What do you consider will be the most significant corruption-related challenges posed to businesses in your jurisdiction over the next 18 months?
Bribery & Corruption (2nd edition)
Upon completion of the restructuring of the government departments and the integration of enforcement resources, more stringent enforcement actions on anti-corruption are anticipated over the next 18 months. Companies need to take a relatively conservative approach to the uncertainties that are not yet clarified by the laws, as well as relevant authorities and the interactions with the relevant authorities in corruption related investigations and matters. Considering that employee’ corruptive misconduct could lead to the criminal liabilities to both the individual and the entity, it is necessary for companies to plan ahead in compliance enhancement to prove their conscientiousness and their continuous efforts in duty execution.
Another delicate issue for companies to consider is with regards to potential legal implications of the International Criminal Judicial Assistance Law (“ICJAL”), which was promulgated by the Standing Committee of the National People's Congress of China on October 26, 2018. Companies in China commonly conducts internal investigations on corruption for foreign law considerations such as the Foreign Corrupt Practices Act (“FCPA”), but now this practice is substantially impacted by the newly enacted ICJAL in October 2018, which expressly stipulates that institutions, organizations and individuals within the territory of China shall not provide evidence materials and assistance provided in this law to foreign countries, without the consent of the competent authority of China. The ICJAL applies to criminal proceedings with a wide coverage of activities potentially deemed assistance thereto. Upon analysis of different types of FCPA investigations in China, it is our view that as long as the investigation could potentially lead to a criminal resolution with the US authorities, it is within the zone of danger and the likelihood of the applicability of the ICJAL on the current FCPA investigations is substantially high with legal implications to be ascertained. Therefore, it is suggested that companies should consult with competent local counsels in advance to access the legitimacy of the internal investigations and to interact with the relevant Chinese authorities if needed.
French corporations and establishments will have to enshrine an effective and efficient whistleblowing system in their corporate culture, given that this is yet another tool which is unfamiliar to the French legal system, and can even be poorly perceived by employees, as a form of denunciation.
In addition, businesses and their counsel will have to learn to conduct internal investigations in a way compatible with the French legal requirements, as well as the specific state of mind of French prosecutors. In effect, French prosecutors tend to be skeptical of such investigations, primarily because they are funded by defendant companies, and conducted by their counsel.
Another corruption-related challenge will be for companies targeted by investigations in relation to bribery offences to conduct fruitful negotiations with judicial authorities -despite the absence of official guidance in relation to cooperation, and the very limited number of precedents- in order to strike the right balance between traditional defence and constructive cooperation.
The German legislator has just recently implemented the EU Directive 2016/943 and passed the Law on protection of trade secrets (Gesetz zum Schutz von Geschäftsgeheimnissen). It will be very important to see how that law will affect the legal behaviour of corporate entities, public prosecutors and national courts. It will also be interesting to see how the courts will apply the newly introduced sections of the Criminal Code regarding bribery related to sports (sections 265c and 265d) and the public health care sector (sections 299a and 299b). It will also be challenging to raise even more awareness in business transactions.
Furthermore, there might be substantial changes if the German government adopts legal regulations for internal investigations that will probably also regulate which documents produced in internal investigations can be secured and which ones are protected from being secured by the public prosecutor.
Businesses will need to promote further their compliance programs and co-operate in adopting common procedures for combating corruption. Effective compliance programs and effective internal procedures will become increasingly important given that corporate liability (as set out above) is stipulated by numerous legal provisions and the consequences may be complex. Sanctions may not only affect the financial status of a company (by imposed fines) but also its regular business (through suspension of activities or other restrictive measures).
As the Government have not published any guidance in relation to the 2018 Act, it is difficult for businesses to determine with any certainty the approach that the government will take to the investigation and prosecution of cases of bribery and corruption. There is therefore a level of uncertainty and it is challenging for businesses to adequately prepare for what is somewhat unknown territory. However, businesses must nevertheless be aware of their obligations under the Act and take all appropriate measures in order to minimise any risk of an instance of bribery or corruption occurring within their organisation.
In the next months companies will have to make a great deal of effort to
- adapt to the new provisions set forth in the above-mentioned Law no. 3, dated 9th January 2019, which, for instance, added to the list of the relevant crimes for corporations the offence of ‘undue influence peddling’ and modified the regulation of corporate criminal liability as far as corruption-related crimes are concerned;
- at a more general level, to adopt (and/or keep updating) their compliance programs aiming at providing the most effective behavioural rules and tools suitable for preventing the commission of crimes in the context of companies. On top of that, one of the topics we deem important that the companies focus on in the near future is the counterparty risk, for it is an aspect that – if well managed – can provide to the companies good protection against the risk of commission not only of bribery crimes but also of anti-money laundering, conspiracy, and terrorism financing crimes.
Companies should develop structures and have policies in place to prevent individuals from committing acts of corruption or bribery at their own initiative, such as the instalment of double signature policies. In addition, companies must undertake preventive measures and provide for trainings (throughout the whole organisational structure) to prevent that corruption or bribery would take place and that the company as a consequence incurs losses and reputational damage. This is a point of attention not only for companies working in countries where corruption is common but also in Western countries or local structures.
It is likely that the adoption of the plea-bargaining system will facilitate investigative authorities in finding information and collecting evidence of domestic and foreign bribery and corruption. Under the circumstances, one of the most significant challenges posed to businesses is how to detect corruption-related information internally at an early stage in order to mitigate the potential damage of the discovery of bribery or other corruption.
Bribing of public officials for business favours within the National Government and County Government; and abuse of office by Public officials.
The most significant challenge for businesses that have uncovered potential violations is weighing whether or not to seek the benefits set out in the DOJ’s recently announced FCPA Corporate Enforcement Policy. As discussed in Questions 16 and 18, the policy offers many potential advantages to businesses that provide full cooperation in that the DOJ will presume that declination is appropriate unless aggravating circumstances are present.
The new federal administration has defined three priority strategies; one of them being tackling corruption and bribery. However, it is still early to see tangible results from the “zero-tolerance” principle adopted by AMLO’s government.
With no doubt, a major positive development would be fully implementing the SNA. Hopefully, pending appointments of senior officers will occur within the next few months, including the official appointment of the head of the system, the independent special anti-corruption prosecutor.
We consider that Mexico is still going through a transition period between governments and political ideologies, which creates an uncertainty atmosphere that represents a challenge for companies looking to anticipate to the economic, social and legal developments to take place in Mexico in the near future.
Ethical maturity. In a context where ethical standards, a compliance culture and the tone at the have not been solidified, it is likely that corruption-related concerns will prevail. Ethical standards have broader scope and applicability than enforcement actions and legal obligations.
Increased trade with China and Asia and the greater integration of Chinese and other Asian businesses in the supply chain will likely increase the risk of corruption.
We do not foresee any significant corruption-related challenges posed to business other than those already outlined above.
Against the backdrop of a growing practice, but insufficiently explored as per the legal doctrine and jurisprudence to date on criminal liability of the legal person, an important challenge in the business sector in the near future might be to identify the mechanisms that can lead to streamlining internal anti-corruption procedures / policies and maximizing the effects sought in this way.
From this perspective, will be able to maintain and strengthen the positions held, the organizations that will opt for the intensification of the internal auditing activities in order to strengthen the preventive anti-corruption practices, to identify the potential vulnerabilities within the organization, as well as the situations that constitute violations of the legal provisions in corruption issues, which can destabilize the current activity of the company.
Although Singapore has done well in terms of combating corruption, Singapore is situated in the Asia Pacific region which exposes Singapore to various corruption risks. In 2018’s CPI, it was noted that the Asia Pacific region had made little progress in the fight against corruption with a fairly low score of 44/100 for three consecutive years.
Singapore companies with overseas business interests and multi-national corporations with their regional headquarters in Singapore may be exposed as a result of corruption activities taking place overseas especially in cross-border dealings. In this regard, the PCA has extra-territorial powers to deal with corrupt acts committed by a Singapore citizen outside Singapore as though these were committed in Singapore. Pressures on financial results arising from economic growth factors (or slow growth) in the region may also be a challenge to companies operating in and out of Singapore.
The key challenge for businesses will consist in continuing implementing and further strengthening their compliance organization. This may be a particular challenge in an environment of increasing regulation and growing economic uncertainty that requires management attention in many different areas. At the same time, the increasing level of prosecution of bribery in Switzerland and abroad leads to higher legal risks in the case of compliance failures. This risk is increased by the increasing availability of electronic data dating back many years that allows prosecutors to look into irregularities occurred years ago. Given the considerable business risks that a conviction for bribery offences can entail, businesses are well advised not to relax their efforts to effectively combat bribery and corruption risks within their organizations.
Mergers and acquisitions represent a key risk area. Buyer companies face real challenges in conducting pre-acquisition due diligence on a potential target which is sufficient to uncover corruption issues. Issues may not be discovered until after execution of the deal, at which point the buyer has "bought an investigation". Similar risks exist in joint ventures.
A high proportion of bribery cases involve intermediaries such as consultants and agents. The Rolls-Royce case shows the issues which companies face in monitoring and policing action by intermediaries. Putting effective due diligence measures into place to manage this risk remains a significant challenge for UK businesses.
It is also difficult for businesses to keep pace with regulatory and legal developments. The UK has experienced a proliferation of changes in the last few years, but the challenge is not simply volume of law or the pace of change. Companies face a multitude of different business risks, some of which are still emerging (e.g. risks around technology). They face the challenge of applying evolving laws to the evolving business landscape.
Finally, businesses face the challenge of global investigations and increasing cooperation between jurisdictions – sharing information, and joint prosecutions. There are an increasing number of countries co-operating, beyond the UK and US. These include Canada, Australia, France, Russia, China, Brazil and other South American countries.
There are no real changes on the horizon – organizations in Canada continue to struggle with the gray areas of what constitutes a bribe, as well as waiting to see how the remediation agreement framework gets utilized.
Public attention is increasingly focused on bribery allegations facing a large Canadian corporation such that it expected that law enforcement efforts will increase in the coming months.
We consider that the biggest tasks for companies operating in Portugal are, in the near future, the implementation of adequate compliance programs and policies, in order to comply with an increasingly demanding regulation, not only in relation to anti-bribery and corruption, but also to anti-money laundering.
Since May 2018, companies operating in Portugal are obliged to keep files of necessary information as set forth and required by regulations affecting the protection of personal data under the penalty of a fine.
The enforcement of Law 27401, thus far unenforced, will necessarily test current business compliance practices, promoting debates about e.g. corporate governance, or the role of the compliance officer, and gradually answering multiple interpretive questions that the legal text opens up. A new practice will need to grow on cooperation agreements, which will be greatly challenging taking into account our historical public-private distrust.
In Argentina, were corruption is widely extended in many economic sectors, compliance programs may face limitations that could be overcome by collective action strategies.
Corruption enforcement has had a big impact in investment and business access to credit, especially in the economic sectors “tainted” by the Notebooks scandal, e.g. construction, public works, and energy, contributing to the economic recession that the country has recently suffered. Compliance practices and integrity measures throughout industries’ value chains should play a role in avoiding the freezing of economic activity by facilitating corporate change and faster remediation in line with global investors’ demands.
Political uncertainty adds ambiguity to this scenario in the context of the 2019 electoral calendar, in which provincial governors, and national legislators are elected, and where President Macri’s re-election is challenged by former President (and defendant in multiple corruption probes) Cristina Fernandez de Kirchner.
Our main challenges is the education of the entire population. Unfortunately, in Angola, the majority of the population deals with corruption as a normal and common situation.