In recent years, governments worldwide have been trying to improve legislation and enforcement against corruption, while businesses in many countries have taken unprecedented actions to strengthen compliance policies and proactively work together, with the public sector, in clamping down on bribes or activities that could lead to bribery. Despite these efforts, bribery and compliance issues remain major challenges that corporations and the public continue to face in doing business globally.
The challenge is clear in a new report by Baker McKenzie, "Connected Compliance: The Business Case for Compliance Integration". It surveyed compliance leaders at more than 500 companies with a UK turnover of £1 billion or more, and found 57% had already had a violation uncovered by a regulator and 55% of leaders felt overwhelmed by the risk exposure of their business.
It is obvious that business leaders and investors have to take calculated risks in pursuing new markets, given the intense competition most businesses are now facing. At the same time, with the rising tide of regulation and more stringent enforcement, they will also need to allocate resources to manage their internal compliance policies and ensure that the return on their new investment will not be lost and their corporate reputation not destroyed along the way in pursuit of growth.
It is always hard to try to enforce against failure to comply. We can see from the above survey the more markets or the more risky markets you expand into, the more resources you have to invest and more money you have to spend. The question is, how much more effort and resources will one have to spend to try to catch wrongdoing?
Snuffing out corruption and compliance problems needs more than strict regulation and enforcement by regulators. This needs to go hand in hand with creating the right mindset and good practices for businesses to mitigate risk of exposure.
What companies should focus on is how to change the way their people think about corruption and bribery. This change of mindset and perceptions is one of the key elements to reduce violations of the law or corporate policies in this area. Legislators in the US and UK have recognised this fact and are encouraging corporations to offer training and demonstrate the seriousness of their compliance policy.
Both the US and UK governments are prepared to offer executives and management-level staff assurances that they will be treated fairly as long as they leverage their efforts in helping prevent bribes through enforcement of their internal policies. It's a bit like dangling a carrot while also making it loud and clear that severe punishments await should they ignore enforcement of their own corporate and compliance policies.
Many other countries have followed suit. Thailand is no exception. In August 2017, the National Anti-Corruption Commission issued a manual with guidelines on what may be considered "appropriate internal control measures" for the prevention of acts of bribery within a company. These internal control measures comprise eight elements:
1. Strong, visible policies and support from top management to prevent bribery.
2. Risk assessment to effectively identify and evaluate exposure to bribery.
3. Enhanced and detailed measures for high-risk and vulnerable areas.
4. Application of anti-bribery measures to business partners.
5. Accurate books and accounting records.
6. Human resource management policies that complement anti-bribery measures.
7. Communication mechanisms that encourage the reporting of suspicion of bribery.
8. Periodic review and evaluation of anti-bribery prevention measures and their effectiveness.
The newly issued notification, under the Organic Act on Counter Corruption (1999), specifically requires companies to have appropriate internal control measures to prevent acts of bribery that may be undertaken by connected persons for the company's benefit. Under the notification, a company's internal control measures must at least include the eight fundamental elements outlined above.
The notification makes it clear the existence of such minimum internal control measures alone does not guarantee a company's exemption from liability. Consideration must also be given to how the measures are actually implemented and used by the company.
The notification means the eight fundamental elements can no longer be considered as merely recommended practices but must be considered as minimum legal requirements.
This development confirms the need for companies to get their house in order and ensure robust compliance programmes and functions to respond effectively to these new requirements.
Peerapan Tungsuwan is a partner with Baker McKenzie in Bangkok. She can be reached at peerapan.tungsuwan@bakermckenzie.com
