Growing Global Consensus on the Compliance Best Practices
29 November 2012
I thought I’d share what Richard Cassins from the FCPA Blog pointed out in his post about how the FCPA guidance mentioned that there is a growing international consensus on Compliance Best Practices. Time and time again I blog about the growing global convergence on the Compliance and Regulatory fields, as is normal as we are increasingly becoming a globalized society.
The best way to fight common crimes that are widely accepted as a thorn to business and prosperity, is to align clear principles on what we seek to achieve. The implementation will vary but as long as the world agrees on the objective, then the differences in application will level out the playing field for global businesses for fair trading.
What is impressive is the growing awareness in China over the need to fight corruption, which is particularly noted in the handover president Xi Jinping’s speech to the new 25-member Politburo warning that in recent years, countries where corruption prompted major public anger have experienced social unrest and regime collapse. Jinping said,
The large number of facts tells us that if the problem of corruption becomes increasingly severe, it will lead to the ruin of the party and the country.
The new enforcement over the corruption agenda already showed results as it only took 63 hours to sack the Chongqing district head, Lei Zhengfu, over an explicit sex video tape that uncovered the fortune he amassed that led to non-monetary bribery methods to tempt Lei in return for favors.
In response, the Central Commission for Discipline Inspection (CCDI) of the Communist Party of China have requested all government agencies to come forward with detailed anti-bribery programs by 10 March 2013, and all provincial governments to report their detailed programs by 20 March 2013.
As the business networks interweave and mingle to create a more complicated web of a new breed of highly intellectual profit seekers, heighten cooperation and international regulations will be hot on the agenda to push back on the endless fight against corruption.
Compliance Best Practices Guidance (Sourced from FCPA Blog)
- OECD’s 2009 Anti-Bribery Recommendation (available here) and its Annex II, Good Practice Guidance on Internal Controls, Ethics, and Compliance, published in February 2010 (available in pdf here).
- Asia-Pacific Economic Cooperation—Anti-Corruption Code of Conduct for Business (available in pdf here);
- International Chamber of Commerce—ICC Rules on Combating Corruption (available here)
- Transparency International—Business Principles for Countering Bribery (available here);
- United Nations Global Compact—The Ten Principles (available here);
- World Bank—Integrity Compliance Guidelines (available in pdf here); and
- World Economic Forum—Partnering Against Corruption–Principles for Countering Bribery (available here).
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SFO publishes guidance on the UK Bribery Act 2010 – non-UK businesses ALSO beware
The Serious Fraud Office (SFO) continues to publish guidances on UK Bribery Act 2010, with the latest referring to its intention to prosecute based on the law rather than the guidance issued after the law came in force. Self reporting no longer offers protection from law suit if it is considered that it is a matter of public interest.
The Bribery Act 2010 came into force on 1 July 2011. The Act applies to the whole of the UK and provides for wide extra-territorial jurisdiction to deal with bribery committed outside the UK.
What effect will Bribery Act have on non-U.K. companies doing business in the U.K.? It depends if the company has some connection to the UK. A U.K. office, for example, could extend potential liability to its global operations.
Attention should be paid to the outreaching provisions that require adequate procedures which extends to required due diligence over foreign agents (both UK or non-UK domiciliary) to ensure that they also comply with the Bribery Act provisions.
Joint US and UK Cooperation
Conspiracies of joint cooperation between the the US Department of Justice and the SFO have emerged, as the US long awaited and delayed guidance on the Foreign Corrupt Practices Act (FCPA) is expected to be released in October. Furthermore, the SFO’s quiet retrieval of certain published guidance from its website without notice have roused further suspicions.
Certain discrepancies still remain between the FCPA and the Bribery Act such as facilitation of payments are allowed under the FCPA but not the Bribery Act, and also Corporate Hospitality, as long as it falls under promotional expenses that are “reasonable and bona fide”.
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Sex, Spies and Bribes at the Reserve Bank of Australia (RBA)
Image credit: SMH
Former Austrade Senior Trade Commissioner, Elizabeth Masamune
10 October 2012
As the Melbourne county court continues proceeding on bribery allegations against 8 former RBA executives, the case of the seduction of former Austrade senior Trade Commissioner, Elizabeth Masamune by a Vietnamese intelligence officer arose.
Masamune said in a statement that she had two ”isolated” sexual interactions with spy Colonel Anh Ngoc Luong, who had helped to secure a banknote contract and whom federal police allege received up to $20 million in bribes from the Reserve Bank’s half-owned subsidiary Securency. Masamune claims to be ”having problems in (her) marriage and (she) liked Anh” which led to her vulnerability.
Luong allegedly helped Securency executives arrange bribes and assured the executives the payments were “the price of doing business in Vietnam.”
Patrick Stringer, senior Trade Commissioner in Vietnam between 2006 and 2008, when asked about a 2007 Austrade report stating that Securency agent Colonel Anh Ngoc Luong had “probable” links to the Vietnamese intelligence service, Stringer said, “We had known – we the embassy had had suspicions of his status for many years.”
However Stringer asserts that Austrade is always very careful not to be involved, you know, at the very commercial end of things.”
According to Mark Ingram, former salesman for Securency and its sister company Note Printing Australia, RBA subsidiary Securency allegedly paid bribes in Asia, Latin America, and Africa to win currency printing contracts. The executives at RBA however, have kept quiet about this practice.
More progression on the case to come.
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Charging Ahead with the Foreign Corruption Practices Act (FCPA)
7 October 2012
The US Justice Department and SEC are charging forward with the FCPA, and does not give out any signs of stopping.
Few multinational companies can afford to ignore the 1977 law, which bars foreign bribery and requires companies to keep accurate books and records. U.S. companies, companies that trade on U.S. stock exchanges, and even foreign companies that further corrupt schemes in the U.S. fall under the FCPA’s prodigious umbrella. Foreign subsidiaries are included if U.S. authorities can show the conduct in question was “authorized, directed, or controlled” by the parent company.
Average FCPA penalty: About $25 million in most years
Corporations under the Watch: Siemens AG, Halliburton Co., Panalpina World Transport Ltd Pfizer Inc., Johnson & Johnson to name a few
FCPA with cooperative internal probes: Avon Products Inc., Weatherford International Ltd. and Wal-Mart Stores Inc.
Fugitives on the run: Apparently the ”Siemens 8″ have yet to make their initial appearance in court and are still living freely in Argentina, Germany or Switzerland
FCPA Investigations and Market price: Companies’ stock prices seem to have increased, on average, by 1.1% after FCPA settlement
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US CONGRESS: THE MOST CORRUPT
19 September 2012
Courtesy of CREW, Citizens for Responsibility and Ethics in Washington, an annual list of the most corrupt US Congress members have been published. This year, 14 members and several dishonorable mentions have made it to the report.
They have outlined their Methodology in the report as follows:
To create this report, CREW reviewed media articles, Federal Election Commission reports, court documents, and members’ personal financial and travel disclosure forms. We then analyzed that information in light of federal laws and regulations as well as congressional ethics rules.
CREW is a non-partisan nonprofit 501(c)(3) organization dedicated to promoting ethics and accountability in government and public life by targeting government officials who sacrifice the common good to special interests.
You can view the 2012 report here: CREW’s Most Corrupt
Picture from CREW website
inside REG 