Gaps in anti-bribery compliance at multinational corporations

Despite a steady increase in Foreign Corrupt Practices Act (FCPA) investigations and enforcements over the last several years, the majority of corporate compliance officers at multinational corporations are confident in their anti-bribery compliance programs.

However, many still believe they are exposed to bribery risk and fall short on best practices with respect to third party screening, facilitating payments and political donations.

The 2012 Kroll Foreign Corrupt Practices Study is designed to take the pulse of corporate compliance officers at large multinationals to provide benchmarks for the current state of anti-bribery preparedness.

A total of 139 senior corporate compliance executives from companies ranging in size from $100 million to more than $10 billion in revenues per year were interviewed by phone from July 2011 to February 2012. The results of the interviews were analyzed against objective measures of anti-bribery compliance to identify the most significant sources of risk exposure at large multinationals.

Following are key findings of the report:

Confident in preparations: 70 percent of respondents characterized their anti-bribery compliance level as very well prepared, while 23 percent said they were somewhat well prepared, 4 percent said they were extremely well prepared and 3 percent said they were not very prepared.

Exposed to risk: 69 percent of all respondents said their companies were either moderately or highly exposed to risk related to compliance with anti-bribery laws; this number jumps to 100 percent in the pharmaceutical industry and drops to 46 percent in the financial services industry.

Third parties pose largest overall risk: While 99 percent of respondents said they had anti-bribery provisions for employees in their companies’ codes of conduct, only 73 percent have the same in place for third parties. 71 percent require third parties to complete a disclosure listing affiliations with foreign officials, 65 percent verify that third parties adhere to the company’s code of ethics and 73 percent confirm that each third party is free from sanctions pertaining to compliance with anti-bribery regulation.

Facilitating payment policies vary: 36 percent of respondents permit facilitating payments under certain circumstances; just 60 percent do not permit facilitating payments under any circumstances. 19 percent do not have a written policy with respect to facilitating payments.

Political and charitable donations create compliance gray area: 81 percent of respondents said their companies engage in political and charitable donations.

Pharmaceutical industry – Most exposed and most prepared: Across all survey responses, compliance officers representing pharmaceutical companies were notably more concerned and more vigilant about anti-bribery risk management than their counterparts in other industries.

“Multinational corporations continue to take advantage of the burgeoning opportunities overseas, despite the heightened regulatory climate and increased anti-bribery enforcement,” said David Holley, a Senior Managing Director with Kroll Advisory Solutions. “Our survey participants, for the most part, believe they are addressing these challenges head-on and doing those things necessary to not run afoul of the FCPA, the U.K. Bribery Act, and other anti-bribery regimes. While gaps remain, the message has reached the C-suite that addressing these risks plays a meaningful role in determining the entity’s success overseas.”

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