No More Business as Usual in Africa?

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Photo Credit: Wikimedia Creative Commons

France has long been criticized for falling short on enforcement of its international obligations to fight corruption abroad, including the OECD Anti-Bribery Convention that mandated member states to criminalize bribery of foreign public officials in international business transactions. That changed with the introduction of Sapin II, a new law similar to the U.S. Foreign Corrupt Practices Act and the UK Bribery Act that penalizes companies for failing to mitigate corruption risks in their operations, including third parties. A significant recent probe under this law shines the spotlight on Africa.

French tycoon Vincent Bollore and two of his associates have been placed under formal investigation over suspicious deals in Guinea and Togo, respectively. An advertising agency tied to Bollore allegedly undercharged the presidents of Guinea and Togo to help them win elections nearly a decade ago and, in return, the Bollore Africa Logistics company won contracts to operate ports in Conakry and Lomé.  Read More...

Private Sector Participation in the Global Magnitsky Act

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On May 15, one day after this blog was originally published by the FCPA Blog, Russian lawmakers adopted in the first reading amendments to the Criminal Code to make it a criminal offence to observe sanctions imposed by the United States or other foreign countries on Russian oligarchs and government officials. The offense is proposed to be punishable by up to four years in prison. The draft also makes it a criminal offense for Russian citizens to help foreign governments sanction senior Russian government officials and oligarchs by providing advice or information, punishable by up to three years in prison. These changes seek to undermine the sanctions introduced by the U.S. Countering America’s Adversaries Through Sanctions Act (CAATSA) adopted in August 2017 and imposed by the Department of Treasury’s Office of Foreign Assets Control (OFAC) in April 2018. These U.S. sanctions were adopted in response to the Kremlin’s interference in the U.S.  Read More...

Kenya’s Big Five

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Photo Credit: SaBigFive via Wikispaces

Every safari fan knows what the Big Five are – the five large animals that can be found in parts of Africa such as Kenya’s Maasai Mara National Reserve: the lion, rhino, leopard, Cape buffalo, and elephant. These are interesting times to watch Kenya, and not just because the rainy season is soon coming to an end, bringing back the best chance to spot the Big Five on the savanna. On March 9, bitter rivals, President Uhuru Kenyatta and the opposition leader Raila Odinga, shook hands in a historic gesture meant to show willingness to overcome divisions within the country. This is a much-needed signal for the country affected by tribal divisions, and a year-long political conflict after the Supreme Court annulled President Kenyatta’s disputed electoral victory (he still won in the subsequent vote).

While the details of what the handshake deal will translate into in practical terms remain unclear, Odinga publicly threw his support behind Kenyatta’s four-point sweeping agenda for reform.  Read More...

What Works in Anti-Corruption: A Podcast with Alina Mungiu-Pippidi

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Photo Credit: CIPE

During the 2018 spring meetings at the International Monetary Fund (IMF), Managing Director, Christine Lagarde announced the IMF’s commitment to anti-corruption and governance reforms, potentially a marked change from the IMF’s long-standing policy of staying apolitical in matters that do not appear to directly affect macroeconomic stability – scandals from Moldova to Venezuela suggest that corruption does, and always has.

There is plenty of skepticism around this announcement and how the IMF might enforce governance reforms. Many will be watching the impact of the ongoing pressure the IMF has placed on Ukraine to establish an independent anti-corruption court. This nudge from the Bank is a powerful motivator where anti-corruption standards have failed, yet it still may not be enough for all of the country’s officials to embrace reform and reject lucrative personal payoffs. Top-down approaches to fighting corruption are one piece of this complex puzzle however they tend to have serious limitations, especially in state-owned sectorsRead More...

Integrated Compliance: Companies Need to Think Holistically and Act Globally

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Photo Credit: CIPE

In recent years, compliance has become an increasingly complex landscape. The need for strong anti-corruption controls, both in multinationals’ own operations and extending to their suppliers, distributors, and agents in emerging markets, has been clearly evident. Significant enforcement actions under the U.S. Foreign Corrupt Practices Act (FCPA), the great majority of which involved violations through third parties, sent a clear message to the global business community that corruption is no longer an acceptable part of conducting business. Similar laws passed by other countries, such as the UK Bribery Act (UKBA) or Brazil’s Clean Company Act, further emphasize this point. There is also a growing trend of regulators either requiring companies to put in place compliance programs – such as France’s Sapin II law – or providing what UKBA calls “adequate procedures” defense in hope of a reduced penalty.

Another important trend has to do with the authorities paying greater attention to other aspects of compliance such as human rights, labor, and environmental standards.  Read More...

Tipping Points for Successful Collective Action Expansion

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Corruption is one of the most challenging problems facing countries all over the world. It is difficult to imagine what successful eradication of this issue might look like, but we have learned it cannot be achieved by government alone. It requires an orchestrated effort by all stakeholders, including the local private sector to address the supply side of bribery.

Effectively tackling corruption and creating a clean business ecosystem requires the commitment by numerous companies to opt into a collective action campaign or coalition. Convincing companies to join anti-graft initiatives can be difficult, however Thailand’s private sector Collective Action Coalition against Corruption (CAC) has tips for persuading companies to step up and make pledges against corruption. There have been three major ‘tipping points’ that triggered the healthy growth of this anti-corruption network:

Sectoral approach:

In addition to traditional recruitment efforts, CAC adopted a sectoral approach by reaching out to business membership organizations with the aim of convincing them to bring all their members together to sign onto the CAC pledge at the same time.  Read More...

Politicizing Anti-Corruption Campaigns

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Photo Credit: FARS News Agency

Across the globe, countries have taken varying approaches to combat the problem of corruption. In South Africa, the Parliament finally took steps to hold President Jacob Zuma accountable for his unethical dealings, resulting in his resignation in February 2018. While in Bangladesh, the head of the Bangladesh Nationalist Party Khaleda Zia was recently sentenced to five years in prison for corruption and embezzlement, thus eliminating her from running for Prime Minister.

In recent years, Thailand’s private sector has united to tackle their corruption issue through collective action, while in Brazil open data platforms are becoming a popular tool for reducing misconduct in the country in recent years. While it is clear that fighting corruption should be a main priority for every country, not every anti-corruption campaign is what it appears to be on the surface. At times, these initiatives are executed in a manner that does more harm than good.  Read More...

Managing Supply Chain Risks and Opportunities

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Around the world, legislators and consumers alike are paying greater attention to supply chains these days. The Rana Plaza factory collapse in Bangladesh, alleged use of child labor by Samsung suppliers, or numerous eye-popping fines for foreign bribery involving companies in various industries (GSK, Alstom, or Telia to name just a few) drive home an important point. While global supply chains provide unprecedented opportunities for business growth, they are also a large source of compliance risks.

At a recent event on supply chain risks and rewards in emerging markets, organized by Baker McKenzie in Washington, DC, speakers highlighted the need for greater integration between the various aspects of legal, regulatory, and ethical business compliance. The regulators’ focus on corruption has been well established through enforcement of the U.S. Foreign Corrupt Practices Act (FCPA) and similar laws. Bribery is now only one such area requiring renewed focus.  Read More...

Podcast: Changing the Global Compliance Environment

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Photo Credit: SCCE “Compliance & Ethics Blog”

A new podcast from the Society of Corporate Compliance & Ethics (SCCE) features CIPE’s global anti-corruption work at a time when more and more countries are enacting legislation designed to restrict bribe-making and bribe-taking. In this edition of the weekly “Compliance Perspectives” podcast, host Adam Turteltaub, an SCCE vice president, and Frank Brown, Director of CIPE’s new Anti-Corruption and Governance Center, offer listeners an overview of CIPE’s mission in those emerging market countries where new laws make the business community increasingly sensitive to corruption risk.

In one such country, Indonesia, a recent Supreme Court ruling found that companies are subject to corporate criminal liability for corrupt practices. Overnight, this caught business leaders’ attention as they strove to understand the implications for their own operations and to discern which Indonesian law enforcement body would take the lead in the new environment. The development also illustrated the sort of opportunity that CIPE looks for in deciding where to deploy limited anti-corruption resources.  Read More...

Zuma Ousted as South Africa Aims to Move Ahead

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Since his election as President of South Africa in 2009, Jacob Zuma has been a controversial figure, mired in numerous corruption scandals. Even before Zuma took office, corruption plagued him. In 1999, an associate of his was arrested and convicted of bribing him in a $5 billion dollar arms deal. Zuma, the “people’s president,” got a pass for his role in the scandal. It took seventeen years for the Supreme Court to rule that the 18 counts of corruption pertaining to the arms deal would be reinstated.

Similarly, in 2016, the Court declared that Zuma had used government funds to renovate a private housing compound for himself, called Nkandla. The fact that Zuma used taxpayer money and was ordered to repay the government, which he did, should have been evidence enough that he was not fit to serve, but Zuma carried on as president for two more years.  Read More...