Building an Effective Anti-Corruption Compliance Program
Building an anti-corruption compliance program is a complex task. But for companies with global operations, the risk of doing business far outweighs the cost of due diligence. So why does negative corporate behavior persist, and what can your team do about it?
Despite the best efforts of government programs, ethical businesses, and concerned investors, the World Economic Forum puts the cost of corruption at $2.6 trillion — or five percent of the global gross domestic product — per year. This is complicated by differing priorities between presidential administrations, and uncertainty around how rigorously enforcement will be pursued.
Although the former Trump administration issued record fines in 2020, it initiated fewer Foreign Corrupt Practices Act (FCPA) investigations on a year-over-year basis since the beginning of his term. This will change under President Biden, whose bipartisan platform makes no exceptions for companies that break the rules. And prosecutors are eager to make a name for themselves calling out high-profile misdeeds.
If you’re an executive or a compliance officer heeding these reports as Biden signs his own executive orders, you may be asking yourself: Is corruption happening in my company? What can we do?
What Is Anti-Corruption?
In a broad sense, you might think of corruption as when someone in a seat of power abuses their position for personal gain. But from a business perspective, until the FCPA was published in 1977, covert payments and side-deals were by and large an acceptable take on foreign policy.
Since the FCPA, anti-corruption has become the act of ensuring corporate business is conducted fairly and ethically, and doesn’t contribute to unstable, corrupt regimes. The regulation formalized real consequences to deter companies from buying off foreign officials and private stakeholders to gain lucrative procurement and natural resource contracts.
Now, these actions are widely perceived as unethical, and all manner of stakeholders prefer to associate with poised brands that do business fairly. In this sense, anti-corruption meant winning business ethically and competing for resources fairly — until the Yates memo changed the landscape again.
Learn more about how business corruption is a risk to your company in our whitepaper, “Combating Bribery & Corruption in the Supply Chain.”
In 2015, the Department of Justice (DOJ) memorandum penned by then-U.S. Attorney General Sally Yates warned that senior executives would be held personally liable for corruption, both internally and in their business and supply partners.
This sparked a series of enforcement actions, including joint efforts between the DOJ and the Department of the Treasury’s Office of Foreign Asset Control (OFAC). Boards and executive teams became concerned about their international behavior and what was happening in their supply chains.
Now, companies are spending over $180.9 billion per year on anti-bribery, anti-corruption compliance and supplier risk assessment. So we know executives now understand the potential for real damage to their career, brand, and livelihood.
Thus, anti-corruption means more now than it ever has. It encompasses extending your culture toward the third parties in your supply chain to influence positive behavior, and sharing your story with peers and stakeholders to create a positive corporate environment. Doing it well will give you the confidence to manufacture goods without introducing new, complex risks to your brand. Over time, this builds deep value.
The Benefit of an Anti-Corruption Compliance Program
An anti-bribery and corruption compliance program can protect your company in several ways, but chief among them is showing your stakeholders that you’re committed to doing two things: meeting your requirements, and going a bit further to meet your client expectations. That means performing supply chain due diligence to mitigate risk, but also going a bit further to promote business ethics within your company.
Due diligence goes a long way toward maintaining credibility when poor behavior is discovered outside of your immediate purview. It leads to:
- Engaged, happy employees who value their roles.
- Stronger financial risk mitigation.
- Respected brands.
- Lucrative partnerships.
- Happy investors.
- Strong client contracts.
- Knowledge of your counterparties.
- Sustainable revenue growth.
If your company is interested in growing profits, its first order of business should be to increase your breadth of vision, and create a culture of transparency within your organization and with suppliers. This requires thorough due diligence that includes supplier education, ongoing engagement, and expertise. But you can’t do that effectively with manual or point software solutions anymore.
This is why companies that manage vendors are making the digital transformation. They need platform technology, cloud storage, supplier engagement services, and machine learning data principles to do the job well.
“Your company needs platform technology and deep supply chain engagement services to navigate the current bribery and corruption landscape.” — Jared Connors
Assent’s Anti-Corruption Solutions
Assent helps the world’s largest businesses automate supply chain communication, enabling them to identify and mitigate bribery and corruption risks. This delivers transparency and insight to the intermediaries within the supply chain, reduces risk, and protects them from reputational damage, financial penalties, and legal action. It also shows the rest of your company what your values are.
Assent’s Anti-Bribery, Anti-Corruption Solution can filter your responses by supplier, contact, or regulation and check for alignment with ISO 37001 and supporting documentation. We also provide supplier education, so your business partners understand why you need their data.
For more information about how Assent can help you meet FCPA requirements, as well as your internal standards, contact us today.