Many corporations around the world in many sectors face government inquiries and eventual fines and penalties for breaching regulations, whether intentionally or not. Sometimes the illegal activity involves a few bad apples among the company’s tens of thousands of employees in dozens of countries. Sometimes it’s a lack of awareness among a group of employees that a certain practice is illegal. Occasionally the wrongdoing and corruption extends broadly, involving the highest levels of corporate leadership, such as with Parmalat and Enron.
A corporation that has experienced the rigors of government investigations, gone to court and paid fines typically follows up with greatly increased compliance education, monitoring and overall diligence. Other companies see the experience of others and intensify their compliance efforts.
Through these efforts, companies learn a lot about the operational areas that are most at risk and need extra attention. They also learn which practices are most effective in maintaining compliance across many countries and regulatory regimes.
Interpretation and enforcement of regulations can vary widely from one country to the next, so this is an added complication in corporate compliance programs. For example, about 50 nations have anticorruption laws, often with little transparency about enforcement. Regulations change often and regulatory agencies have limited resources, with inconsistent approaches from one situation and country to the next. As a result, compliance is a continual process requiring substantial company management time, attention and investment. Global companies headquartered in North America and Europe have increased compliance resources multi-fold in the last decade.
When accused of corruption, companies can go through court proceedings in many countries for the same offense, with years of costly distraction and multiple fines. We must strive for a streamlining and coordination of enforcement across multiple international jurisdictions. It would make compliance more transparent, and reduce and eventually eliminate this “double-jeopardy” problem.
We firmly believe that regulated enterprises can be a strong aid in the fight against corruption and other illegal activities, including price-fixing, money laundering, anti-competition, privacy, theft and fraud. Research shows that bribery and corruption is today’s No. 1 regulatory concern for international companies. To speed progress in eliminating corruption, the regulated need to have input and dialog on regulatory development and enforcement worldwide. In the past, the dialog between regulatory officials and business has been infrequent and strained at best—and we are working to change this.
We participate in the B20 Task Force on Increasing Transparency and Anti-Corruption, an initiative that enables regular discussions between authorities and the private sector to identify enforcement measures that can discourage bribe payers. While we agree that sanctions are a necessary, fundamental “stick,” we want to create more “carrots”—in the form of incentives—and remove disincentives for companies to take an active role in fighting corruption. This is only possible through collaboration and a coordinated approach between the public and business sectors.
We’re happy to report that progress is being made. In late November 2013 in Panama at a UN Conference Against Corruption, we sat down with officials including Nicola Bonucci, director of legal affairs at the Organization for Economic Cooperation and Development (OECD); Dimitri Vlassis, chief of corruption and the economic crime branch, UN Office on Drugs and Crime (UNODC); and others from EBRD, World Bank and Transparency International, as well as representatives from numerous jurisdictions and companies.
While the issues are indeed complex, we appreciate the receptiveness and encouragement given by Bonucci, Vlassis and other officials in Panama to welcome recommendations from the private sector. At the Panama roundtable we presented a preliminary study on “Possible Regulatory Developments to Enhance the Private Sector Role in the Fight Against Corruption in a Global Business Context.” The discussion focused on issues of:
- Incentives for self-reporting and self-policing
- Global and coordinated settlements
- Multi-jurisdiction enforcement and double-jeopardy problems
- The return of assets to demand countries
- The benefit of collective actions
The OECD and UN are open to the concept that if governments can adopt similar guidelines to follow in their regulations and enforcement practices, the fight against bribery can be more effective and efficient—with less demand on governments’ constrained resources or sometimes uneven regulatory expertise.
This progress is promising, and can have a major impact on the work of corporate legal and compliance functions everywhere. It is an extremely complex undertaking and will take time and effort on many fronts. We encourage general counsel, boards of directors and chief compliance officers to take part. If we don’t work to improve and streamline global regulations and enforcement, we can only expect a more tangled web of regulations that will make it increasingly difficult to engage in responsible, compliant business growth.
Massimo Mantovani is general counsel of Eni SpA and workstream leader for the B20 Task Force on Increasing Transparency and Anti-corruption. Richard Alderman was Director of the U.K. Serious Fraud Office from 2008-12 and authored the study presented at the UN conference in Panama, entitled “Possible Regulatory Developments to Enhance the Private Sector Role in the Fight Against Corruption in a Global Business Context.” Copies of the study can be obtained by email to [email protected].
