Government contracts attorneys aren’t the only ones that are encountering more enforcement of anti-corruption regulations. William Olsen, principal in the Economic Advisory Services practice at Grant Thonton (.pdf), has noticed a similar trend and so we asked him to tell us about his new book on the topic.
Hi Bill, can you tell us more about your new book “The Anti-Corruption Handbook: How to Protect Your Business in the Global Marketplace”? Why did you write it?
The book begins with background on current corruption risks and the U.S. government’s efforts to fight it. An important focus area involves measures that companies can take to build and enhance their compliance programs. As companies increase their global footprint, the likelihood of fraud and corruption increases. We are seeing a greater level of enforcement of anti-corruption regulations on the federal level in the past year or two. There are number of things that anyone can learn from the book that will help them understand the realities of working in global markets today as well as steps they can take to mitigate their risks.
What are the emerging risks of doing business in the global marketplace that could lead to fraud and corruption charges?
Emerging countries, such as Brazil, India and China as well as other in Asia, Central Europe and Latin America, are taking a greater role in the global financial markets, All have diverse cultures, government structures, and economic systems. In order to penetrate new markets, businesses may be asked to engage in existing business practices, such as use of foreign agents, that can increase your exposure to Foreign Corrupt Practices Act (“FCPA”) violations, for example.
Corruption in some markets has inhibited the growth of free markets and destabilized governments. Violations can seriously impact the bottom line for individual companies. From a positive perspective, many non-government organizations (“NGOs”) and not for profit advocacy organizations have made great strides in fostering collective action to inhibit and punish corrupt acts.
How can businesses take proactive steps to deter corruption charges related to these emerging risks?
Companies should re-examine their controls. It is important to take a fresh look as the markets in which you are doing business, particularly if you have recently expanded operations internationally or if the risk profiles of countries where you are doing business may have changed. You should take note of situations where your customers are government officials or where you are using foreign agents to help conduct business. Controls designed to mitigate against corrupt acts should be built into the company’s enterprise-wide risk management program.
What are some ideas for improving your controls environment? Enhance your system for background checks on new employees, separate duties among members of your finance and accounting departments (at headquarters and abroad), and implement strict, consistent guidelines around employment of subcontractors. All companies should have a firm, clearly articulated code of conduct. Sound planning and process implementation will pay off as you continue to grow the business internationally.