On the Anti-Bribery “Watchlist”: Compliance and Labor/Anti-Trafficking Issues

Today’s companies must understand and prevent the myriad problems flowing from labor issues. Increasingly demanding, serious compliance attention and resources are now being focused on the emerging area of human anti-trafficking and forced labor laws and regulations as they relate to business supply chains. These mandates include the California Transparency in Supply Chains Act, the Executive Order on Strengthening Protections Against Trafficking in Persons in Federal Contracts, and the UK Modern Slavery Act of 2015. By enlisting or conscripting companies into the fight against human trafficking, child labor, and other “forced” or “coerced” labor practices, these laws introduce a wholly new compliance reality requiring accountability and supply chain compliance.

The United Arab Emirates

The United Arab Emirates (UAE) anti-corruption framework targets bribery of domestic and foreign officials, corruption, and even facilitation payments. The laws, which appear in legislative initiatives regulating a variety of industries and areas, create a robust system to combat both public and private-sector corruption and bribery. A 2016 amendment to the Federal Penal Code strengthened the legal framework against public corruption, fraud, and embezzlement with a view to strengthening the laws that protect the public trust. The anti-corruption framework can be found primarily in the UAE’s civil law, its Federal Human Resources Law, and its penal code. The enforcement is handled by the police, the Office of the Public Prosecutor, the Ministry of Justice, and the State Audit Institution. Given the increased international cooperation between regulatory agencies, the UAE’s enforcement agencies and its regulators will be at the forefront of the global fight against corruption. This is especially true given the UAE’s growing importance in regional and global financial markets.

Mexico

There have been significant changes to Mexican law recently that have provided prosecutors updated and enhanced tools to combat corruption. In May 2015, the Mexican Congress and the states approved a constitutional amendment that created the National Anti-Corruption System, which was put into full force and effect in 2017. This supplemented and broadened the already existing anti-corruption laws in Mexico’s public procurement process. Now individuals and legal entities can be criminally liable for bribery of public officials in Mexico. In November 2014, Mexico City passed modifications to the criminal code making bribery an offense that can be committed by both individuals and legal entities and created an innovative approach to calculating penalties against companies. However, even though laws have changed, much remains to be done. The OECD noted that Mexico has fully implemented very few of the recommendations that it has made to eradicate corruption. Mexico still had no prosecutions or convictions for foreign bribery. Corruption is still common in Mexico, with the widespread use of “gestores” or intermediaries to navigate the bureaucracies responsible for issuing licenses and permits, shell companies owned by family members of government officials seeking a bribe, fictitious service providers, and improper gifting and excessive hospitality to employees of state-owned entities. With the new Lopez Obrador Administration’s anti-corruption plan, further changes are anticipated in public procurement by the creation of a central mechanism to manage and monitor public contracts to achieve greater transparency. The new administration has also committed to creating an autonomous Special Prosecutor’s Office to independently investigate and prosecute corruption cases and to implement additional restrictions on entertainment and gifts provided to public officials.

India

This chapter discusses the various laws and enforcement agencies in India relating to the investigation and criminalization of bribery and related offenses. Although India’s principal statutes, the Prevention of Corruption Act (PCA) and Prevention of Money Laundering Act (PMLA), have been in force for decades, the number of related prosecutions is low, with the first prosecution under the PMLA coming 15 years after that statute’s enactment. While India criminalizes bribery of domestic public officials, it lacks any laws criminalizing commercial bribery or bribery of foreign public officials, which sets the country behind many of its peer economies. There have been various calls for increased anti-corruption reforms in recent years, including from the administration of current prime minister Narendra Modi, but the success of these efforts remains to be seen.

Germany

Germany is currently ranked among the top 12 in the Transparency International Corruption Perception Index. The country achieved this ranking through substantial efforts in the last decades in legislation, in society, and in the business sector. Today, the corporate compliance management systems of many major German corporations serve as a benchmark in the corporate world. But there is still a lot of work to do. Germany does not yet have a corporate criminal code that holds legal entities criminally liable for corruption-related offenses. German authorities still do not have a uniform and standardized procedure for acknowledging adequate compliance management systems as an affirmative defense or mitigating factor to decrease administrative fines. Although repeatedly requested by the OECD, Germany also still lacks an express and explicit law that grants specific protection to whistle-blowers from retaliation in the private sector, though many German corporations have already set up highly sophisticated whistle-blower systems. This chapter provides an overview on the most important statutory provisions and draft bills with regard to anti-corruption in Germany. Further, the chapter discusses how companies in Germany can take appropriate measures in order to navigate safely through the challenges of corruption-related liability in today’s competitive business environment.

China

China’s anti-corruption legislation prohibits both official corruption and commercial bribery. China is a civil law country. It does not have a uniform national anti-corruption law yet, and the relevant anti-corruption legal provisions are mainly in the PRC Criminal Law and the PRC Anti-Unfair Competition Law. In addition to these two key legislations, there are also regulations and judicial interpretations issued by relevant government agencies and Supreme People’s Court to address implementation issues under the law. Since China’s president, Jinping Xi, came to power in 2012, China has launched an anti-corruption campaign. The 19th CCP Congress in 2017 continues to send strong signals to fight against corruption.

Australia

Australia’s anti-bribery and anti-corruption laws appear simple in expression but have proved illusive in securing successful prosecutions. The structure of the foreign bribery offense is complicated and requires numerous physical and mental elements to be established for each limb of the offense. Since 1999 when Australia enacted its foreign bribery laws, there have been several corporate and individual guilty pleas in foreign bribery cases but as yet no contested trials. The first case in 2011 arising out of the Securency banknote printing scandal has concluded with mixed results: several plea deals yet other prosecutions permanently stayed due to illegal conduct on the part of the investigative agencies. Other more recent cases have started but are early in the criminal justice system. The traditional approach of the Australian prosecutors is that once charges are laid, they expect a guilty plea to the offense charged or an agreed lesser offenses and then any discount is a matter for the sentencing court. Australia still lacks a structured approach to complex commercial crime including foreign bribery. While there are reforms pending before the Australian government on changes to the foreign bribery offense deferred prosecution agreements, a strict liability corporate offense of failing to prevent foreign bribery, and enhanced private sector whistle-blower laws, they are yet to be implemented. While resources at the Commonwealth level have improved over the years, they remain diffuse, underfunded, and under-resourced. Australian business is starting to adopt a more proactive response to manage offshore risk and the expected legislative reforms are pushing this along. Australian business increasingly knows it must address these issues in a global economy as its most significant trading partners are taking a similarly tough stand against bribery and corruption.

Conclusion

As we hope the foregoing chapters have underscored, it is high time that practitioners of the compliance, regulatory, and investigative arts recognize not only that other countries have credible anti-bribery/anti-corruption regimes—including ones with extraterritorial application—but also that new anti-bribery laws are being passed frequently. And from our perspective, even more importantly, is that the long-lagging enforcement of these laws is increasingly on the minds of prosecutors, regulators, judges, and politicians. As these key stakeholders and decision-makers gain a fuller appreciation of the wider fight against corruption, we believe they will feel emboldened to act positively to root out conduct that undermines democracy and the rule of law. We also believe these same stakeholders will be motivated to take steps that ensure that they do not fall behind their geopolitical “peers.” As a consequence of today’s increasingly polycentric fight against bribery and other forms of corruption, those advising companies will be expected to understand, and more importantly ward off against, this development’s direct impacts on companies and individuals engaged in cross-border commerce, regardless of where in the world they are based or do business....

Voluntary Disclosures

In the course of doing business, company managers may discover that the company has violated the law, thereby exposing the company to potential civil or criminal liability. When this occurs, an inevitable question is whether the company should voluntarily disclose this information to the government. To be sure, the U.S. Department of Justice (DOJ) has strongly encouraged companies to self-report their misdeeds. However, disclosure is not without serious risks and potential consequences. Determining whether to self-report requires careful evaluation of multiple considerations. This chapter discusses in depth those considerations, and fully outlines both the benefits and risks of voluntary disclosure.

Corporate Monitors and the Monitorship Process

The prospect of a Foreign Corrupt Practices Act monitor is an unpleasant one for a company that just emerged from what likely was a long, expensive, and invasive investigation and wants to get back to business. A compliance monitor brings even more cost, effort, and scrutiny through evaluating the company’s anti-corruption compliance program, conducting interviews, performing testing, and making recommendations. Although rarely welcomed by companies, a well-executed monitorship can be a helpful endeavor that results in a stronger company. This chapter discusses the use of corporate compliance monitors as a condition to resolving corporate FCPA enforcement actions, common aspects of FCPA monitorships, and best practices for achieving a successful FCPA monitorship.