The Importance of an Anti- Bribery Compliance Program

Transcription

1 The Importance of an Anti- Bribery Compliance Program Michelle Juan TRACE International March 19, 2015 Shanghai, China Raising the Standard of Anti-Bribery Compliance Worldwide 2015 TRACE International, Inc.

2 Anti-Bribery Enforcement Over 100 companies are currently the subject of an ongoing and unresolved FCPA-related investigation. Nearly 90 percent of FCPA cases involve conduct by 3rd parties. All 2014 corporate resolutions involved allegations concerning third parties (such as distributors, channel partners, consultants, agents). High dollar cases continue. Rise of international, multi-agency cooperation, and increasing global enforcement. More is expected of companies and their third parties each year. Improving transparency across supply and marketing chains requires collaboration. Raising the Standard of Anti-Bribery Compliance Worldwide 2015 TRACE 3/20/2015 International, Inc. 2

3 Top 10 FCPA-Related Monetary Settlements Siemens (Germany): $800 million in 2008 Alstom (France): $772 million in 2014 KBR / Halliburton (USA): $579 million in 2009 BAE (UK): $400 million in 2010 Total S.A. (France): $398 million in 2013 Alcoa (USA): $384 million in 2014 Snamprogetti Netherlands B.V. / ENI S.p.A.(Holland/Italy): $365 million in 2010 Technip S.A. (France): $338 million in 2010 Weatherford (Switzerland): $253 million in 2013 JGC Corporation (Japan): $218.8 million in 2011 Raising the Standard of Anti-Bribery Compliance Worldwide 2015 TRACE International, Inc.

4 FCPA Enforcement Actions in China Since 2002, the DOJ & SEC have brought enforcement actions against 30 corporations relating to business activities in China In the history of the FCPA, the number of enforcement actions in China is second only to Nigeria There are at least 41 China-related investigations currently undergoing Pharmaceuticals / life sciences Whistleblowers; third parties Gifts & travel; employee hiring practices Sales, marketing, procurement trade practices Raising the Standard of Anti-Bribery Compliance Worldwide 3/20/ TRACE International, Inc. 4

5 6 Common Elements of Anti Bribery Laws The offer, promise, giving, or authorization of the giving; Anything of value; To a government official (or private sector individual); Directly or indirectly; For an improper or corrupt purpose; To obtain or retain business, or other improper advantage Raising the Standard of Anti-Bribery Compliance Worldwide 2015 TRACE International, Inc.

6 DIRECTLY or INDIRECTLY Under most anti-bribery laws, companies can be liable for the improper payments made by third parties, such as distributors, subcontractors, vendors, brokers, joint venture partners, consultants and contractors: If the company knows that the third party will use its compensation in a way that violates the law You only need to have a firm belief that the particular circumstances exist, not actual knowledge willful ignorance is not an excuse Requires due diligence background checks Raising the Standard of Anti-Bribery Compliance Worldwide 2015 TRACE International, Inc.

7 What do companies view as their most significant anti-bribery compliance challenge? 9.5% 5.4% 8.1% 18.9% 58.1% Understanding government expectations when evaluating adequacy of compliance programs Gifts, hospitality and entertainment Third party due diligence Supply and marketing chain compliance Dealing with state-owned enterprises 58.1% Raising the Standard of Anti-Bribery Compliance Worldwide 3/20/ TRACE International, Inc. 7

8 DOJ / SEC Guide to the FCPA third parties, including agents, consultants, and distributors, are commonly used to conceal the payment of bribes to foreign officials in international business transactions. Risk-based due diligence is particularly important with third parties and will also be considered by DOJ and SEC in assessing the effectiveness of a company s compliance program. Companies should undertake some form of ongoing monitoring of third-party relationships. Where appropriate, this may include updating due diligence periodically, exercising audit rights, providing periodic training, and requesting annual compliance certifications by the third party. Raising the Standard of Anti-Bribery Compliance Worldwide 3/20/ TRACE International, Inc. 8

9 Third Parties Face Fines Marubeni Corporation (2012) Agent for the TSKJ joint venture made up of Technip S.A., Snamprogetti Netherlands B.V., Kellogg Brown & Root Inc. (KBR), and JGC Corporation. Bribed officials to win government contracts to build liquefied natural gas facilities in Nigeria worth more than $6 billion. Settled with DOJ for $54.6 million. Panalpina World Transport and Panlapina Inc. (2010) Global logistics firm for multinational corporations Bribed customs officials on behalf of customers to clear equipment and goods in at least seven countries, including Angola, Azerbaijan, Brazil, Kazakhstan, Nigeria, Russia and Turkmenistan. Settled with the DOJ and SEC for $70.5 million. Raising the Standard of Anti-Bribery Compliance Worldwide 3/20/ TRACE International, Inc. 9

10 Costs of Bribes to Third Parties Puts company s value and reputation at risk Loss of current and future business with principals Creates uncertainty in commercial transactions Slippery slope Fosters a permissive atmosphere for other business crimes Fraud and money laundering Undermines employee confidence in management Costs companies millions of dollars each year to investigate and settle bribery charges. Raising the Standard of Anti-Bribery Compliance Worldwide 3/20/ TRACE International, Inc. 10

11 Benefits of Compliance Raising the Standard of Anti-Bribery Compliance Worldwide 3/20/ TRACE International, Inc. 11

12 Demand for Compliance and Transparency Your global business partners: are under pressure to have checks and controls in place to detect unlawful behavior by their suppliers, vendors, etc. will require you to demonstrate your good practices and transparency. Companies who adopt effective compliance programs will have a competitive advantage over competitors. Raising the Standard of Anti-Bribery Compliance Worldwide 3/20/ TRACE International, Inc. 12

13 9 Benefits of Compliance Programs 1. Enhance Your Company s Reputation 2. Marketing and Promotional Value 3. Create a Culture of Good Governance 4. Increase Employee Confidence in Management 5. Reduce Liability if Something Goes Wrong 6. Deter and Prevent Inappropriate Payments, Fraud and Money laundering 7. Detect Inappropriate Demands 8. Avoid Related Bookkeeping Anomalies 9. Avoid Costs Associated with Investigations and Settlements Raising the Standard of Anti-Bribery Compliance Worldwide 3/20/ TRACE International, Inc. 13

14 Key Elements of a Compliance Program A sound program need not be expensive or require extraordinary internal resources, but it should have: A Clear Message from the Top Code of Conduct and Anti-Bribery & Corruption Policy Employee Training Incentives and Consequences for Violations Anonymous Whistle Blowing/Complaints Mailbox or Hotline Raising the Standard of Anti-Bribery Compliance Worldwide 3/20/ TRACE International, Inc. 14

15 A Concise Written Policy Effective anti-bribery policies address prohibited behavior simply, concisely and unambiguously. Policies should define clearly the prohibited behavior. Policies should include a prohibition on retaliation against employees who bring violations to the attention of management. Policies should include a prohibition on facilitation payments. Flat prohibitions can save companies money. Raising the Standard of Anti-Bribery Compliance Worldwide 3/20/ TRACE International, Inc. 15

16 A Concise Written Policy Effective anti-bribery policies address prohibited behavior simply, concisely and unambiguously. Policies should define clearly the prohibited behavior. Policies should include a prohibition on retaliation against employees who bring violations to the attention of management. Policies should include a prohibition on facilitation payments. Flat prohibitions can save companies money. Raising the Standard of Anti-Bribery Compliance Worldwide 3/20/ TRACE International, Inc. 16

17 A Concise Written Policy Effective anti-bribery policies address prohibited behavior simply, concisely and unambiguously. Policies should define clearly the prohibited behavior. Policies should include a prohibition on retaliation against employees who bring violations to the attention of management. Policies should include a prohibition on facilitation payments. Flat prohibitions can save companies money. Raising the Standard of Anti-Bribery Compliance Worldwide 3/20/ TRACE International, Inc. 17

18 Why the Shipping Industry? Shipping community turned to TRACE: > Trade associations > Shipping agents > Shipping principals > Service providers All stakeholders have common objectives: > Avoid delays and extortionate demands at ports > Increase commercial transparency > Eliminate expensive and duplicative paperwork > Spend time on core business Raising the Standard of Anti-Bribery Compliance Worldwide 3/20/ TRACE International, Inc. 18

19 Expanding Compliance Expectations >More third parties service providers, agents >More rigor checklists not sufficient >More issues no longer just anti-bribery Resulting in >More expense for companies >More paperwork for agents Raising the Standard of Anti-Bribery Compliance Worldwide 3/20/ TRACE International, Inc. 19

20 TRACE Initiatives in the Maritime Industry > >DA-Desk Partnership - shipping agents >MACN collaborating with major shipping company to rating ports for transparency >Rightship (individual ship owners) - maintains a global database of available ships, rating them on age, environment efficiency etc. TRACE will add a rigorous compliance component from May 1st, identifying beneficial ownership and screening against all watch lists and international media. Together, this will provide the greatest visibility into available shipping options worldwide. >global due diligence initiative underway for freight forwarders and logistics companies. Raising the Standard of Anti-Bribery Compliance Worldwide 3/20/ TRACE International, Inc. 20

21 Duplication of Effort Raising the Standard of Anti-Bribery Compliance Worldwide 3/20/ TRACE International, Inc. 21

22 The Solution >A single annual review >Reflecting internationally recognized best practices >Paid for only once >Available immediately Without duplication of effort Raising the Standard of Anti-Bribery Compliance Worldwide 3/20/ TRACE International, Inc. 22

23 What is TRACEcertification? Establish TRACEcertification as the shipping industry standard to vet: > Shipping and port agents > Service providers Together, stakeholders establish that: > Shipping principals select TRACE Certified agents over others. > Agents select TRACE Certified entities over other suppliers of service. > Agents and service providers seek TRACEcertification to demonstrate their commitment to transparency. Raising the Standard of Anti-Bribery Compliance Worldwide 3/20/ TRACE International, Inc. 23

24 Why is TRACEcertification needed? Enhance certainty and efficiency in shipping industry and communicate a strong message that transparency and good governance are a priority. Shipping principals know which agents are certified for compliance and transparency. Agents understand they must be certified to work with reputable principals. Raising the Standard of Anti-Bribery Compliance Worldwide 3/20/ TRACE International, Inc. 24

25 Value of TRACEcertification to Shipping Companies > Reduce costs and labor along the supply chain. > Provide continuous monitoring of agents and other providers with constant screening of names against international sanctions and enforcement lists that are updated every 24 hours. > Mitigate risk across complex supply and marketing chains. > Turn third party compliance into a reality for shipping companies with multiple agents and service providers at ports. > Companies pay nothing to access verified due diligence information. > Provide compliance certifications on anti-bribery, forced labor, and conflict minerals. > Encourage agents and other service providers to think about compliance issues and their reputation. Raising the Standard of Anti-Bribery Compliance Worldwide 2014 TRACE International, Inc. 25

26 What is included in a TRACEcertification report? >Thorough questionnaire based on the best practices of hundreds of multinationals, including questions about: > beneficial ownership > related entities > ties to the government > past misconduct >Resumes for key people >Audited financials or a financial reference >Code of conduct Raising the Standard of Anti-Bribery Compliance Worldwide 3/20/ TRACE International, Inc. 26

27 TRACEcertification is a process, not a snapshot >Daily sanctions screening >Daily search against hundreds of international watch lists >Multilingual online training for all employees (with certificate awarded) >Due diligence renewed annually Raising the Standard of Anti-Bribery Compliance Worldwide 3/20/ TRACE International, Inc. 27

28 Duplication of Effort Raising the Standard of Anti-Bribery Compliance Worldwide 3/20/ TRACE International, Inc. 28

29 No Duplication of Effort Raising the Standard of Anti-Bribery Compliance Worldwide 3/20/ TRACE International, Inc. 29

30 Using TRACEcertification reports wisely >Ask for a copy of their full report; their one-page certificate of completion is not sufficient >Review the executive summary at the front for red flags >Contact TRACE for a security review if you re concerned the report has been altered >Alert us if you believe the entity has misrepresented any information Raising the Standard of Anti-Bribery Compliance Worldwide 3/20/ TRACE International, Inc. 30

31 About TRACE The world s leading anti-bribery standard setting organization. Internationally recognized and respected provider of third party due diligence and shared-cost anti-bribery compliance solutions. Hundreds of multinational members and thousands of TRACE Certified small & medium-sized enterprises around the world. Continuously benchmarking to provide actionable information. Raising the Standard of Anti-Bribery Compliance Worldwide 2015 TRACE International, Inc. 31

32 Compliance Tools & Resources Raising the Standard of Anti-Bribery Compliance Worldwide 3/20/ TRACE International, Inc. 32

33 Ascertaining Best Practices The OECD s Good Practice Guidance U.K. Serious Fraud Office Guidance DOJ & SEC Resource Guide to the Foreign Corrupt Practices Act UN Office on Drugs and Crime: An Anti-Corruption Ethics and Compliance Programme for Business: A Practical Guide Publications/2013/ _Ebook.pdf World Bank: Fighting Corruption Through Collective Action A Guide for Business: antic/whole_guide_oct.pdf Raising the Standard of Anti-Bribery Compliance Worldwide 2015 TRACE 3/20/2015 International, Inc. 33

34 Written Policies UNODC Database ( Anti-corruption policies and measures of the Fortune Global 500 UN TRACK ( Tools & Resources for Anti-Corruption Knowledge Gift and Hospitality Guidelines ( The US Department of State maintains per diem thresholds for almost all cities, broken down by meals, accommodation and incidentals. Raising the Standard of Anti-Bribery Compliance Worldwide 2015 TRACE 3/20/2015 International, Inc. 34

35 Training Tools TRACE Training Video Toxic Transactions: Bribery, Extortion & the High Price of Bad Business Global Infrastructure Anti-Corruption Center (GIACC) Anti- Corruption Training Manual Training manual designed for infrastructure, construction, and engineering sectors. RESIST Training Tools Pamphlet providing brief scenarios aimed at training employees to avoid extortion & online video tool ( Raising the Standard of Anti-Bribery Compliance Worldwide 3/20/ TRACE International, Inc. 35

36 Other Resources OAS s Anti-Corruption Portal of the Americas Provides model laws, training programs and tools categorized by topic. Group of States Against Corruption (GRECO) Offers resources for sharing best practices, as well as reports on anticorruption legislation and enforcement in member states. Raising the Standard of Anti-Bribery Compliance Worldwide 3/20/ TRACE International, Inc. 36

37 Annapolis New York Dubai Manila Visit us online at Questions? facebook.com/traceinternational twitter.com/trace_inc youtube.com/traceinternational linkedin.com/company/ TRACE-international-inc. Raising the Standard of Anti-Bribery Compliance Worldwide 3/20/ TRACE International, Inc. 37