Anti-corruption compliance: Adapting to the new business environment
These days, it seems that not a week goes by without a headline trumpeting a new bribery and/or corruption scandal, or yet another example of unethical behaviour by an executive or politician. The leaks from the Panama and Paradise Papers have, along with increased reporting by company executives and political leaders, highlighted the seriousness of the corruption issue around the world. Corporate reputations are sullied, public confidence is eroded, and governments are changing regulations and laws in response. And the mining industry has had more than its share of corruption related scandals over the past several years.
Contrary to what many may think, however, the growing trend of exposing scandals is a good sign because it means that we are on the right path. The culture and environment that has allowed corruption to thrive for so many years is slowly beginning to change. Five or ten years ago, the headlines we see today didn’t exist. Corruption scandals were buried, and the individuals involved continued to operate with impunity and without fear of public disclosure, never mind prosecution.
With aggressive global enforcement action and an increased demand for greater transparency and accountability, however, this is changing. A growing demand for ethics, compliance, and robust anti-corruption measures is changing the landscape in which business is conducted – across the globe. To be successful in this new business environment, public and private organizations must adapt and be able to demonstrate that their business practices and culture reflect the new reality.
No controls, policies or compliance program can completely prevent unethical people from wrongdoing, but the absence of a robust anti-corruption compliance program seriously increases a company’s risk and liability. In addition, it can depreciate M&A and joint venture value, potentially damage a company’s brand, undermine and reduce trust and confidence, increase the potential for prosecution, and threaten sustainability. On the flip side, having such a program along with an ethical business culture can help a company detect and mitigate misconduct, and will markedly increase the chances authorities will go after individual wrongdoers instead of the company itself.
A growing number of countries are enacting anti-corruption laws. Many countries have implemented or are considering “failure to prevent bribery” laws that put the legal onus on companies to have adequate anti-corruption measures (ex: UK Bribery Act Section 7). Others, such as the U.S., do not have specific “failure to prevent bribery” laws, but they still provide procedural and prosecutorial incentives and credits, under Deferred Prosecution Agreements (DPAs), for companies to implement an Anti- Bribery/Corruption (ABC) compliance program.
In Canada, for instance, the government recently announced the introduction of Remediation Agreements (RAs) as its version of DPAs to deal with corruption and other financial crimes, including offences under the Corruption of Foreign Public Officials Act (CFPOA). The underlying premise of this approach is to motivate and incentivise companies to self-disclose, cooperate in the prosecution of individual wrongdoers, and be proactive in implementing robust ABC measures.
The Canadian Extractive Sector Transparency Measures Act (ESTMA) and the Extractive Industry Transparency Initiative (EITI) highlight the industry-specific anti-corruption efforts being made by the government to tackle corruption and CSR issues. The Canadian mining industry is also taking steps to address these issues by working with governments to institute proactive and responsible business practices. The Canadian Mining Association’s Towards Sustainable Mining (TSM) initiative is the latest example of how the industry is demonstrating its commitment to improve the way business is conducted.
The mining industry is particularly vulnerable to becoming entangled in bribery and corruption schemes in high-risk countries. At every stage of a mining project’s life cycle, contacts with foreign government officials are constant and numerous. This exposes individuals to potential opportunities for and pressure to take bribes and become involved in corruption. It is critical for mining companies to ensure they protect themselves from such risks through the implementation of robust ABC compliance measures.
In today’s business environment, a growing number of businesses and government agencies are looking to mitigate their risk and exposure to bribery and corruption. Adopting ethical business practices that include having a robust compliance program in place is becoming a competitive business advantage.
To find out more about ABC compliance programs, contact the Canadian Centre of Excellence for Anti-Corruption (CCEAC) at the University of Ottawa. CCEAC is an academically based platform that encourages the exchange and communication of best practices to help detect and deter corruption related issues. CCEAC offers ABC training and a toolbox that aggregates relevant information, links, best practices and tools to help industries implement ABC measures.
PAT POITEVIN is a cofounder and senior advisor with the Canadian Centre of Excellence for Anti-Corruption
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