International - Written by Barry & Richard on Tuesday, November 29, 2011 15:46 - 3 Comments
Opinion: Is the world flat and does your toast land butter side up?
Howard Sklar wrote an excellent piece here with some home truths about the compliance industry entitled “Scare the crap out of them”.
In summary Howard called out the use of scare tactics by in and out house compliance professionals to motivate businesses to spend more on compliance initiatives.
The scare tactics broadly fall into two buckets. First, that prosecutors and investigators may go unchecked and prosecute every violation under applicable anti-corruption laws (unlikely). Second, that fines will be telephone numbers and jail time (not the case to date in the UK and ‘it’s all relative’ in the US).
However, some openly question the tough enforcement rhetoric and have concluded that governments will not pursue cases in the current economic climate.
Recently we were told that while anti-bribery compliance had moved up the list of priorities for some businesses it remained a discretionary spend.
The perception was that with current economic challenges governments lacked the political will to prosecute corruption in circumstances where the upshot could be loss of jobs.
This is very bad news for those many corporates who have invested in ethical policies and processes. They stand to lose out as a result of bribes paid by the competition to win business.
In our view, for what it’s worth, the SFO will match its strong rhetoric with public action.
As the Director of the SFO is on record saying:
“There will also be instances of alleged bribery where we decide that…we must start to develop the investigation ourselves. These investigations are going to be complex and will range across many jurisdictions. There are some we are considering now. This will happen.”
Translated this means raids and search and arrest warrants. A scary prospect or a risk priced in?
In the meantime, the SFO has taken steps to enforce the Bribery Act behind the scenes. We are aware and Richard Alderman, the Director of the SFO has confirmed, that:
“…there is already Bribery Act activity by the SFO. It is not out there in the public domain because our approach is to corporations and the work we are doing with them at this stage must inevitably remain confidential. There may be outcomes in future depending on what we find that may become public but that is for another day.”
Some will believe these threats and be sufficiently concerned to take preventative steps.
Others will not either because they don’t believe it (the world is flat) or taking the chance that they will not be unlucky and will go undetected (toast lands butter side up).
On the other hand some corporations will suffer financial penalties and economic sanctions and all the hassle and inconvenience that goes with it. Some individuals will face lengthy investigations and some of them will be found guilty and receive custodial sentences.
In view of the growing list of enforcement actions there would appear to be plenty who take the chance they won’t get caught. Or, put another way, who in spite of the best efforts of the compliance industry refuse to have the crap scared out of them. BTW: Point of Order – defence counsel are as happy to defend as they are to help corporations comply so there should be no real motivation to over cook the enforcement risk.
The unvarnished truth is that companies and individuals have a choice which they freely exercise against an increasingly publicly reported risk of prosecution. We have dubbed the choice the burglars analysis.
That choice: Do they feel lucky?