OECD report could lead to tighter anti-corruption laws: EY
(Toronto, 14 April, 2011) Canadian businesses should be prepared to face increasingly vigorous fraud investigations after the latest Organisation for Economic Co-operation and Development (OECD) report urges Canada to boost its anti-corruption enforcement efforts, says EY.
“Although Canada is generally considered one of the least corrupt countries in the world, the OECD report identifies some clear areas for improvement,” says Mike Savage, Canadian Fraud Investigation and Dispute Services Leader at EY. “Many Canadian businesses already conduct their international business safely above the minimum standards set by law. If Canada implements the OECD recommendations, the main implications for businesses will be how payments to government officials are recorded in their books. We can also expect enhancements to compliance programs and internal controls to prevent or detect violations.”
Savage refers to Transparency International’s 2010 Corruption Perception Index, which ranked Canada as the least corrupt country in the Americas. Globally, Canada placed sixth out of 178 countries.
“Despite low corruption levels, the OECD clearly believes Canada needs to do more to enforce anti-corruption,” states Savage. “One of their greatest concerns is that Canada has had just one prosecution in the 10 years since its anti-corruptions laws were passed. Among other recommendations, they’re proposing Canada urgently dedicate more resources to prosecute over 20 active fraud investigations. They also advise Canada to automatically stop convicted persons from enjoying any further benefit from government contracts and to identify methods that will encourage more violations to be reported to law enforcement.”
A number of the report’s recommendations relate to facilitation payments, which are made to foreign public officials to speed up or secure the performance of a routine act. This is a focus area for many countries. For example, the new UK Bribery Act does not clearly allow for these payments. The OECD recommends Canada raise awareness of these payments, review its policies and approach on small facilitation payments, and encourage companies to implement internal controls to prohibit or discourage its use.
Facing tighter anti-corruption laws and an increased risk of prosecution, Canadian companies can protect themselves by ensuring they incorporate these corruption risks into their compliance programs, and conduct periodic reviews of their international operations in industries vulnerable to corrupt payments, notes Savage.
“What this means for Canadian businesses is that they’ll need to be extra vigilant when recording the true nature of their accounts and transactions to defend against accusations of bribery from all ends,” says Savage. “Depending on how Canada responds to the OECD’s report, businesses may also need to review or realign their organization’s overall fraud risk management strategy.”
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