Wave of global regulations mean no leeway for bribery and corruption in 2011
Wednesday, 2 February 2011 — Australian CEOs and Directors could be prosecuted for the corrupt practices not only of their own company, employees or contractors working outside Australia, but also the illicit activities of their agents, partners and joint venture partners under global legislation targeting bribery and corruption.
According to EY, Australian companies with international operations, or considering an aggressive growth strategy in 2011, might need to comply with the anti-corruption legislation of four or more countries. Failing to comply with applicable laws can result in imprisonment, severe fines, profit loss, increased regulatory scrutiny and reputational damage.
The UK’s Bribery Act 2010, which comes into force in April 2011, extends the powers of foreign prosecutors to address corruption. The US Dodd-Frank Wall Street Reform and Consumer Protection Act 2010 has also imposed new reporting requirements on some businesses. Combined with increased prosecutions under The Foreign Corrupt Practices Act (FCPA) 1977 and increased penalties for bribery and fraud under Australia’s Criminal Code Act 1995, compliance is becoming increasingly complex and the consequences are growing more severe.
Paul Fontanot, Oceania Leader of Fraud Investigation & Dispute Services, says that while many business leaders believe they understand the threat of bribery and corruption and are mitigating the risk, in reality, this is often far from true.
“Boards and business leaders should be concerned about their personal exposure to bribery and corruption risk. The UK Bribery Act 2010 imposes liability for failing to prevent corruption within an organisation – and introduces the matching defence of having instituted ‘adequate procedures’. This means that company directors can also be liable for negligence and can no longer delegate responsibilities to management.”
”Companies may have a strategy for managing bribery and corruption risk in their own organisations, but few have measures in place for managing the conduct of their agents, partners and joint venture partners”.
“With many Australian companies looking to expand their operations this year, they need to mitigate the increased bribery and corruption risk associated with expanding into new markets, acquiring competitors and establishing new partnerships.”
The EY 11th Global Fraud Survey found that 40% of the 1,400 executives surveyed across 36 countries rarely performed bribery or corruption due diligence, despite more than half seeking growth opportunities on high risk regions such as Latin America and the Far East.
While the risks of bribery and corruption are real and the consequences can be catastrophic, Mr Fontanot says there are there are a number of strategies that can help companies to develop and design an anti-corruption program.
“We advise our clients to know and understand key laws, and become familiar with the accepted standards and guidance for designing an effective compliance program,” he says
“Conducting a corruption risk assessment is essential, as is designing, implementing and monitoring an anti-corruption compliance program.”
For more information, please see Upping the ante - Bribery and corruption back on the agenda (pdf, 946kb)
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