anti corruption - ignorance is no longer bliss

Anti- corruption legislation—Ignorance is no longer blissJune 12 2012

Sandy BoucherSenior Investigator416 369-7027Sandy.boucher@ca.gt.com

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 369-7027Sandy.Boucher@ca.gt.com