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Fourth ICAC Symposium

Fourth ICAC Symposium. Deals under the Table – the Doing or Undoing of Business? Hong Kong, December 16, 2009. Plenary Session 2. Regulators and Professionals: Guarding Whose Interests? Regulators and Professionals, what does business expect, what does it fear, how can they cooperate?

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Fourth ICAC Symposium

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  1. Fourth ICAC Symposium Deals under the Table – the Doing or Undoing of Business? Hong Kong, December 16, 2009

  2. Plenary Session 2 Regulators and Professionals: Guarding Whose Interests? Regulators and Professionals, what does business expect, what does it fear, how can they cooperate? Intervention by François Vincke, International Chamber of Commerce (ICC)

  3. 1.- A three pronged trip • Doha (5-8/11): Fifth UN Global Compact Working Group on the Tenth Principle and the Sixth Global Forum on Fighting Corruption and Safeguarding Integrity • Dubai (20-22/11): Global Agenda Council of the World Economic Forum • Hong Kong (15-17/12): 4th ICAC Symposium

  4. 2.- Taking stock • 2009, a year during which bribery has become more then ever a challenge and a threat • What is the effect of the crisis: more or less compliance, more or less enforcement? • UNCAC has an implementation review mechanism, how will it be used? • OECD will issue a new 2009 Recommendation, resulting from the review of its legal instruments • Lisbon Treaty enters into force (art.69 B, corruption “particularly serious crime with a cross-border dimension”) • OLAF and GRECO celebrate their tenth anniversary, how are they planning their future?

  5. 3.- ICC and anti-corruption • ICC, the “world business organization”, has since 1977 taken a strong position on corruption and renewed its efforts as from 1995 • Extortion and bribery, in all their forms, are unequivocally condemned • Companies are encouraged to have strong willed self regulation and to install robust, full fledged and sustainable integrity programs • Willingness to engage the authorities (international organizations, national legislators, regulators and professions) in public/private partnerships with the view to creating a culture of integrity

  6. 4.- Our place in anti-corruption? as a direct actor : the corrupting party in public and private corruption as a direct victim : the solicited or extorted party as an indirect victim : the losing and not compensated competitor as an indirect actor : through corrupt members of staff (private corruption) as a tax payer : through higher taxes caused by a corruption induced increase in public spending as a disenchanted investor in front of all pervading corruption

  7. 5.- What are our goals? • The famous level playing field: • freedom of enterprise and investment not hampered by difference in ethical standards • no CEO should have the feeling that he/she is the only one to apply high ethical standards, while his/her competitors are cheating • all anti-corruption provisions to be equally interpreted/ implemented/enforced and applied everywhere • integrity is rewarded and infringement is sanctioned • For our well understood self–interest, we want business integrity • PricewaterhouseCoopers, Fifth Global Economic Survey, Economic crime in a downturn, November 2009: • Companies with both ethical guidelines and compliance programs suffer fewer economic crimes • Compliance is a good investment

  8. 6.- What are the instruments? • Precise and realistic conventions • Clear national implementing laws • Clear mandatory provisions (criminalization provisions) • Leaving space for corporate self regulation (co-regulation) • Selection, appointing and remunerating intermediaries • Facilitation payments • Gifts and hospitality • Political contributions • Charitable donations… • Strong national regulators • Robust corporate integrity programs

  9. 7.- Necessary cooperation • Fighting corruption is a daunting task, requiring all energies • November 2009 PwC Economic Crime Survey: • 30 % have experienced at least one incident of fraud in the past 12 months • 40 % say risk of economic crime had risen due to recession • ICC and ifo World Economic Survey, August 2009 • What will be the impact of the global recession on businesses’ efforts to comply with anti- corruption measures? • Most of the countries: minimal impact • In some countries : reinforcement • But also in other countries : relaxation • Corporate compliance requires lots of synergies between business, regulators and professionals • Example of money laundering

  10. 8.- Regulators & Business (I) • The scene is set by article 12 UNCAC • Regulators and business should cooperate on preventive measures: • A.- Define the minimum preventive measures businesses should take in order not to be considered negligent • US DoJ Sentencing Guidelines • Italian Legislative Decree n° 231 of June 8, 2001 • Bribery Bill (UK) of March 25, 2009 (offence of negligently failing by commercial organizations to prevent bribery) • Financial Services Authority (FSA) fined AON UK subsidiary on January 6, 2009 for having taken insufficient measures to ensure compliance with its code of conduct Can we think of European/UN Sentencing Guidelines?

  11. 9.- Regulators and Business (II) • B.- Should businesses go for voluntary disclosure? • Article 12, §2, (a), UNCAC recommends cooperation between law enforcement agencies and relevant private entities • US practice and the UK SFO is open to self reporting (Guide of July 21, 2009) • Business on the European Continent is not used to such kind of cooperation • But voluntary disclosure may lead to • acceleration of the process • civil rather than criminal proceedings • leniency • European business sees the advantages of cooperation but considers that criminal procedural legislation are not designed for voluntary disclosure

  12. 10.- Regulators and Business (III) • Regulators and business should cooperate on defining standards • business organizations in contact with international organizations to define more precisely standards on • facilitation payments (evolution in ICC) • whistle blowing (directive/laws on data protection and anonymous reporting; recommendations by Group 29; differentiation of worldwide whistle blowing systems) • political contributions (work done by Council of Europe and GRECO) • draft OECD document on lobbying

  13. 11.- Professionals and Business: Auditors (I) • There is no real integrity program without provisions on internal and external audit • What can business expect from the auditing professionals in relation with corruption prevention/detection? • In June 2008, the OECD Working Group on corruption conducted a Review of the OECD anti-corruption instruments and asked different stakeholders their comments • The auditing profession stressed that • Their primary purpose is to give an opinion as to whether the financial statements give a fair view and are free from material misstatements • An external audit is not planned or carried out with a view to ensuring that all acts of bribery are uncovered nor in an assurance being given that there are no such acts of bribery that remains undetected. Only forensic audit specifically designed with bribery detection in mind, could hope to achieve such objectives.

  14. 12.- Professionals & Business: Auditors (II) • Auditors indicate clearly the limits of their responsibility: • the maintenance of company’s books and records is the sole responsibility of the management of the company • the responsibility for the prevention and detection of non-compliance rests with management • it is the role of management to communicate non-compliance to appropriate third parties, unless the auditor is required by law to communicate directly with such parties • Auditors have a duty of confidentiality • Is there a need for (the US concept) of “safe harbor”? • Is there a possibility to find a new balance in the division of responsibilities?

  15. 13.- Professionals & Business: Legal Profession (I) • Growth of the Ethics and Compliance Officers profession • No integrity program is conceivable without • one (or more) ethics or compliance officer(s) • an ethics committee (European continent) • A Chief Compliance Officer (CCO) reports to the Board, the Audit Committee (or the Chairman thereof), not - as far as I know - to the General Counsel

  16. 14.- Professionals & Business: Legal Profession (II) • The ethics/compliance and legal professions have parallel (and not necessarily overlapping) evolutions • Ethics and compliance officers are required to be • persons with practical knowledge of the business • having sufficient independence of mind to inspire an integrity culture • but they don’t have to be lawyers • Legal profession has certain reporting obligations in relation with money laundering, what about (large scale) corruption?

  17. 15.- Conclusions • Corruption needs more than one actor to be committed and many more than one actor to be fought against • The legal instruments are ready • What we now need is day to day implementation • Practical public-private partnerships, embedded in the economic reality , can make a difference • Business has shown – for instance with the CEO letter pleading for an implementation mechanism for UNCAC – that it stands ready for cooperation and even initiative in anti-corruption

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