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Anti-Corruption and Bribery Compliance

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 Businesses operating in just one country must adhere to all the laws, rules, and regulations associated with conducting business there. This covers everything from labor laws to anti-corruption and bribery compliance.

As businesses expand and start operating in different countries, facilitating the exchange of goods, services, and, most importantly, financial assets, the web of required compliance gets bigger. Every country you expand to and operate in will have its own version of anti-corruption and bribery compliance regulations you must adhere to when operating there.

Anti-Corruption and Bribery Compliance

Anti-corruption and bribery laws prohibit a business from offering anything of value to businesses, government departments, government officials, regulatory bodies, and any other entity in exchange for unjust favors or bypassing due process. The idea behind anti-corruption and bribery compliance is punishing a crime (bribery) from both ends. Not only do most countries have rules and regulations against taking bribes, but they also outlaw giving bribes to stop/reduce corruption. This is maintained at both a local and international level.

Examples of Anti-Corruption and Bribery Compliance Laws In International Trade

The Foreign Corrupt Practices Act (FCPA) was introduced in the US in 1977. This law (in its current form) prohibits US-based businesses from offering bribes (primarily material/financial) to government officials or other responsible entities in foreign countries to either secure or retain a business. This includes both publicly traded and private companies in the US. It also extends to companies listed in the US, even if they are headquartered/based somewhere else, to a certain extent.

The second facet of this Act is related to accounting, records, and book-keeping provisions that ensure better transparency and aid in tracking and eliminating bribery and corruption, which is the primary focus of the FCPA.

It’s important to understand that even though FCPA is one of the most famous anti-corruption and bribery compliance Acts enforced on an international level, it’s primarily US-based and applies to US-connected businesses.

There are multiple international variants/comparable compliance laws, including the British Bribery Act of 2010, which covers individuals and business entities and prohibits giving and receiving bribes anywhere in the world.

China doesn’t have a separate law/Act like the FCPA or British Bribery Act, but it has specific laws in its criminal conduct code prohibiting bribery of foreign officials.

The OECD Anti-Bribery Convention is another example of anti-corruption and bribery compliance that member countries must adhere to. However, since it’s tied to a convention, it relies upon the participating members enforcing anti-corruption and bribery compliance within their jurisdiction.

Why Should Businesses Be Well-Versed In Anti-Corruption and Bribery Compliance

Even if you are not expanding your business to another country, it’s imperative to know and adhere to the anti-corruption and bribery compliance in the form that it’s imposed in the country you operate in. But the need to understand this compliance and what it entails in a country you are expanding to might be significantly more pressing for a few reasons.

  • When you are expanding into a country, time might be of the essence, and in order to “fast-track” your expansion, you may be tempted to offer bribes or favors (which are also illegal) to government officials. However, even if you are not caught right away, you will start your business in a new country in a legally vulnerable position.
  • You may have difficulty understanding the local culture and processes. Corrupt government officials may take advantage of this fact and ask for money in terms of certain fees and expenses. Make sure you verify that what they are asking for is legally endorsed and comes with the appropriate documentation and traceability.
  • A bribe is not just something of value that you directly offer to government officials of a country in order to get around the standard procedure or get permission to do something you are not eligible for. It can also be the payments you make to local consultants, intermediaries, and even local businesses, to get what you need. Even if they don’t explicitly convey that they are going to bribe local officials, just an understanding that these entities can help you bypass the system/due process in exchange for monetary gains can make you complicit.

It’s imperative to understand what anti-corruption and bribery compliance regulations are in any country you operate in because if you knowingly or unknowingly go against these regulations, you will be vulnerable to legal repercussions. The penalty may be as mild as a warning and a fine. Or it may be severe, like revoking your permission to conduct business in the country or filing a complaint in your home country. FCPA violations result in penalties like fines twice as much as the benefit you expected to gain from a bribe. The consequences also trickle down to individuals and can lead to criminal prosecution and jail time.

Regardless of the severity of the penalty, violating anti-corruption and bribery compliance laws in any country significantly damages your reputation. Your business partners and investors may cut ties with you simply to save their reputation.

How To Ensure Anti-Corruption and Bribery Compliance

To ensure that your business remains compliant with the anti-corruption and bribery laws of any country you operate in, the first step is to understand those laws. Secondly, you must ensure that internal controls are in place to prevent any individual from committing this crime in your company’s name. Even if they do, there should be enough transparency in your business’s financials to help you track funds that are going into unsanctioned expenses like bribes.

The real challenge is ensuring that your relationship with businesses and regulatory bodies in the country you are operating in doesn’t require or involve any action or payment against anti-corruption and bribery compliance regulations. This may require you to research your partners-to-be in a country and evaluate their reputation for honesty and integrity. Even if your business relationship doesn’t implicate you, it’s still possible for you to suffer simply from association with entities guilty of not adhering to the local anti-corruption and bribery compliance regulations. Schedule a consultation today to see how Aadmi can equip your business. Don’t hesitate to contact our team and update your workplace practices to align with the evolving employment landscape.

 

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