. In some cases, these laws act as an alibi for companies which has good management or compliance officers who know that their company is not that rich enough to pay these facilitation payments or bribes. From the statistics, it is naturally occurring that 64% strongly agree to the subject that law serves as a deterrent, but the interesting part is that out of this 64%, 54% are from US, United States, and 42% from the rest of the world. I'm so sure that the US respondents believe so because of the recent enforcement of FCPA. There hasn't been much of enforcement by the other laws as much as in the case of FCPA. While the overall 30% disagree. I'm so sure those are from the emerging market while 6% are neutral.

The next slide as move on, we would understand that the enforcement is the key and this is the major reason why, for all laws to be successful, it must be strongly enforced because of the enforcement, at individual and at corporate level, business have started trusting the regulations, somewhat. However, we cannot leave the aspect of funding and the resources out of the equation. As I'm sure this is where US scores the most while the other countries are not able to do that well. Like for instance, the UK Bribery Act which is I believe one of the strongest regulation on papers, but it does not show the same promise as the FCPA because it has not been enforced as widely and as much as FCPA has been.

The chart that you see on the screen covers the statistics to the first half of 2016. As we at the corporate level, the penalties have risen from 143 million to 920 from 2015 to 2016. While in the case of individual, we see 2016 having eight people penalized for it. That is half the 2016 and 2015 had 11. I'm so sure that this number would beat the 2015 one.

Now that we are speaking about the enforcement and the laws, the next slide would show the maze, the maze of the growing laws. With the trust being put in the laws, all major countries are acting to develop a anticorruption framework laws of their own. Basically, it is to avoid the socioeconomic or the political risk surrounding corruption. Well, those countries who enforce their laws, they are rewarded themselves through penalties and fines, while those who do not, well, there's a high trend of corruption in those countries. Starting from the left hand side, FCPA, which is like at this point in time, mother of all laws, it prohibits making payments to foreign officials and it basically stands on two major provisions. One on the accounting provision which is to make sure that you are representing true and fair representation of records and the anti-bribery provision that surrounds making payment to foreign officials as illegal.

The next to it is the ever famous and less enforced UK Bribery Act which is quite similar to FCPA. However, this goes an extra mile. It penalizes the subject that could be individuals or the corporations if they fail to prevent bribery and that's an important thing. It penalize people if they fail to prevent bribery. Another thing is that you cannot use facilitation payment as a strong defense in case of UK Bribery Act. We move to the [inaudible 00:10:18] and so on. Germany, one of the strongest economies. They do not have a self-existing corruption law but it is embedded in their criminal court and as far as Singapore goes, one of the financial dependent economies in Southeast Asia, there's a law as well. Same with Australia and India.

Similar to all the bribery acts, the major defense would be to show that a company had adequate procedures to prevent corruption or had a full-proof compliance framework program but the person who committed the act was a rogue employee and that's what is creating this maze more and more complicated.

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