Key elements of an anti-bribery_anti-corruption framework

Compliance & Ethics
April
2016
Professional®
a publication of the society of corporate compliance and ethics
www.corporatecompliance.org
Meet Mark Lanterman
Chief Technology Officer
Computer Forensic Services
Minnetonka, MN
See page 14
29
EU Data Protection
Regulation: Are we
nearly there yet?
Jonathan P. Armstrong
33
Marketing and Data
Security Practices: The
FTC v. LifeLock settlement
Keith M. Gerver and Peter T. Carey
39
“To disclose, or not to
disclose? That is often
a tough question.”
Peter Anderson
45
The Ethics
Wheel: Shaping
corporate culture
Susan Korbal
This article, published in Compliance & Ethics Professional, appears here with permission from the Society of Corporate Compliance & Ethics. Call SCCE at +1 952 933 4977 or 888 277 4977 with reprint requests.

y Robin Singh, MSc-Law, MBA, CFE
Key elements of an
anti-bribery/anti-corruption
framework
»»
To successfully develop and implement an anti-corruption framework, an organization must have an excellent tone at
the top.
»»
An anti-corruption framework must have a robust, clear, and comprehensive definition section for any employee or
vendor to refer to.
»»
Assess your organization’s culture with adequate risk assessments and take steps to mitigate problem areas.
»»
The degree of confidentiality and mechanism of reporting offered to employees will inform the level of trust those
employees maintain.
»»
Investigation procedures and disciplinary actions that an employee might face are indicators of an organization’s
tolerance and intolerance toward misconduct.
Singh
Anti-bribery statutes are enforced
in many nations across the world.
One of the most prominent
statutes is enforced in the United Kingdom
through the Bribery Act of 2010 and various
nineteenth century and twentieth century
laws. The United States of America
has enforced the Foreign Corrupt
Practices Act of 1977 (FCPA). Some
other countries with strong anticorruption
frameworks in place are
Russia, Italy, Ireland, China, and
Brazil. Although the Netherlands
has not laid down a specific statute
against anti-corruption, its Dutch
Criminal Code (DCC) constitutes bribery
by a civil servant as a criminal offense
(Article 177, 177a, and 178 of Dutch Criminal
Code). These articles were specifically
introduced into the Dutch Criminal Code
as a compliance measure of the OECD
convention of 1997.
Top Nine elements of anti-bribery framework
The Bribery Act of 2010 in the United
Kingdom came into force on July 1, 2011. The
Act is a representation that strengthens the
position of the United Kingdom on corruption
and bribery and is a major milestone in the
development of anti-bribery legislations at a
global level.
Here are the Top Nine elements of
anti-bribery framework, according to the
UK Bribery Act.
1. Procedures should be proportionate:
Procedures that exist to prevent any act
of bribery should be proportionate to
the risk. Moreover, policies should be
accessible, clear, practical, enforced, and
effectively implemented.
Compliance & Ethics Professional ® April 2016
+1 952 933 4977 or 888 277 4977 www.corporatecompliance.org 73

Compliance & Ethics Professional ® April 2016
2. Commitment of top management: Top
management should be thoroughly
committed to confrontation of bribery
across the company. Management
should work towards creating a culture
where accepting or giving bribes must
be discouraged.
3. Risk assessment: While assessing risks,
both internal and external risks should
be considered. Regular risk assessments
should be performed and the results
should be documented.
4. Due diligence: The anti-bribery approach
has to be risk-based and proportionate.
Persistent efforts should be given by all
parties who are providing services for
the business.
5. Communication and training:
Procedures as well as policies should be
understood and embedded. Training that
is conducted should be in proportion
to risks and customized according to
specific needs. Unless you train, the
framework/policy is ineffective and you
can forget about getting compliance. Train
and carry out refresher trainings to make
it a success.
6. Internal audits: Internal audits should
be conducted according to documented
procedure to check the effectiveness of
anti-bribery procedures.
7. Monitoring and review: Evaluation is
essential to find out how effective the
procedures for bribery prevention are
in an organization and make changes
wherever necessary.
8. Reporting: It is a question that is
defined differently and offers a different
level of confidentiality depending on
the institution that is developing the
anti-corruption framework, such as
non-governmental or governmental
institutions can offer. Depending on
the type of reporting and the degree
of confidentiality, an organization can
proactively propose their assistance
as intermediaries in addressing
such offences.
9. Investigation & Discipline: The
framework should define an organization’s
zero tolerance towards such crimes
and the level of discipline to which an
organization is willing to go to set a lesson
and ingrain a culture of integrity.
Comparison between Chinese anti-corruption
laws and FCPA
Many people are under the impression that
all nations where they carry out business
transactions have anti-corruption laws similar
to those in their home countries. However,
such assumptions often lead to negative
consequences, especially if you are not
familiar with the legal system and cultural
practices of a country where you are currently
conducting your business. For example, if your
company has business interests in the People’s
Republic of China (PRC), you may have to
revisit your compliance program to make sure
that you are complying with China’s severe
and singular anti-corruption regulations. We
will now illustrate how the USA’s FCPA is
different from China’s anti-corruption laws.
One law versus a set of laws
FCPA provides the central set of guidelines
that are applicable for American companies
that do business overseas and with
international organizations that have their
presence in the U.S. The FCPA is a single
United States federal law, and its rules
for conducting international business
have simplified the processes that help in
ensuring compliance. In contrast, China’s
anti-corruption rules do not exist as a single
law. They are spread across various rules
and regulations that include the Anti-Unfair
Competition Law, 1 Provisional Measures
74 www.corporatecompliance.org +1 952 933 4977 or 888 277 4977

on the Prohibition of Commercial Bribery,
PRC Criminal Law, and many other judicial
decisions and laws. Because each law’s scope
is to cover a certain aspect of corruption, a
specific compliance program needs to be
created especially for China that must cover
all the different laws that constitute the anticorruption
rules of China.
Differences in
definitions
Anti-corruption
rules in the United
States are more
clearly defined than
in China as far as
the prohibition of
actions is concerned.
For instance, it is
stated by the FCPA
that giving gifts of
value or payments to
foreign officials, so
that their positions
can be used to secure a commercial contract
or bypass custom regulations, is prohibited.
On the other hand, anti-corruption laws
in China are not defined specifically. The
definition given is quite broad, because the
exchange of gifts is very common in China,
and a distinction between a gift and a
bribe with no expectations is quite tough to
make out.
Comparison between FCPA and
UK Bribery Act
Active and passive bribery
The UK Bribery Act prohibits active as well
as passive bribery, but the FCPA prohibits
only active bribery.
Bribery on a private level
The UK Bribery Act covers bribery even on
a private level, unlike the FCPA, although
To bribe a foreign official
is considered an offense
by both the FCPA and
the UK Bribery Act.
However, the FCPA
defines a foreign official
in a broader manner
than the UK Bribery Act.
such conduct may be prohibited by other
legislation in the U.S.
Bribery of foreign officials
To bribe a foreign official is considered an
offense by both the FCPA and the UK Bribery
Act. However, the FCPA defines a foreign
official in a broader manner than the UK
Bribery Act.
Intent
Under the FCPA,
one has to prove
that a person who
is trying to bribe
someone else is
doing so with a
“corrupt” intent.
This is not the case
in the UK Bribery
Act, where there
is no requirement
to prove an
improper intent.
What are the three top tests that a
compliance officer or an internal auditor
should follow?
The main reason to conduct substantive
testing is to detect red flag or potential
corruption violations. An internal audit
should not be treated as an investigation, but
as a process like any other process. If any red
flag or serious potential violation is detected,
protocol must be immediately put into place
for consultation. The following are some tests
that a compliance officer must follow for an
anti-corruption audit:
1. Risk assessment: The Audit/Compliance
Review should be based on an
organization’s risk assessment/fraud risk
assessment to concentrate on areas that face
elevated level of risks for bribery/corruption.
A compliance officer must test how effective
Compliance & Ethics Professional ® April 2016
+1 952 933 4977 or 888 277 4977 www.corporatecompliance.org 75

Compliance & Ethics Professional ® April 2016
the company’s existing controls are, in
comparison to the need derived by the
business. Furthermore, the controls can
be tested in relation to any international
leading practice which would befit the
organization.
2. Pre-site procedures and planning: Pre-site
planning procedures may include a
notification letter to the business units to be
audited; teleconferencing with management
to explain the aim of the audit process
and talk about potential corruption risks;
and requests for relevant information,
especially financial data so that the process
of choosing samples for testing transactions
can be started.
3. Fieldwork: In an anti-corruption audit,
fieldwork is conducted for one to two weeks
and includes onsite procedures at a business
unit. The focus of the fieldwork is to do a
compliance test for the different elements of
an anti-corruption compliance program and
to conduct substantive testing to detect red
flags or potential violations.
Top clauses to include in vendor contracts
To ensure compliance with the FCPA and UK
Bribery Act, it is important to identify high-risk
affiliates, subsidiaries, and personnel, including
consultants, agents, contractors, and employees
in a company. It should be understood that a
company is responsible for FCPA violations
that are committed by these stakeholders. Here
are some clauses that should be included in a
contract with your contractors or vendors to
avoid violation of FCPA:
··
A standard contract may include warranties
and representations;
··
A clause should mention your discretion
to terminate that contract if your partner is
found to violate the FCPA or the UK Bribery
Act; and
··
An indemnification clause can be also
included if a contractor or a vendor is
found to be a party in violation of the anticorruption/anti-bribery
act.
Impact of data analytics for proactive
anti-bribery review
The regulatory environment has become quite
stringent in today’s business world, and all those
US firms that have global business interests are
under tremendous pressure to ensure that their
compliance programs on anti-corruption and
anti-bribery are improved. Potentially improper
payments that would expose the organization
to risks under the FCPA should be detected
and prevented. At many of the multinational
companies, senior management, boards, and
compliance audit committees are focused
towards anti-corruption compliance.
Anti-corruption and anti-bribery analytics
tests of controls incorporate concepts of big data
that can integrate data from multiple sources
(e.g., text mining, transactional data, and email
and social media) to isolate as well as prioritize
rogue activity and areas of risk. These anticorruption
analytics can be used by executives
in reducing costs pertaining to compliance
fieldwork or internal audits. These analytics are
included in the risk assessment process to find
out which company locations should be audited,
rather than simply running the analytics.
Impact of anti-bribery framework on policies
The UK Bribery Act provides various
restrictions on the conduct of employees
in various situations while they deal with
stakeholders and government clients as part of
the anti-bribery provisions. A clear Standard
of Conduct (also called a Code of Ethics),
conflict of interest policy, and other anti-fraud
policies are required. If the employees are not
made aware of the various restrictions and
provisions of the Act, they may violate them
out of sheer ignorance. Thus, extensive training
on the complete scope of violations, along with
appropriate scenarios and examples, must be
76 www.corporatecompliance.org +1 952 933 4977 or 888 277 4977

given to staff that is in sync with their work
profiles. It is rightfully stated that creating
awareness is the first major step to complying
with this anti-corruption law.
Where does the legal element fit in an
anti-bribery framework?
The Compliance department works closely
with Legal Affairs to interpret/understand the
legal angle when carrying out an investigation.
Section 7 of the UK Bribery Act declares a
criminal offense in all those circumstances
where persons associated with a relevant
commercial organization have committed an act
of bribery in order to procure business for the
said organization. The guidance provided by the
Act and its implication must be understood well
in advance, such as understanding the meaning
of relevant commercial organization, business,
bribery, and associated person in relation
the evidence identified in the investigation.
Similarly, on the FCPA front, the legislative
history speaks of keywords such as willful
blindness, deliberate ignorance, and taking a
head-in-the-sand, which needs to be interpreted
in correlation with the evidence obtained. At
the end, a decision for prosecution should be
done on the merits of how strong the available
evidences are and whether it is really in the
interests of the public/organization/stakeholder
to prosecute. ✵
1. The Supreme People’s Court of the People’s Republic of China: Anti
Unfair Competition Law. Posted September 9, 2003. Available at
http://bit.ly/china-court
Robin Singh (robinsingh002@yahoo.com) is Corporate Senior
Compliance and Fraud Examiner at Abu Dhabi Health Services
Company in Abu Dhabi, United Arab Emirates. @drobinsingh
ae.linkedin.com/in/whitecollarinvestigator
www.advancedcompliancesol.com
Upcoming 2016 SCCE Web Conferences
4.13.2016 | Right to be forgotten, right
of erasure, so nothing left to chance?
• ROBERT BOND, Head of Data
Protection and Cyber Security Law,
Charles Russell Speechlys LLP
4.14.2016 | Preparing for a
Regulatory Exam of Your Organization:
Your Plan from Start to Finish
• CATHERINE COLYER, Chief Compliance
Officer & Fair Lending Officer, Veterans
United Home Loans
4.28.2016 | Navigating the
Challenges of U.S. Export Controls
• JULIO FERNANDEZ, Principal
Consultant, Fernandez Export
Advisory LLC
5.31.2016 | Compliance Risk
Mitigation in Developing Economies
• IBRAHIM YEKU, Legal Counsel ,
Solola & Akpana
Learn more and register at corporatecompliance.org/webconferences
Compliance & Ethics Professional ® April 2016
+1 952 933 4977 or 888 277 4977 www.corporatecompliance.org 77