The global problem of bribery isn’t going away anytime soon. Forty percent of all compliance officers reported the risk of bribery and corruption at their company will increase this year, according to the Kroll and Ethisphere Institute report released this morning: The 2016 Anti-Bribery and Corruption Report. Just 8 percent believed that their corruption risks would decrease in 2016.
The report collected information from 267 senior-level executives working in ethics, compliance and/or anti-corruption.
Many of the survey questions and reported information dealt with the issue of third party involvement in bribery and corruption. Third parties have been a huge area of concern regarding violations of the FCPA since their conduct has been at the heart of many of the government enforcement actions. The FCPA targets not only the regulated company but its agents or intermediaries which may engage in misconduct on its behalf.
The survey responses identified training of third parties for compliance and ethics as one area lacking prudent steps to stop corruption. Only 34 percent of respondents provided training to their third parties. With nearly half of the companies employing the survey participants doing business with at least 1,000 third parties, the potential for wrongdoing as a result of insufficient training and insufficient audits is great.
The most popular measure to establish compliance and ethics expectations to third parties is to include explicit provisions in their contracts requiring adherence to their policies and protocols. 75% of respondents reported that the company undertook this measure to prevent violations.
Other data further supports the tremendous worldwide problem of corruption. Earlier in the year, Transparency International released its annual Corruption Perceptions Index detailing the perception of corruption in various countries. According to the responses, sixty-eight percent of the world’s countries have a serious corruption problem and that group includes half of the G20.
We took an indepth look at the report last year, so we thought it was worth discussing some of the issues on the periphery rather than do an analysis of which countries won and which lost in rankings.
At the same time that the Transparency report indicated a global problem, the Chair of the organization also applauded the fact that people took to the streets to protest corruption in their country. Among the areas where that happened was Brazil, which saw the perception of corruption get worse as the details of the Petrobras bribery scandal became public.
The report also highlighted the fact that some of the countries which were perceived to be relatively corruption free had companies which are suspected of participating in bribery or other corruption abroad. The latest progress report on the OECD Convention on Combating Foreign Bribery from Transparency International, released in August 2015, found that about half of the countries to the Convention have failed to prosecute any foreign bribery cases since joining.
The United States, Germany, the United Kingdom and Switzerland are the only countries considered by the organization to have active enforcement of its obligations. The U.S., of course, does so through actions by the Justice Department and the Securities & Exchange Commission under the FCPA. In part because of whistleblower tips encouraged by Dodd-Frank financial incentives, the Justice Department has been expanding the number of lawyers investigating and prosecuting companies and individuals for violations of the anti-bribery law.
The United States took a giant leap forward in the detection of these incidents a few years earlier when they implemented whistleblower rewards for FCPA and other securities law violations. More than 10% of the tips each year have been provided by individuals located outside of the United States and a significant percentage of the overall tips are related to suspected violations of the FCPA.