Creating an anti-corruption program.

AuthorKrebel, Katherine
PositionEthics Corner

Corruption-based allegations can be crippling for any company. Compliance in this area of the law is of particular importance to companies who regularly use international consultants and sales representatives, commonly referred to as "intermediaries," to develop business opportunities.

Legal and compliance professionals across the world recognize this as a significant area of risk, and the normal course of action is to develop a robust infrastructure around vetting foreign intermediaries.

Several of the largest enforcement actions of all time involve the use of third party intermediaries, including Justice Department and Securities and Exchange Commission settlements with Siemens for $800 million in 2008, BAE for $400 million in 2010, Total SA for $245 million in 2013, and Alstom S.A. for $772 million in 2014. The danger has only increased as a result of the declining U.S. defense budget which has resulted in industry focus on growing international business.

Any number of sources can be found to provide guidance on developing a strong risk-based intermediary compliance program. In particular, the 2012 Resource Guide to the U.S. Foreign Corrupt Practice Act issued by the Justice Department's criminal division and the SEC's enforcement division, which includes a section titled "Hallmarks of an Effective Compliance Program," and can help businesses understand the need for a risk-based program.

Other sources for best practices and benchmarking can be found by referencing the U.S. Sentencing Guidelines, which contain a section titled "Effective Compliance and Ethics Programs," and the Organization for Economic Co-operation and Development's "Good Practice Guidance on Internal Controls, Ethics and Compliance." The International Organization for Standardization has released ISO 37001 covering anti-bribery management systems, which may be a good place to start for businesses who are in the initial stages of program development, and where additional best practices can be added over time. There are a variety of other sources for guidance and resource tools related to foreign law, policy development, monitoring and evaluation as well as training.

While a compliance infrastructure related to intermediary vetting is critical to the success of any international program, if inefficient, it can conflict with the constant need to stay agile and competitive. Compliance professionals face the challenge of reacting to this dichotomy by coming up with...

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