FCPAméricas Blog
6 Reasons to Have an Anti-Bribery Compliance Program
11.25.2015
An anti-bribery compliance program is a system of self-governance established by companies in order to prevent and detect bribery acts and remediate compliance failures. In a global marketplace, an effective anti-bribery compliance program is becoming a critical component of a company’s business model. There are various reasons for why a company should have such a program in place. This post highlights six.
Mandatory requirement. While in most jurisdictions companies are not obligated to have anti-bribery compliance programs, in certain jurisdictions they may be required to do so. In the UK, for example, companies can be liable for failure to prevent bribery. Local laws may require companies to have other sorts of compliance programs. In many jurisdictions, anti-money laundering laws, for example, obligate individuals and legal persons involved in certain activities to report suspicious transactions. Failing to do so may subject the companies to sanctions, including significant fines and imprisonment.
Mitigating factor. In many jurisdictions, the existence of an anti-bribery compliance program is an important mitigating factor that may reduce or, when combined with other factors (e.g., self disclosure and cooperation), exempt the legal entity from liability. This result is illustrated in the Morgan Stanley case, in which U.S. authorities recognized that (in addition to the bank’s voluntary disclosure and cooperation with the investigation) Morgan Stanley constructed and maintained a system of internal controls. This system provided reasonable assurances that its employees were not bribing government officials. As a result, the authorities declined to bring any enforcement action against Morgan Stanley for the acts of one of its former directors.
Competitive advantage. Given the risks that indirect payments through third parties present for companies under the FCPA and other anti-bribery laws, some companies are now requiring that their third parties have anti-bribery programs in place as a condition of engagement or renovation of contracts. Other companies have gone further and are requiring suppliers as well to have compliance programs in place. In this way, having an anti-bribery compliance program has become a competitive advantage in many industries.
Attracting investors. Since the consequences of violating anti-bribery laws may be harsh and expensive, investors are increasingly looking for anti-bribery compliance programs before investing in companies. Under Brazil’s Clean Companies Act, for example, if a company has 10% or more of the shares of another entity (even with no control over that entity), the company may be held jointly liable for a fine and restitution of damages for the violations committed by the invested company. As such, venture capital and private equity firms investing in the country are conditioning their investments on the existence or implementation of an anti-bribery compliance program that meets certain standards agreed upon beforehand.
Facilitating acquisitions. In recent years, pre-acquisition anti-bribery due diligence has become an important component of a company’s expansion strategy. Many companies conduct anti-corruption legal due diligence before continuing with other areas (e.g., corporate, tax, environmental). This is because, clearing anti-bribery compliance due diligence has become a condition for proceeding with the transaction in order to avoid successor liability. Companies that have an effective anti-bribery compliance program in place are better positioned to undergo that process.
Ensuring shareholder value. Another reason for companies to have an anti-bribery compliance program, as highlighted in the FCPA Resource Guide, is that such program “protects a company’s reputation, ensures investor value and confidence, reduces uncertainty in business transactions, and secures a company’s assets.”
Based on reasons like the ones stated above, adopting an anti-bribery compliance program has exponentially grown in importance in recent years. It has evolved from a legal obligation or mitigating factor to now being a key element of a company’s business growth model.
The opinions expressed in this post are those of the author in his or her individual capacity, and do not necessarily represent the views of anyone else, including the entities with which the author is affiliated, the author`s employers, other contributors, FCPAméricas, or its advertisers. The information in the FCPAméricas blog is intended for public discussion and educational purposes only. It is not intended to provide legal advice to its readers and does not create an attorney-client relationship. It does not seek to describe or convey the quality of legal services. FCPAméricas encourages readers to seek qualified legal counsel regarding anti-corruption laws or any other legal issue. FCPAméricas gives permission to link, post, distribute, or reference this article for any lawful purpose, provided attribution is made to the author and to FCPAméricas LLC.
© 2015 FCPAméricas, LLC
Post authored by Carlos Henrique da Silva Ayres, FCPAméricas Contributor
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