Authorities in Australia and overseas are zeroing in on bribery and corruption. Laws are getting tougher and more companies are being prosecuted.

Companies must protect themselves with a robust anti-corruption and bribery program that if needed will stand up to investigation and prosecution.

One of the most critical things a company needs these days is an adequate and robust anti-corruption and bribery program. There are several reasons for that. The first is that with the current economic climate, companies have been tightening their belts and so they are taking money away from compliance programs and the like, while at the same time the impetus for corruption and bribery to occur is getting higher and higher.

In that environment you have the overlay of increasing international co-operation in the anti-corruption and bribery area--  more prosecution, more investigation and more cross continental co-operation of an unprecedented nature. Add to that that corruption and bribery laws are changing and becoming tougher. For example, last year the UK Bribery Act came into play in a way that added a new layer of compliance requirements to every company, even those that aren’t based in the UK but who just do business there in some way or employ a UK resident or citizen.

Under the Act, failing to prevent a bribe is a new offence in this area--  and that can be a public bribe or a private bribe. So, if a bribe occurs, or even if it’s threatened to occur or offered to occur (there doesn’t have to be a completion of the offence), a company would be assumed guilty of failing to prevent that bribe unless it can show that it has a very robust anti-corruption and bribery policy in place. Such a policy is a complete defence to that offence.

In Australia we have increasing penalties over the last year for bribery of foreign public officials. We also have on the agenda a change to the anti-corruption and bribery laws which would do away with the defence of a facilitation payment, which many companies have relied on over the past several years – so that’s a changing landscape.

Even worse, in America we have the United States Securities and Exchange Commission offering bounties to whistleblowers who give them, or the DOJ or any other US agency, information which leads to a successful prosecution and penalty (or even if a prosecution doesn’t occur - as long as a penalty is levied based on that information) of 10% to 30% of that total penalty. When you look at the dollars that amount to penalties in this area, that’s a pretty significant motive for whistleblowers to come out of the woodwork. Indeed since those rules have been enacted, there has been an average of about eight tips per day going into the DOJ and SEC.

That environment means companies need to be very vigilant. The best way for them to be vigilant is to have a very robust anti-corruption and bribery policy. It will allow them to avoid the offence in the UK, and it will allow them to detect and prevent some corruption and bribery from occurring. Where those acts do occur, it will give them, under the US legislation and the Australian Criminal Code, a defence against a finding of corporate criminal culpability by showing that there was no direction or approval of the act, and no corporate culture which encouraged or permitted this act to occur.

How best to enact a robust compliance program is very situation specific for each company. It’s going to require a proportionate response to the threat of corruption and bribery for that company. It requires a risk assessment for that company’s particular operations and partners. It requires appropriate due diligence as to every person or entity that company is doing business with. It requires policies that are enforced and led from the top down and that are appropriate to address those risks that the company has identified. A simple two page policy is not going to cut it in this area any more.

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