A Look at Corruption Risks in the ECA Region.

Author:Sultan, Ann
Position:FOREFRONT - Europe-Caucasus-Asia
 
FREE EXCERPT

Corruption scandals are a common occurrence in many countries of the Europe-Caucasus-Asia (ECA) region, which consists of Armenia, Azerbaijan, Belarus, Estonia, Georgia, Kazakhstan, Kyrgyzstan, Latvia, Lithuania, Moldova, Russia, Tajikistan, Turkmenistan, Ukraine and Uzbekistan. In just the past year, we have seen a number of well-publicized scandals, such as reports of various government officials owning luxury real estate and living well beyond their means, and the expulsion of 13 members of the Parliamentary Assembly of the Council of Europe for accepting gifts and bribes from Azerbaijan's government. These scandals have coincided with international money laundering investigations involving banks and individuals across the ECA region, as well as revelations from the Panama Papers about the questionable use of shell companies tied to public officials in ECA countries. These recent developments help illustrate what international indices have long reported: Public corruption is widespread throughout the ECA region. But what practical information can help companies manage their corruption risks there?

Although often grouped together because of their shared history as Soviet states, the ECA countries are diverse in many ways, including in the nature and prevalence of corruption in each one. Nonetheless, some sentiments are common across the region, including a general distrust of governments' abilities to deter and prosecute corporate malfeasance, which increases the corruption risk faced by companies operating in the region and the importance of addressing that risk proactively.

Common Anti-Corruption Mitigation Measures RESPONSES PERCENT Anti-corruption policy 63% Anti-corruption contract terms 53% Anti-corruption training 53% Walk away from a deal to avoid corrupt acts 50% Procedures for expenses related to gifts, meals, 44% travel or entertainment for officials Due diligence on third parties 44% Monitoring of third parties 43% Procedures for charitable and community donations 38% Anonymous reporting mechanisms (e.g., reporting 37% website/hotline) Dedicated compliance personnel 36% Anti-corruption audits and assessments 28% Merger and acquisition due diligence 26% Procedures for political contributions 23% Other 4% To shed more light on the particularities of ECA countries on the topic of corruption and the steps companies are taking to mitigate corruption risks, Miller & Chevalier and partner firms in the region surveyed more than 300...

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