anti corruption - ignorance is no longer bliss
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An overview of the new anti-corruption environment in CanadaTRANSCRIPT
Anti- corruption legislation—Ignorance is no longer blissJune 12 2012
Sandy BoucherSenior Investigator416 [email protected]
Do you operate in markets or industries with a high risk of corruption and/or bribery?
Do you know if your internal anti-corruption policies are sufficient to defend your company and its senior management from prosecution under anti-corruption legislation?
It's a front page issue
• Blackfire Exploration- Police raid• Niko Resources Inc.- $9.5 million
in fines• Alcatel Lucent- $137 Million• Siemens AG- US$450 million in
fines and push out US$350 million in wrongful profits
• BAE- $500 Million
The SNC-Lavalin scandal
Repercussions• Numerous police raids• Class action lawsuits worth
$1.9 Billion• 30% drop in stock prices• Debarred from the World Bank
Learning's from SNC-Lavalin• Payments to third-party agents
who have not been subject to proper scrutiny
• Failure to enforce strict monitoring of financial activities and to take appropriate action of identified suspicious transactions
Learning's from SNC-Lavalin• Lavish entertainment and
travel expenses for high-ranking government officials
• Failure to monitor and regulate complex relationships with government employees and others
The SNC-Lavalin scandal
Repercussions• Numerous police instigations• Class action lawsuits worth
$1.9 Billion• 30% drop in stock prices• Debarred from the World Bank
A wide and complex net— Canada
• Cited as worst offender amongst G7 nations for failing to fulfil obligations to combat bribery and corruption
• Enforcement is increasing due to international pressures
• Non-compliant Canadian companies are at risk
A wide and complex net— US
• US government has stated that fighting foreign corruption is second only to fighting terrorism
• In 2010, US prosecutions and settlement fines totalled US$1.8 billion
• Top ten largest FCPA corporate penalties of all time involve foreign rather than US companies
A wide and complex net— UK
• Bribery Act came into effect on July 1, 2011 • Considered the global gold standard• Applies to commercial bribery, bribery of
government officials, and it considers “failure to prevent bribery” an offence
Niko probation order—a framework for an anti-corruption program1. Companies require a rigorous anti-
corruption compliance code, standards and procedures, including:–Clearly articulated and visible corporate
policy–Strong and visible support from senior
management
–Compliance standards and procedures–An anti-corruption program that applies to
ALL directors, officers, and employees and, third parties acting on behalf of the company.
Niko probation order—a framework for an anti-corruption program
2. Assigned responsibility to 1 or more senior corporate executives
3. An anti-corruption program should be developed on the basis of a risk assessment .
Niko probation order—a framework for an anti-corruption program
4. Effective system of financial and accounting procedures including a system of internal controls, accurate books, records and accounts.
5. Strong communication and training program including periodic training for ALL staff levels.
Niko probation order—a framework for an anti-corruption program
6. All program elements require ongoing review and testing.
7. Risk-based due diligence and proper documentation of all oversight procedures for agents and business partners.
8. A confidential whistleblower or reporting system and protection against retaliation for informants.
Niko probation order—a framework for an anti-corruption program
Why should you care?
• Significant fines• Jail time and
probation orders• Class action
lawsuits
• Crippling costs • Reputational
damage• Decreased stock
price
Potential consequences are substantial and may include:
Mitigating your risk
1. Understand the specific risks
2. Understand the laws
3. Develop an effective anti-corruption policy
Mitigating your risk
4. Effective training and due diligence
5. Implement a specific plan
6. Understand the consequences if you don't comply
Change is here— we can help
We can help develop a program of:• Prevention• Detection• Education
For more information read our new whitepaper, Anti-corruption legislation casts a global net, at GrantThornton.ca/Insights
Anti- corruption legislation—Ignorance is no longer blissJune 2012
Sandy BoucherSenior Investigator416 [email protected]