IBIC 2016: Compliance systems in the

age of corporate criminal liability

Wilson Ang

Partner, Singapore

Norton Rose Fulbright (Asia) LLP

16 – 17 November 2016

Corporate criminal liability

US Foreign Corrupt Practices Act

• Respondeat superior

UK Bribery Act

• Failure to prevent bribery

Other jurisdictions

• Directing mind and will?

• High burden of proof to demonstrate corporate crime?

• No legal concept of corporate criminal liability?

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Lack of effective corporate criminal liability

“The State has also not acted on pressure to review laws which companies can use to avoid corporate criminal liability “where senior managers of companies use subordinate employees to bribe.”

[It] continues to rely on the so-called common law “identification” principle, where only the acts of controllers of a company are treated as acts and state of mind of the firm itself. The OECD working group said this approach is “inadequate for the purpose of addressing many of the most frequent bribery methodologies”.

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US Enforcement – Corporate Penalties

Company Headquarters Fine & Penalty

(millions)

Year

Siemens Germany $800 2008

Alstom France $772 2014

KBR/Halliburton United States $579 2009

Och-Ziff United States $412 2016

BAE United Kingdom $400 2010

Total France $398 2013

VimpelCom Netherlands $398 2016

Alcoa United States $384 2014

Snamprogetti/ENI Netherlands/Italy $365 2010

Technip France $338 2010

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UK Enforcement – Corporate Penalties

Company Location of

corrupt activity

Fine & Penalty Year

Standard Bank Tanzania US$25.2mil 2015

Innospec Ltd Indonesia US$12.6 mil 2010

XYZ Asia £352,000 (fine) +

£6,201,085

(disgorgement of

profits)

2016

Braid Group UK £2.2 mil 2016

Sweett Group Middle East £1.4 mil (fine) +

£851,152.33

(confiscation order)

2016

Importance of compliance systems

Commercial benefit

• Good governance

• Risk management

• Positive reputation

• Business premium

• Pre-qualification criteria

• Staff morale

Legal effect

• Criminal defence

• Sentencing leniency

• Prosecutorial discretion

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Key features of ISO37001

• Leadership

– Governing body and top management to demonstrate leadership and commitment to the anti-bribery management system

– Establish / maintain / review an anti-bribery policy

– Clear roles and responsibilities for implementation of, and compliance with, the anti-bribery management system

• Risk assessment and planning – Undertake regular anti-bribery risk assessment

– Actions to address risks and opportunities

– Establish anti-bribery objectives and planning to achieve them

• Support – Determine and provide resources needed

– Provide awareness and training to personnel

– Communicate and document information

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Key features of ISO37001

• Operations

– Conduct due-diligence

– Implement financial and non-financial controls to manage bribery risk

– Implement anti-bribery controls by controlled organizations and by business associates

– Implement procedures to enable persons to raise concerns about bribery and to enable the company to investigate and deal with bribery

• Performance Evaluation – Monitoring, measurement, analysis, evaluation

– Internal audit

– Reviews: by management, governing body and anti-bribery compliance function

• Improvement – Determine and provide resources needed

– Provide awareness and training to personnel

– Communicate and document information

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Compliance Maturity Model

Level 1

Level 2

Level 3

Level 4

Level 5

Code of conduct

Compliance function in place

Basic processes defined

Basic policies defined

Staff well informed about rules

Group-wide compliance organisation in place

Engagement of senior management

Staff well trained to apply code of conduct

Compliance rules also apply to suppliers and partners

Staff proactively reports possible violations

Alignment of compliance and strategy to create value

Business integrated approach to compliance

Clear decision making

Compliance is cost effective and efficient making use of technology where appropriate

Compliance performance is internally assured

Compliance enables business to take place within risk appetite

People do the right thing even when nobody is watching or it is difficult

Compliance performance is internally and externally assured / verified

Competitive advantage

Basic compliance system

Values, behaviours and compliance fully aligned and externally assured

Compliance fully integrated into business and internally assured

Compliance part of daily life and strategy

Group-wide rules and processes

Compliance Maturity Taking you from where you are now to where you want to be

Rules Based

Compliance

Values Based

Compliance

Recommendations

• Corporate criminal liability

– Establish a clear and consistent legal test for corporate criminal liability for bribery and other economic crimes that fairly attributes liability to a corporate entity for the misconduct of individuals

– Foster prosecutorial approach that targets both individual and corporate liability

• Compliance systems – Assign legal significance to the establishment of compliance systems,

– Elevate commercial benefits of having in place compliance systems, starting with public contracts

• Implementation – Provide guidance on implementation through commonly accepted standards

– Ascribe social value and industry recognition to corporate entities that implement compliance systems

– Support corporate entities that face compliance challenges on sectoral basis through advisory channels

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Regulatory compliance and investigations

Latin America

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Caracas

Rio de Janeiro

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Africa

Bujumbura**

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Casablanca

Dar es Salaam

Durban

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Kampala**

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Middle East

Abu Dhabi

Bahrain

Dubai

Riyadh*

Australia

Brisbane

Melbourne

Perth

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Asia

Bangkok

Beijing

Hong Kong

Jakarta*

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Tokyo

Central Asia

Almaty

Europe

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Athens

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Frankfurt

Hamburg

London

Milan

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Munich

Paris

Piraeus

Warsaw

Canada

Calgary

Montréal

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Québec

Toronto

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USA

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Denver

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Pittsburgh-

Southpointe

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St Louis

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Norton Rose Fulbright experience in regulation and investigations

using local counsel, as required

Norton Rose Fulbright office locations

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