The Anti-Corruption Law 2008, the U.K. Bribery Act and the U.S. Foreign Corrupt Practices Act clarify that organizations must administer and maintain an operative anti-bribery program for success in a global marketplace and to reduce examination by regulators. Prosecution has increased globally, and the yardsticks for a justifiable program are greater than before.
Lacking compliance, organizations face sanctions, reputational damage, and even the likelihood of individual litigation. The most recent case in point: a US$8 million fine FINRA levied on Brown Brothers Harriman, plus a $25,000 fine and month’s suspension levied on its anti-money laundering compliance director, Harold Crawford.
It is very important for your organization to do business honestly and in compliance with the law wherever it operates. Both your direct workforce and your third-party business partners must know, understand and conform with the laws of the country (or countries) in which they operate and the customary policies of the company.
Further to meeting the regulatory compliance challenges, your anti-bribery program must be accepted and promoted by senior management and easily applied throughout your organization, such that both the message and meaning reverberate with all your employees.
An operative anti-bribery/anti-corruption program depends on due diligence and robust documentation, including concurrent evaluation of compliance data and developments. In addition to upholding the legitimacy of your organization, you must also be able to measure the entire efficacy of your compliance program.
The SEC’s recent declination to prosecute Ralph Lauren Corporation (RLC) proves the value of a well-documented, well-maintained compliance program. The SEC found that the actions of a rogue general manager were to blame, and RLC had documented evidence attesting to the fact that the employees had reported the misconduct soon after reviewing its enhanced FCPA Policy in 2010. As part of the declination, the SEC credited the organization for its “comprehensive” new compliance program including:
- Enhanced third-party due diligence procedures
- A global risk assessment process
- Significant improvement to its internal controls that address corruption “red flags”
- Extensive FCPA compliance training and enhancing the company’s FCPA policies, and
- Implementing an improved gift policy.
- The SEC’s declination of prosecution clearly shows the benefit of implementing an effective compliance program.
- The escalation in global enforcement actions should prompt your organization to fine tune all of its efforts to maintain compliance with anti-bribery laws, including policies, training, due diligence procedures and transaction monitoring to name a few.
- An effective anti-bribery compliance program offers your best line of protection against liability and demonstrates that your organisation values ethical business conduct and will not accept corruption in any guise.
Monthly Business Insight from Gregg Anderson, managing director of VisionQuest Management Services Ltd., a boutique management consulting company that provides Strategy, Governance, Risk & Compliance consulting services.