Several months ago, I received a call from the general counsel of a multinational corporation concerned about new anti-corruption laws that are now part of the international business law landscape.
He was particularly concerned with the recently enacted UK Bribery Act, which he characterized as the FCPA “on steroids.” While the UK’s Bribery Act certainly has quite a bite, I explained that anti-corruption enforcement is tightening all over the world—particularly in Asia.
It’s not unusual for me to get a call like this. For multinational corporations, managing liability risks under varying anti-corruption laws is a highly complicated process.
This is particularly true for companies with business operations in developing economies where history, customs and culture influence day-to-day business.
I mention this because White & Case recently released an excellent report on new anti-corruption rules and the implications for multinational corporations operating in Asia. The emphasis of the report is on new anti-corruption laws in China and the United Kingdom.
The Report “explores the challenges for multinationals doing business in the developing markets of Asia. It looks specifically at the new rules in play, it examines the extraterritorial cross-over of enforcement and penalties, and it discusses some of the tactics multinationals are using to address the challenges of doing business in Asia.”
To illustrate the challenges faced by multinational corporations operating in Asia, the Report highlights two recent cases:
- In early May, Avon Products Inc. fired four executives over bribes to Chinese officials according to a regulatory filing. The four individuals, who were initially suspended in April 2010 during an internal investigation, included a general manager and former head of finance of the company’s China unit. As part of its internal probe, Avon has reportedly discovered millions of dollars in questionable payments in India, Japan, Argentina, Brazil and Mexico. In February of this year, the company conceded that it could face substantial fines, civil and criminal penalties and other sanctions, depending on how the Foreign Corrupt Practices Act (FCPA) matter is resolved. The investigation is reportedly ongoing.
- Citigroup faces lengthy bans on its credit card and wealth management businesses in Indonesia over a case of alleged embezzlement and the death of a client following questioning by debt collectors. Citigroup has said it is working closely with Indonesia’s central bank to address its concerns.
These two cases are far from unique. In my own practice I’ve seen, a significant increase in the number of companies that find themselves in the cross-hairs of anti-corruption enforcement agencies.
As the Report points out, there is some overlap among the laws of the United States, United Kingdom, and China in terms of the types of conduct that are prohibited by the statutes.
However the laws contain significant differences that may have far-reaching implications for businesses.
For more details, you should absolutely take a look at the Report.
What do you think?