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There has been some helpful and searching commentary from several experts on the success or otherwise of BA 2010 on its 10 year anniversary this year. As someone who has been involved in the investigation and prevention of economic crime for 25 years, I reflect here on the success of the law and how we might do better.
Overall, BA 2010 has been positive. Many companies have invested in resources and associated processes and tools to better assess the risks and respond across global operations. While some, sadly, have been in the box-ticking mindset, others (and I hope the majority) have seen it as a genuine attempt to eliminate this scourge that negatively impacts so many people, especially in emerging markets.
I applaud those senior executives who have made tough decisions to stop doing business with certain people in certain countries, and those board members who have held senior executives to account. I also applaud the apparent, though painfully slow, global alignment of consistent anti-bribery law and enforcement.
As we all know, we are only addressing the tip of the iceberg, and the threats and damage continue to increase. Trade in people and exotic wildlife, and the ongoing exploitation of natural resources, facilitated by bribery and corruption remain global crimes that we must continue to attack. Now, with coronavirus (COVID-19), and a deluge of monies being made available by governments, central banks and nongovernmental organisations, at levels never seen before, the temptation to divert public and private funds through spurious schemes is higher than ever.
Commentators are pointing fingers at regulators and their inability to prosecute cases of bribery successfully, and to put the criminals behind bars. Instead, enforcement agencies are happy to agree to deferred prosecution agreements. Large fines are then paid and monitors are appointed for a period of time (or not), and life goes on—a kind of expensive slap on the wrist, with massive fees going to lawyers and consultants.
Companies can budget for this as a cost of doing business (which ultimately is paid for by consumers). Regulators are seen to be doing something worthy in difficult circumstances and, sometimes, when investigating smaller companies where the actual criminal act can be fully investigated and prosecuted, individuals are found guilty and face the consequences. However, as has been reported, of 99 convictions under the Bribery Act 2010, there have been only two successful prosecutions under s 7—the failure to prevent bribery and corruption provisions.
So, 10 years on, in the midst of the worst global crisis since World War II, what’s the answer?
There will now probably be fewer corporate funds available to fight economic crime, and budgets will be cut. Yet the threats increase due to the need for so many companies to do all they can to survive, and that will inevitably involve taking risks with regard to retaining/winning contracts, obtaining immediate supplies and other resources, accelerating distribution and sales of products and services, and the use of third parties to facilitate all of the above. This presents a massive obstacle.
Boards need to challenge their executive teams to do the right thing—and not fall into the trap of reducing internal controls and targeted resources around anti-bribery measures. Companies should use this as an opportunity to enhance and invest in the right corporate culture.
Coronavirus has everyone talking about a ‘new normal’ and the need for greater care and compassion in our world. Can the new normal include an enhanced corporate-driven focus on improved corporate behaviour, especially in critical areas involving people in vulnerable conditions, and involving the future of our natural world? Can we, for example, administer and monitor the trillions of pounds of aid relating to coronavirus, and not line the pockets of corrupt public officials and their associates, and not pay bribes to access customers and supply chains?
Regulators must continue to prosecute cases through cross-border, coordinated efforts, and not worry if some cases are unsuccessful. In combination, they should seek urgent reform to a legal process that inhibits the investigation and prosecution of companies and individuals, especially in cases that harm people and the environment directly.
Regulators should increase the financial penalties and then invest them in targeted economic crime reviews or independent external audits of larger, higher-risk companies with self-assessment and corporate/individual liability for failure to report. Regulators should encourage and protect whistleblowers who are prepared to call out bribery and corruption cases—and make funds available to reward such people. They should empower, invest in and elevate the efforts of the World Economic Forum, the Organisation for Economic Cooperation and Development, and other anti-corruption agencies such as Transparency International.
For example, the time it takes to uncover the identity of ultimate beneficial owners of offshore accounts is unacceptable, especially when illegal activities are in play. The coronavirus response shows what can be done by governments in a time of crisis. Why can’t registers of ultimate beneficial owners in offshore jurisdictions be more accessible, and powers to obtain and freeze assets be accelerated? Tools to enable the fight against economic crime have to be improved.
Above all, rather than allow the business community to push anti-bribery initiatives down the road as people debate the success and impact of BA 2010, I recommend that the government and major corporates demand (and invest in) jointly increased efforts and reform to fight economic crime. Governments have just found trillions of aid dollars to help emerge from the pandemic, and quite rightly. But some of it must be used to minimise loss to economic crime.
Chris Phillips is a managing director at disputes and investigations consulting firm Alvarez & Marsal LLC.
This content is based on an article first published by Law360, a LexisNexis® company, on 3 June 2020 (subscription required) and is published with permission. To access the footnote, see the original article.
Further information can be found at: www.law360.com/corporate-crime-uk (subscription required).
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