A Gap Analysis of Enforcing FCPA-compliant Codes of Conduct in Low- and Middle - Income Countries

Abstract

Recent quantum of FCPA (US ‘Foreign Corrupt Practices Act, 1977’) settlements reveal eye-popping numbers. It has brought to light that superficial anti-bribery enforcement mechanisms are still being deployed as order of the day across many large enterprises. It seems that even after a decade of balance-sheet busting Deferred Prosecution Agreements, Non- Prosecution Agreements and other resolutions, corporations are still taking anti-bribery enforcement efforts lightly. The FCPA compliance industry is a multi-billion-dollar industry and is growing in leaps and bounds, and there is a wide variety of expertise available at all price-bands; that being so, how is it that codes of conduct and anti-bribery policies fail to prevent and/or detect misconduct for years before it spirals out of control? In this article, I will be going over a few select elements of drafting and enforcing an effective code of conduct, which under ‘normal’ operating protocols may be perceived to be too ‘tight’ for well-lubed enterprises, but the tried and tested methods will ensure that the corporation is combat ready in the event of a breach. I will be focusing on FCPA compliant codes but will also cross-refer other legislation like the UKBA (‘Bribery Act 2010ʹ). The fact that conduct enforcers are faced with the fact that extra-territorial laws lack public assent in most low- and middle-income countries is something that I will assess in significant detail. I will be covering behavioural dynamics influenced by socio-cultural and socio-economic parameters of employees and institutions, and how pre-conceived notions of what ‘misconduct’ is, impact actual compliance efforts. Whilst the focus will be on using an effective code of conduct which works in practice, I will draw in other issues like hotline distrust, procurement integrity, economic disruption stemming from anti-bribery investigations, merits of self-reporting violations and perceptions about compliance enforcers, and how they impact organizational behaviour and institutional culture. I will be drawing cues from select high-profile resolutions like Airbus, Rolls-Royce, Odebrecht and Ericsson. I will be talking about the usual suspects inside institutions, who suddenly become sensitive to issues of compliance after a regulator has expressed interest in a subject company. I will also look at pressure points after it is imminent that there would be enforcement action, or an investigation has already begun. A lot of my content will be focussing on the Asian strand but theobservations and intrinsic assessments, albeit picked up from actual conduct in emerging markets in Asia, will apply to a universal set of problems in most low- and middle-income countries. Conduct, culture, socio-economic parameters, FCPA, UKBA, internal controls