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How to Comply In High-Risk Corruption Countries

Common sense ain’t common.  — Will Rogers

Corruption challenges should rarely prevent a company from entering a country’s market.  Assuming that the business case can be made for entering the market, a decision not to enter a market because of corruption reflects a lack of problem solving and compliance creativity. 

 It is easy to say “no” and list all the reasons not to enter a market.  It is another to rise to the occasion and solve the problem of compliance in a high risk environment.  Starting with the company’s global compliance program, new compliance features need to be built onto the system with additional compliance resources. 

Expanding into a high-corruption country and industry is not for the feint of heart.  Before doing so, two important strategies have to be adopted with the support and coordination of key compliance elements — senior management and the compliance team — legal, auditing and compliance offices.

These key players have to be on board to develop and implement a high-risk compliance program which will be built on the key principles of transparency and documentation.  If the company commits to acting in an open manner designed to negate specific intent and do so by documenting each and every step it takes, the company can successfully navigate the compliance risks.

More specifically, the four-part recipe for the new, high-risk program:

 1.  Communications and Training – specific communications and training for the high-risk market should be designed and implemented with a country-specific approach which identifies the risks and the compliance response to the risk.   

 2.  Enhanced Controls and Review – additional controls for each policy should be implemented with greater scrutiny of auditing of expenditures.

 3.  Due Diligence – the hiring of third parties should be subject to even greater scrutiny than typical in the high-risk country. A conservative compliance response to any red flags is imperative.

 4.  Monitoring and Auditing – the monitoring of activities in a high-risk country is a key aspect of any high-risk program.  Auditing of every aspect of the operation should be conducted on a regular basis.

While at first glance the compliance effort for a high-risk country seems burdensome, it can be done and in a way to ensure that the company, its officers and employees are protected.  Mistakes may occur but that should never result in enforcement actions so long as the company adopts a high-risk compliance strategy, tailored to the circumstances of the specific country.  Common sense can prevail over fear.

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1 Response

  1. A very helpful and thought provoking discussion – thank you.
    The progressively international reach of domestic legislation – in the UK most recently the Bribery Act 2010 – is a welcome incentive to directors and senior managers to address corruption issues seriously. The key difficulty for them at present is not knowing for certain what constitutes “adequate procedures” (the phrase used in this UK legislation).

    I completely agree that good documentation to record what the firm does is the key, along with awareness training for those personnel who are engaged in the dialogue in teh high-risk countries. Thoroughly documenting such efforts creates an evidential file which can be presented to any investigative authority if required. Creating such a file need not compromise company confidentiality, but contributions to it must not withold facts or statements, nor under-report on activities.

    One of the main dangers is not making someone in authority responsible for owning this monitoring file. The implications through personal accountability for non-compliance are too serious to allow it to be delegated.