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IBIC 2016: Compliance systems in the
age of corporate criminal liability
Wilson Ang
Partner, Singapore
Norton Rose Fulbright (Asia) LLP
16 – 17 November 2016
Corporate criminal liability
US Foreign Corrupt Practices Act
• Respondeat superior
UK Bribery Act
• Failure to prevent bribery
Other jurisdictions
• Directing mind and will?
• High burden of proof to demonstrate corporate crime?
• No legal concept of corporate criminal liability?
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Lack of effective corporate criminal liability
“The State has also not acted on pressure to review laws which companies can use to avoid corporate criminal liability “where senior managers of companies use subordinate employees to bribe.”
[It] continues to rely on the so-called common law “identification” principle, where only the acts of controllers of a company are treated as acts and state of mind of the firm itself. The OECD working group said this approach is “inadequate for the purpose of addressing many of the most frequent bribery methodologies”.
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US Enforcement – Corporate Penalties
Company Headquarters Fine & Penalty
(millions)
Year
Siemens Germany $800 2008
Alstom France $772 2014
KBR/Halliburton United States $579 2009
Och-Ziff United States $412 2016
BAE United Kingdom $400 2010
Total France $398 2013
VimpelCom Netherlands $398 2016
Alcoa United States $384 2014
Snamprogetti/ENI Netherlands/Italy $365 2010
Technip France $338 2010
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UK Enforcement – Corporate Penalties
Company Location of
corrupt activity
Fine & Penalty Year
Standard Bank Tanzania US$25.2mil 2015
Innospec Ltd Indonesia US$12.6 mil 2010
XYZ Asia £352,000 (fine) +
£6,201,085
(disgorgement of
profits)
2016
Braid Group UK £2.2 mil 2016
Sweett Group Middle East £1.4 mil (fine) +
£851,152.33
(confiscation order)
2016
Importance of compliance systems
Commercial benefit
• Good governance
• Risk management
• Positive reputation
• Business premium
• Pre-qualification criteria
• Staff morale
Legal effect
• Criminal defence
• Sentencing leniency
• Prosecutorial discretion
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Key features of ISO37001
• Leadership
– Governing body and top management to demonstrate leadership and commitment to the anti-bribery management system
– Establish / maintain / review an anti-bribery policy
– Clear roles and responsibilities for implementation of, and compliance with, the anti-bribery management system
• Risk assessment and planning – Undertake regular anti-bribery risk assessment
– Actions to address risks and opportunities
– Establish anti-bribery objectives and planning to achieve them
• Support – Determine and provide resources needed
– Provide awareness and training to personnel
– Communicate and document information
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Key features of ISO37001
• Operations
– Conduct due-diligence
– Implement financial and non-financial controls to manage bribery risk
– Implement anti-bribery controls by controlled organizations and by business associates
– Implement procedures to enable persons to raise concerns about bribery and to enable the company to investigate and deal with bribery
• Performance Evaluation – Monitoring, measurement, analysis, evaluation
– Internal audit
– Reviews: by management, governing body and anti-bribery compliance function
• Improvement – Determine and provide resources needed
– Provide awareness and training to personnel
– Communicate and document information
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Compliance Maturity Model
Level 1
Level 2
Level 3
Level 4
Level 5
Code of conduct
Compliance function in place
Basic processes defined
Basic policies defined
Staff well informed about rules
Group-wide compliance organisation in place
Engagement of senior management
Staff well trained to apply code of conduct
Compliance rules also apply to suppliers and partners
Staff proactively reports possible violations
Alignment of compliance and strategy to create value
Business integrated approach to compliance
Clear decision making
Compliance is cost effective and efficient making use of technology where appropriate
Compliance performance is internally assured
Compliance enables business to take place within risk appetite
People do the right thing even when nobody is watching or it is difficult
Compliance performance is internally and externally assured / verified
Competitive advantage
Basic compliance system
Values, behaviours and compliance fully aligned and externally assured
Compliance fully integrated into business and internally assured
Compliance part of daily life and strategy
Group-wide rules and processes
Compliance Maturity Taking you from where you are now to where you want to be
Rules Based
Compliance
Values Based
Compliance
Recommendations
• Corporate criminal liability
– Establish a clear and consistent legal test for corporate criminal liability for bribery and other economic crimes that fairly attributes liability to a corporate entity for the misconduct of individuals
– Foster prosecutorial approach that targets both individual and corporate liability
• Compliance systems – Assign legal significance to the establishment of compliance systems,
– Elevate commercial benefits of having in place compliance systems, starting with public contracts
• Implementation – Provide guidance on implementation through commonly accepted standards
– Ascribe social value and industry recognition to corporate entities that implement compliance systems
– Support corporate entities that face compliance challenges on sectoral basis through advisory channels
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