Anti-Bribery & Corruption – Allen & Overy

1. Anti-Bribery & Corruption – Allen & Overy Overview • Global Anti-Corruption Law – What we now face • Impact on Asian & Global Businesses • Anti-corruption in 2010 : New Law–new enforcement? • Anti-corruption in 2010 : New Law – same old reality? • China story

2. Global Anti-Corruption Law - What we now face • Greater application to the commercial sector • No longer just bribery of Government officials • Shift in emphasis from Individuals to Corporate • New offences - Making companies liable for their corrupt employees – criminal, not just regulatory • Extraterritorial reach • Attacking conduct abroad & cross-border co-operation • Active enforcement internationally • Political will post GFC – Obama/UK administrations • Globalisation of markets – level playing field

3. Impact on Asian & Global Businesses • The Key Recent International Developments • July 2010 Dodd-Frank Act passed introducing Whistleblower provisions in the FCPA • January 2011 UK Govt. publish guidance on “adequate procedures” to prevent bribery • April 2011 UK Bribery Act comes into force • The Global Reach of Sanctions • Germany - Siemens – US$1.6 billion paid in joint US/German settlement, employees fined, directors • China - Rio Tinto – employees given sentences from 7 to 14 years with fines ranging from US$43,000 to US$74,000

4. Anti-corruption in 2010 : New Law – New Enforcement? Global Anti - Corruption - the Hot issues FCPA • Enforcement gone exponential – target high risk sectors • Whistle blower provisions • UK Bribery act - the new Corporate Offence • “failing to take adequate steps to prevent bribery” • Just who does the UK bribery act apply to ? • Is a connected subsidiary or associated company enough • The importance of the Bribery Act will become clear :- • If & when an enforcement culture develops • the British High Courts develop the jurisprudence

5. Anti-corruption in 2010 : New Law – same old reality ?? FCPA – • Whistle blower provision having significant impact on reporting This is not yet seen in prosecutions but exponential increase anyway UK Bribery Act – • Not to be dismissed as overlapping with FCPA • Applies expressly to commercial bribery, not just Govt officials • Creates new strict liability offence – must take positive steps to be able to defence the company • No US style plea bargaining in the UK Bribery Act Must update for UK Bribery Act Enormous fines, combined US/UK prosecutions. The race to report :- • Whistle blowers – a “tip a day” will enhance the pay • Voluntary self reporting – global wrenching !

6. What about local legal environment? • China – Corruption Perceptions Index ranking: 78 • Cf: Vietnam 116, Indonesia 110, India 87, Thailand 78, Malaysia 56, Taiwan 33, US 22, UK 20, Japan 17, Hong Kong 13, Singapore 1 • China statistics – Five years - 120,000 corruption charges; 20,000 commercial bribery cases – RMB3.4 billion • “Collusion between officials and business, trade between power and money, power and sex, and cases seriously damaging public interests will be severely punished.” - Premier Wen Jiabao, “Seeking Truth”, April 2008

7. China • Legislation – Criminal Code. Anti-Unfair Competition Law. Anti-Money Laundering Law. • Corruption of state officials - criminal • Commercial bribery – criminal and administrative • Givers and takers liable. • Vicarious liability. • Severity of punishment.

8. How to deal with it? • Pre-investment reality check • Operation controls • Demonstrable compliance; independent audit • top down culture • fair disciplinary measure • reporting hotline • KPI – staff and management