In December 2021, the White House presented the “U.S. Strategy on Countering Corruption” to modernize anti-corruption efforts, strengthening multilateral cooperation to focus on its transnational nature. The comprehensive five-pillar approach aims to prevent, mitigate and respond to corruption and associated crimes, reducing perpetrators’ ability to use financial systems to hide and launder assets. The premise is that effectively preventing and countering corruption, as well as demonstrating the benefits of transparent and accountable governance, could secure a critical advantage for the U.S.
U.S. companies with operations abroad must take note: Corruption-related sanctions have been toughened, and fines can reach billions of dollars. Facing this scenario, and based on our experience at BH Compliance, below I will list three trends that companies should consider and recommendations to keep their reputation safe.
New Focus On Bribery Inside And Outside The US
Since 1977, it has been a crime for a U.S. company or citizen to offer a bribe to a foreign official under the Foreign Corrupt Practices Act (FCPA). Now, the Foreign Extortion Prevention Act (FEPA), which came into effect in December 2023, allows criminal prosecution of all foreign officials who demand or accept bribes in exchange for business opportunities. “Foreign official” is defined as a foreign government employee or any person acting in an official or unofficial capacity for or on behalf of a government or a public international organization.
Fines Have Reached Billions Of Dollars
Recently, high fines have been applied to national and international companies in cases related to FCPA violations. In 2020, Goldman Sachs agreed to pay a $2.9 billion fine for a bribe to obtain business in Malaysia and Abu Dhabi. As recently as January 2024, German software company SAP agreed to pay $220 million for bribing government officials in South Africa and Indonesia.
Efforts Are Being Reinforced To Pursue Corruption
In December 2023, on the occasion of International Anti-Corruption Day, and the opening of the Conference of States Parties to the U.N. Convention against Corruption, the U.S. announced that any person involved in cases of corruption, including money laundering and obstruction of justice, as well as their immediate family members, will be denied entry into the country. This makes the U.S. the first country to establish a visa restriction for those involved in corrupt acts, while also freezing their assets.
The Message To Companies: Reinforce Compliance
The crackdown on transnational corruption makes it more necessary than ever for companies to prevent crimes and bad practices, including within or by their suppliers, contractors or clients. Companies large and small, from all sectors, from rich and poor countries, old or new, need to pay attention: No one is immune, and the risks can come from many places.
One of the best safety measures at companies’ disposal is having solid, effective compliance programs. More than mere ink on paper, they must be rigorously complied with, thanks to employee training, reporting channels that guarantee confidentiality, cross-checks, well-placed incentives, and disciplinary measures that discourage irregularities.
But that’s not enough. Setting the tone at the top is essential in any organization since that establishes the guiding values and ethical climate—and is the foundation upon which an enterprise’s culture is built.
The only way to create a culture of compliance is to start at the highest level. It makes no sense for the executive staff to comply with all kinds of controls if the board of directors or the CEO can skip them. They should not only lead by example but set the tone by developing a set of beliefs against which all decisions can be measured and tested. Next, they can communicate those key ethics and compliance messages in both internal and external communications, encouraging employees to report bad practices or crimes committed within the company without fear of retaliation.
Finally, to align those ethics and values with the business strategy and operating plans, consider establishing relationships with third parties. Due diligence ensures that those with whom we do business meet the same ethical standards that we demand in-house.
Companies have an important role to play in preventing corruption, and leaders set the tone when it comes to reinforcing compliance.
By: Susana Sierra
Source: Forbes Business Council
