Anti-Corruption
HIGH STAKES
THIS ISSUE: ANTI-CORRUPTION
Last week, Sarah Ferguson, the Duchess of York, was caught on tape selling access to her ex-husband, Prince Andrew, to an undercover reporter posing as a businessman. The story not only made front-page headlines around the world; it also demonstrated that the media’s zeal to uncover corruption of whatever sort is at least equal to the determination with which global regulators have driven unprecedented enforcement for the better part of the last decade.
In this issue, we outline the ways in which communication serves as a powerful corruption control in both the public and private sectors…Gain insight from 13 leading experts in the regulatory and compliance community…Take a look at the blogs covering anti-corruption issues…And look ahead to how global investors will be demanding greater disclosure of corporate anti-corruption efforts in the future.
Strategies: Communication as a corruption channel
Today, companies and countries have more reasons to engage in the fight against corruption than ever before. This year alone, we’ve seen a record-breaking prison sentence and massive increases in nearly every measureable enforcement activity related to the U.S. Foreign Corrupt Practices Act (FCPA). We’ve witnessed the enactment of the UK Bribery Bill 2010, which has been called the “toughest enforcement standard in the world.” We’ve heard global investors call for greater disclosure of corporate anti-corruption efforts. And we’ve heard countless reports of the devastating impact of corruption on ongoing aid programs in the neediest corners of the world.
In such an environment, public and private sector enterprises must not only implement effective anti-corruption controls; they must also articulate those efforts far and wide to send the clear and unmistakable message that new sheriffs are in town.
Private Sector
With regulators around the world now focusing on corruption issues like never before, it’s no surprise that we’ve now seen 145 global companies sign onto the Principles for Countering Bribery first codified by the World Economic Forum’s Partnering Against Corruption Initiative (PACI) in 2004. These companies have taken a “zero-tolerance” stance against bribery and a commitment to implement effective anti-corruption programs. Their efforts will likewise be communicated to myriad stakeholders as aggressively as possible.
Of all the Principles for Countering Bribery put forth by the PACI, no less than 17 are directly related to communications. Nearly all of them involve at least a minimal communications component. From informing employees, contractors, subcontractors, and suppliers of anti-bribery policies and the consequences of unacceptable conduct, to public disclosure of third-party recommendations, the PACI sees effective internal and external communications as vital to any anti-corruption initiative.
After all, what good is a plan to combat corruption if no one knows that it exists?
In fact, private sector efforts to curb dishonest business practices often fail because they lack a communications component. In a new era of enforcement and global scrutiny, a policy gathering dust in the corporate compliance department won’t satisfy a growing roster of concerned stakeholders. To deter problems, or provide a strong fallback position should violations arise, companies must talk about their dedication to eradicating corruption as often and with as many audiences as possible.
Public Sector
The recent news that ongoing aid programs in Ethiopia, Somalia, Afghanistan, and El Salvador are rife with corruption is, unfortunately, no surprise. For years, it has been well understood that fraud and abuse are the greatest impediments to assistance. The problem is compounded in crisis situations because corruption controls are often relaxed to allow resources to reach people in need as quickly as possible. Because multiple layers of bureaucracy can’t be allowed to get in the way of relief, it seems the global community has grown content to not let the perfect be the enemy of the good.
But just how much good are we doing when as much as half the food aid meant for needy people in Somalia is diverted to Islamist radicals, corrupt contractors, and even United Nations staffers? With similar stories playing out in nearly every corner of the developing world, it’s time for an enhanced approach. Much of it starts with effective communications.
According Glenn Ware, the Managing Director of the PricewaterhouseCoopers Anti-Corruption Centre for Excellence, sending the messages that someone is watching, and that corruption will be punished with the full force of the law, is paramount. “It has to be clear to those on the ground that someone is riding shotgun on the stagecoach, and that this person is along for the ride to ensure that aid gets to those for whom it is intended,” says Mr. Ware.
Mr. Ware outlines four key steps that can be implemented immediately with minimal impact on the speed of relief efforts while significantly enhancing their benefits. “First, it must be communicated that strict accounting and enforcement mechanisms are in place and that corruption will not be tolerated. Second, monitors and investigators should be embedded with the crisis team and those people need to be highly visible.
“Third, aid programs need to leverage the power of organizations such as Transparency International and build partnerships that will help shine the light of day on problems that emerge. And fourth, bad actors need to be made an example of. The more egregious the offense, the harsher the penalties must be.”
Simply put, an effective corruption suppression plan is all about finding ways to articulate that a strong deterrent is in place. To some, that might not be an urgent priority when a disaster impacts hundreds of thousands – or even millions – of lives. But to those most in need, communicating a steadfast commitment to seeing that aid and resources reach the right people could very well be most compassionate message they’ve heard in a long while.
Industry insight: 13 leading regulatory and compliance strategists discuss the global anti-corruption landscape
Chris Barbee of PricewaterhouseCoopers; Lucinda Low of Steptoe & Johnson; William Jacobson of Weatherford International; Tom McCarthy of Akin Gump: These are a few of the regulatory and compliance professionals playing key roles in some of the most highly-scrutinized anti-corruption efforts around the world. Along with other top colleagues, they shared leading insights in video interviews recently published on Levick Strategic Communications’ Bulletproof Blog™.
Click the links below to read their commentary.
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Kathryn Atkinson, former Vice Chair of the International Department, Miller & Chevalier;
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Chris Barbee, Global Forensic Services Leader, PricewaterhouseCoopers LLP;
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Amy Conway-Hatcher, Partner, Morgan, Lewis & Bockius, LLP;
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Bruno Cova, Partner, Paul Hastings;
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Jonathan Drimmer, Partner, Steptoe & Johnson;
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William Jacobson, Vice President, Co-General Counsel and Chief Compliance Officer, Weatherford International, Ltd.;
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Helge Kvamme, Partner and Leader, PricewaterhouseCoopers’ ForensicServices, Norway;
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Lucinda Low, Head of the FCPA Practice, Steptoe & Johnson
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Tom McCarthy, Senior Counsel, Akin, Gump, Strauss, Hauer & Feld LLP;
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Patrick Norton, Partner, Steptoe & Johnson;
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Sulaksh Shah, Director, PricewaterhouseCoopers’ Forensic Services Practice;
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Alexandra Wrage, President, TRACE International;
Blogs and anti-corruption
While mainstream media coverage often only scratches the surface of the corruption issues impacting public and private sector enterprises, the blogosphere provides in-depth discussion and analysis of the latest legislative, regulatory, and strategic developments as they arise. From prevention to remediation, the blogs are where you’ll find descriptions of the best practices having the greatest impact on anti-corruption efforts.
Here are four blogs you should be reading:
Governance Matters
http://blogs.worldbank.org/governance/
The World Bank’s blog on governance and anti-corruption, Governance Matters, provides online space for debate and discussion of the major issues shaping the anti-corruption landscape, with a specific focus on the challenges facing developing economies.
http://blogs.worldbank.org/governance/
The World Bank’s blog on governance and anti-corruption, Governance Matters, provides online space for debate and discussion of the major issues shaping the anti-corruption landscape, with a specific focus on the challenges facing developing economies.
The European Anti-Bribery Blog
http://www.antibriberyblog.eu/
The European Anti-Bribery Blog, which provides news and views on the widening reach of the FCPA, the UK Bribery Act 2010, and related legislation across Europe, is a must-read for anti-corruption professionals.
http://www.antibriberyblog.eu/
The European Anti-Bribery Blog, which provides news and views on the widening reach of the FCPA, the UK Bribery Act 2010, and related legislation across Europe, is a must-read for anti-corruption professionals.
The FCPA Blog
http://www.fcpablog.com/
This blog, maintained by Cassin Law LLC, focuses exclusively on developments related to the FCPA. It reviews the implications of ongoing investigations, developing trends, and analysis of the latest legal opinions.
http://www.fcpablog.com/
This blog, maintained by Cassin Law LLC, focuses exclusively on developments related to the FCPA. It reviews the implications of ongoing investigations, developing trends, and analysis of the latest legal opinions.
CIPE’s Development Blog
http://www.cipe.org/blog/
Published by the Center for International Private Enterprise (CIPE), the Development Blog focuses on a broad range of issues related to private enterprise and market-oriented reform across the globe, including expanded anti-corruption efforts.
http://www.cipe.org/blog/
Published by the Center for International Private Enterprise (CIPE), the Development Blog focuses on a broad range of issues related to private enterprise and market-oriented reform across the globe, including expanded anti-corruption efforts.
What's Next? Global investors seek greater disclosure of anti-corruption efforts
Last month, a coalition of investors who manage more than US$1.6 trillion in assets wrote to 21 major corporations around the world to request enhanced reporting of anti-corruption measures. With massive growth in nearly every measurable area of regulatory anti-corruption enforcement, shareholders of some of the world’s largest and most successful companies are concluding that corruption represents a significant bottom-line liability – and they want to know precisely how the companies they own are working to mitigate this ever-increasing risk.
As George Dallas, Director of Corporate Governance at F&C Management and a signatory to the letter, put it, “As investors, we believe that bribery and corruption are incompatible with good corporate governance and harmful to the creation of value. Therefore, we expect the companies that we invest in to have robust programs to manage corruption in their firms and supply chains, and to ensure those programs measure up to respected international standards.”
Just as governments around the world are already implementing anti-corruption communications programs to attract increased foreign direct investment, it seems that public companies must now do the same or risk the ire of shareholders and potential shareholders who are increasingly sensitive to how bribery and other dishonest business practices can damage their portfolios.
Further evidence of the need for vigorous communications to both support and publicize anti-corruption programs is provided by in the World Economic Forum Partnering Against Corruption Initiative’s (PACI) “Principles for Countering Bribery. The program explicitly demands that a corporate signatory:
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“Establish effective mechanisms for internal communication of the program;”
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“Publicly disclose its policy for countering bribery;”
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“Be open to receiving communications from relevant interested parties with respect to its policy for countering bribery.”
With investors providing the “why” and the good governance community providing the “what,” it’s time for companies to examine the “how” of anti-corruption communications. The United Nations Global Compact (UNGC) and Transparency International (TI) recently issued “Reporting Guidance on the 10th Principle Against Corruption,” a collection of emerging best practices for communicating commitment to the UNGC’s 10th Principle. The document states, “Businesses should work against corruption in all its forms, including extortion and bribery.”
From policy development and program implementation, to compliance monitoring and improvement initiatives, the UNGC and TI have provided a detailed assessment of how best to provide the information that stakeholders seek when evaluating corporate anti-corruption measures. And, with stepped-up enforcement of the U.S. Foreign Corrupt Practices Act (FCPA), the recent enactment of the UK Bribery Act 2010, and many other nations seeking to mirror these efforts, such guidance couldn’t have come at a better time.
This month's top posts on Levick's...
Richard Levick discusses the vital role communication must play in Iraq’s efforts to curtail corruption and encourage foreign direct investment.
Michael Robinson outlines the implications of the U.S. Attorney’s criminal investigation into allegations of securities fraud.
Gene Grabowski examines the reputational fallout from last month’s oil spill and what BP can do to better shape the narrative.
Larry Smith chats with Jonathan Armstrong, a partner in the UK office of Duane Morris LLP, about what is being called the “toughest enforcement standard in the world.”
Valerie Elston discusses the launch of LinkedIn’s new “follow” feature and six opportunities for businesses to leverage the powerful social networking tool.
Making Your Point
Making Your Point, a new book by Levick Senior Vice President David Bartlett, examines the fundamental strategic considerations driving effective communication. It defines that key component called “emotional intelligence.” It provides the simple powerful tools to make a point in person, prepare and deliver effective speeches and presentations, get messages across in a media interview, and communicate during crises. Making Your Point is an easy-to-use communications guide for professionals and non-professionals alike. Order your copy today.
Making Your Point, a new book by Levick Senior Vice President David Bartlett, examines the fundamental strategic considerations driving effective communication. It defines that key component called “emotional intelligence.” It provides the simple powerful tools to make a point in person, prepare and deliver effective speeches and presentations, get messages across in a media interview, and communicate during crises. Making Your Point is an easy-to-use communications guide for professionals and non-professionals alike. Order your copy today.
Stop the Presses: The Crisis and Litigation PR Desk Reference – now in its second edition – is a survival manual for corporate leaders, board members, lawyers, and communications specialists. This book provides the dos and don’ts of crisis planning and communications and articulates the essential strategic guidelines for navigating myriad bet-the-company issues. Order your copy today.Future High Stakes™ issues:
Maximizing Social Media's Potential:
Blogs, Facebook, and Twitter are shaping buying decisions like never before. Do you know the rules of social media engagement?
Patents & IP Litigation:
High-profile intellectual property cases threaten to sink stock prices. How can companies protect themselves in the wake of a negative ruling?
High-profile intellectual property cases threaten to sink stock prices. How can companies protect themselves in the wake of a negative ruling?
CEO Departures:
Whether in the midst of crisis or at the end of a long and successful run, CEO departures present critical communications challenges. Do you know how they are best overcome?
More to come:
- Coming to America
- Diversity
- Education
- Executives Behind Bars
- Food
- Global Capital Markets
- Intellectual Property
- Internal Communications
- Internal Investigations
- Monetizing Moments
- Money Laundering/Money Transfers
- New Media/Social Networking
- Product Liability
- Professional Services Crises
- Public Equity
- Whistleblowers
- Reputation Management – Celebrity
- Reputation Management – Corruption
- Reputation Management – SEC Investigations
- Tourism
- Trade
Next month in High Stakes™: LABOR & UNEMPLOYMENT
In the wake of the largest employment discrimination verdict on record, High Stakes™ examines how to best articulate fair and equitable employment practices.