Bribery & Corruption - ACL

1 ACL EBOOKBRIBERY ANDCORRUPTIONTHE ESSENTIAL GUIDE TO MANAGING THE RISKSB ribery & Corruption : The essential guide to managing the risks - 3 CONTENTSF ailing to Manage Bribery and Corruption Risks Can Be Very Global Risk _____8So Why is Bribery Still Commonplace and Such a Risk? _____9 What Can Be Done to Address the Risks Associated with Bribery and Corruption ? _____10 Whose Job is it Anyway? Start by Defining Roles and Responsibilities _____12A Fork in the Process Roadmap: Choose a Standalone or an Integrated Process _____13 Build an Anti- Bribery & Anti- Corruption Program: 5 Step Process _____14 Identify and Assess Risks _____14 Identify Mitigation Procedures to Reduce the Risks and Their Impact _____16 Monitor _____18 Manage Exceptions _____20 Reporting and Ongoing Assessment _____22 Anti- Bribery & Anti- Corruption Compliance Process Flow _____24 How Does Your Organization Rank?

2 _____25 Anti- Bribery and Anti- Corruption Technology Buying Checklist _____264 - Bribery & Corruption : The essential guide to managing the risksFAILING TO MANAGE Bribery AND Corruption RISKS CAN BE VERY & Corruption : The essential guide to managing the risks - 5 For many corporations, the risks related to Bribery and other forms of corrupt payments rank among the most serious risks that must be managed. The direct impact of financial penalties is not the only problem for businesses, as the damage to brand and reputation from negative publicity can have an even greater and more long-term impact. Some organizations, such as multinationals and those in specific industries, including defense, major construction and resources, are particularly at risk, but it typically extends to any organization competing for contracts across the globe.

3 Virtually no business is completely free of the risks associated with some form of corrupt payments. Many people in the world of audit, compliance, legal, and risk management will be well aware of high profile instances in which organizations had to pay many hundreds of millions of dollars in fines and penalties to and other national authorities for failing to comply with anti- Bribery and Corruption regulations. This e-book outlines the key aspects of an effective process framework for managing the risks of Bribery and corrupt payments. Many of you are familiar with our pending litigation against various executives of Magyar Telekom, Siemens, and Noble. Litigation is ongoing against individuals in all three matters, and these cases have sent an unambiguous message that we will vigorously pursue cases to hold individual accountable for FCPA violations including executives at the highest rungs of the corporate ladder.

4 In fact, this April, we obtained the second highest penalty ever assessed against an individual in an FCPA case, when one of the Siemens executives agreed to pay $275,000. Andrew CeresneyCo-Director of the Division of Enforcement, Securities and Exchange Commission6 - Bribery & Corruption : The essential guide to managing the risks Bribery is a specific offence which concerns the practice of offering something, usually money, to gain an illicit advantage and Corruption is an abuse of a position of trust in order to gain an undue advantage. Government of Ireland definition By its nature Corruption can be difficult to detect as it usually involves two or more people entering into a secret agreement. The agreement can be to pay a financial inducement to a public official for securing favor of some description in overseas Corruption this can manifest itself in a company paying a bribe for the benefit of an overseas public official in order to win a contract.

5 This can be done through a third party commonly known as an agent or advisor who then passes the bribe on to the public official or directly by the company to the public methods of making the payments are used by those involved, including moving the money through a number of offshore companies (which, on the face of it, have nothing to do with the intended recipient) registered in various jurisdictions. UK Serious Fraud OfficeFAILING TO MANAGE Bribery AND Corruption RISKS CAN BE VERY & Corruption : The essential guide to managing the risks - 7 The Foreign Corrupt Practices Act (FCPA), enacted in 1977, generally prohibits the payment of bribes to foreign officials to assist in obtaining or retaining business. The FCPA can apply to prohibited conduct anywhere in the world and extends to publicly traded companies and their officers, directors, employees, stockholders, and agents.

6 Agents can include third party agents, consultants, distributors, joint-venture partners, and FCPA also requires issuers to maintain accurate books and records and have a system of internal controls sufficient to, among other things, provide reasonable assurances that transactions are executed and assets are accessed and accounted for in accordance with management s sanctions for FCPA violations can be significant. The SEC may bring civil enforcement actions against issuers and their officers, directors, employees, stockholders, and agents for violations of the anti- Bribery or accounting provisions of the FCPA. Companies and individuals that have committed violations of the FCPA may have to disgorge their ill-gotten gains plus pay prejudgment interest and substantial civil penalties. Companies may also be subject to oversight by an independent consultant.

7 The Securities and Exchange Commission8 - Bribery & Corruption : The essential guide to managing the risksA GLOBAL RISKThe Foreign Corrupt Practices Act (FCPA) and the Bribery Act are just two examples of government legislation that aim to address the problem by levying massive fines and other penalties against organizations and individuals involved in Bribery . The specifics of regulations vary by region and applicable laws. The FCPA, for example, is only applicable to public companies whose shares are traded in exchanges and only relates to corrupt payments to government officials. The Bribery Act is more wide-ranging and also applies to corrupt payments to non-government officials. Other national legislation, such as the Chinese Article 164, the Brazilian Clean Company Act and the Canadian Corruption of Foreign Public Officials Act, among many others, all seek to do essentially the same thing and impose very severe penalties on corporations that resort to Bribery .

8 Despite increasing global legislation and enforcement, the extent of Bribery and corrupt payments does not appear to be in decline. PwC s 2014 Global Economic Crime Survey reported that most organizations have actually seen an increase in the problem. Bribery and Corruption , along with other forms of fraud and economic crime, continue to be a major concern for companies of all sizes across all regions and in virtually every than 40 countries have adopted the OECD Anti- Bribery Convention, which establishes legally binding standards to criminalize Bribery of foreign public officials in international business transactions. Bribery & Corruption : The essential guide to managing the risks - 9SO WHY IS Bribery STILL COMMONPLACE AND SUCH A RISK?Dealing with the problem of Bribery and corrupt payments is not always easy. Formal policies in most large companies clearly forbid such practices, but this does not mean they will not occur.

9 Behavioral education and compliance training is simply not enough to mitigate the and receipt of bribes, as well as other forms of facilitation and consulting fees, gifts, entertainment, travel and other benefits, are a well-established part of business and government culture in many parts of the world. Until relatively recently, these practices were widely accepted by large, global companies as simply a part of the cost of doing business. The reality for many business managers is that it can be extremely difficult to remain competitive and win new business in foreign markets without resorting to some form of activity that may be illegal or, at best, in a grey area. As a result, in spite of the implementation of increasingly stringent corporate policies, the temptation is to do whatever is necessary to close a deal and then find a way to avoid getting caught.

10 This often means that large payments manage to make their way into the bank accounts of influential individuals in governments or corporations in order to win a contract, but are carefully disguised in a way that makes them difficult to detect through normal control mechanisms. 10 - Bribery & Corruption : The essential guide to managing the risksWHAT CAN BE DONE TO ADDRESS THE RISKS ASSOCIATED WITH Bribery AND Corruption ? We encourage companies to maintain robust compliance programs, to voluntarily disclose and eradicate misconduct when it is detected, and to cooperate in the government s investigation. But we will not wait for companies to act responsibly. With cooperation or without it, the department will identify criminal activity at corporations and investigate the conduct ourselves, using all of our resources, employing every law enforcement tool, and considering all possible actions, including charges against both corporations and individuals.