How far is it feasible to apply a global compliance policy in widely differing regional markets? And to what extent should there be local policy exceptions?
In Control Risks’ 2017 International Business Attitudes to Compliance survey, a majority of respondents (55 percent) say that their global compliance policy applies worldwide, without any local exceptions. Just over half of U.S. companies surveyed (51 percent) take this stance, compared with 56 percent from Germany, 57 percent from Brazil, 63 percent from the UK, and 67 percent from France.
However, a substantial minority of companies said that their company policies did have local exceptions in three key areas. These are “gift-giving,” chosen by 40 percent of respondents. This is followed by “permitted interactions with government employees or agents” (30 percent), and “the use of facilitation payments” (20 percent).
The survey does not go into detail on the nature of these exceptions. However, in many cases the purpose of local variations may be to reinforce the company’s international position rather than to relax it. As one respondent puts it, “Exceptions are usually used to make the controls tighter than the global ones used by our parent company.”
This is a point that applies particularly to gifts, hospitality and entertainment. Company policies often apply financial limits for the kinds of gifts or hospitality that are acceptable. It is understandable that those thresholds should be lower in less prosperous developing countries.
Given the many legal prohibitions, it is surprising that as many as 30 percent of respondents say they have local exceptions for interactions with government employees. Again, these may provide for a tightening of the global policy in response to local conditions rather than the reverse. Whatever happens, company interactions with government officials need to be tightly monitored.
As I noted in an earlier post for the FCPA Blog, the third issue -- demands for facilitation payments -- continues to present particular difficulties in many emerging markets. One might therefore expect that a large proportion of US companies would take advantage of the FCPA provision that excludes these payments from the criminal offense of foreign bribery. However, it turns out that only 19 percent of the U.S. companies we surveyed incorporate this exception into their policies, slightly less than the global average.
The figure for the UK is notable for a different reason: 17 percent of companies report that they have local exceptions for facilitation payments. This is lower than the U.S., but one might expect UK companies to take an even stronger line given that there is no exception for such payments in the UK Bribery Act.
In Control Risks’ view, any exceptions should be regarded as a temporary expedient, and subject to tight controls, with the medium-term objective of abolishing such payments altogether. If written into policy, facilitation payment exceptions undermine the company’s overall commitment to anti-corruption.
This takes us back to the original question: is it really possible to apply a single global policy in varied international markets? In our view, there is no need for conflict. Global policies should be founded on anti-corruption principles that are universal. Equally, their implementation needs to be intensely local, informed by careful risk assessment, tailored operational procedures, and targeted training.
When problems arise, they rarely have anything to do with policy. Rather, they are caused -- or reinforced -- by failures of communication between regional offices and their headquarters, and a lack of realism about the scale of the challenges that they face.
This article was first published on The FCPA Blog on June 28, 2017