FCPA, UK Bribery Act, Brazilian Clean Company Act - The Olympians of Corruption

• By: Staff Editor
• Date: September 13, 2016
• Source: ComplianceOnline

FCPA, UK Bribery Act, Brazilian Clean Company Act - The Olympians of Corruption

Corruption at a major sporting event takes away something from the integrity of the game. On an organizational front, corruption takes away from business integrity too. Consequently, committees have been set up, stringent laws have been enforced, and staggering penalties have been levied – but has the lesson hit home?

The laws that champion the cause are many, but here’s a look at a few global game changers.

FCPA

The founding principles of the Foreign Corrupt Practices Act of 1977 aim at creating a level playing field for businesses in the marketplace. The FCPA focuses on its two key provisions: anti-bribery and accounting. These provisions collectively seek to eliminate the risk of corruption and money laundering and encourage ethical practices when U.S. businesses breach borders and go global.

While the DOJ and SEC share enforcement authority for the FCPA’s anti-bribery and accounting provisions, the two agencies also rely on law enforcement and federal agencies to investigate and prosecute non-compliant businesses and personnel.

Whether it is third party due diligence or internal controls for company expenditures and assets, the key responsibility that the FCPA reiterates for US businesses operating in any part of the world: accountability.

UK Bribery Act

The Bribery Act of 2010 stands a head taller than the FCPA in its unflinching position on bribery and corruption. In that, the Act focuses on four primary offences: two general offences regarding offering a bribe or an advantage, and receiving or responding to any such incitement; a discrete offence regarding bribery of a foreign public official; and, a newer, stringent liability offence against commercial organizations that fail to prevent a bribe.

The Act came into force to set a precedent and comply with the requirements of the 1997 OECD Anti-Bribery Convention. The corporate liability offence here is one that was incorporated later to emphasize the burden of liability on companies, directors and individuals. Apart from businesses that function within the UK, the Act’s extra-territorial reach also covers businesses that operate abroad with roots in the UK.

Comparisons between the FCPA and the Bribery Act are plenty, the general consensus leaning toward the Bribery Act’s provisions that extend beyond the FCPA’s comparatively limited scope.

Brazilian Clean Company Act

Initially a demonstration against the increase in public transportation fares, the 2013 protests in Brazil quickly snowballed into a public outcry against corruption in the country. The stage for the FIFA World Cup in 2014 and the Olympics in 2016, Brazil set about the brisk task of assuring sponsors and participating nations that Brazil was still a great place to bring the games to. Brazil’s Clean Company Act, enacted in 2014, rated as one of the toughest anti-corruption laws in the world, but when it came to enforcement, inconsistencies abounded.

Brazil’s chief anti-corruption enforcement agency, the Comptroller General (CGU) authored the anti-corruption law and was also given principal enforcement authority over corporations.

Rescinding all that, the first formal act of Brazil’s interim president, Michel Temer, has been a provisional measure to dissolve the CGU, amid an economic climate shrouded with corruption - be it in the government sector or in the corporate sector.

Corporate Hospitality

Corporate socialization at sporting events have become increasingly popular over the years and are now seen as a relationship-building opportunity for companies. When handled improperly though, corporate hospitality has often resulted in bribery or other improprieties.

These improprieties mean corporates work harder on ethical business practices such as ensuring business relationships that extend beyond the boardroom do not aid or augment any transactions between the two - the driving factor being regulations and regulators that view it as an area of audit interest.

Organizational Compliance with Anti-Bribery and Corruption Laws

Laws and their loopholes aside, what truly sets the precedent for organizational compliance when it comes to anti-bribery and corruption (AB&C) laws is the tone at the top. Contrary to that, research indicates that only 60% of CEOs regard dealing with AB&C as one of their top priorities. Correspondingly, 44% companies do not list AB&C as a standing priority. Lack of training on the subject too rates high among CEOs and employees, creating a vulnerable vacuum when it comes to staying informed on organizational AB&C policies and staying abreast of local and international laws and regulations.

In a ComplianceOnline survey, 35% of survey respondents said that their organizations had changed the way they operated nationally and internationally since the implementation of anti-corruption legislation like the UK Bribery Act, SEC Whistleblower Rules and heightened enforcement of the FCPA.

In many ways, the differences in AB&C laws, their premise and enforcement creates a local context and fills in blanks when organizations take their business offshore or when they liaise with others overseas – the organizational responsibility being maintaining ethical business practices in compliance with the laws that seek to accomplish the same.

Sources:

http://www.complianceonline.com/free-resource

https://www.justice.gov/