MANAGING FCPA/UKBA 3 RD PARTY RISK

Transcription

1 A MANAGING FCPA/UKBA 3 RD PARTY RISK Presented to US-Russia Business Council February Patricia Dowden, President and CEO Center for Business Ethics and Corporate Governance

2 MANAGING FCPA/UKBA 3 RD PARTY RISK

3 ENFORCEMENT AUTHORITIES: Risk-based due diligence is particularly important with third parties and will also be considered by DOJ and SEC in assessing the effectiveness of a company s compliance program. (FCPA Resource Guide, p. 60) FCPA enforcement actions involving third-parties: 2011: 100% 2012: 90+% 2013: 67-70% CORPORATIONS: Only half of those surveyed (50%) have due diligence procedures in place when selecting local business associates, despite the known risks. International legal practice makes it clear that companies may not claim ignorance of a third party paying bribes on their behalf if they have done nothing to prevent such malpractice in a high-risk environment. International Business Attitudes to Corruption, Survey 2013 Control Risks Group

4 MNC FCPA Requirements Prevention Mitigation Cost Effectiveness

5 THE SOLUTION!!!

6 PRINCIPLES Global legal principles Market incentives Collective action Measurable results

7 MODEL ISO 9000 QUALITY STANDARDS Standards set by industry experts Voluntary, marketdriven compliance

8 TOOLS Self Evaluation Registry

9 SELF EVALUATION CULTURE -- Exec leadership Governance Risk Management Human resource management Corporate Social Responsibility COMMUNICATIONS AND TRAINING Internal operations Business relationships MONITORING: Internal Operations Business relationships CONFLICTS OF INTEREST FINANCIAL MANAGEMENT IMPROPER PAYMENTS

10 SELF EVALUATION Educates Creates common language Identifies key issues Emphasizes substance not form Keeps responses confidential Allows option of anonymity Provides research data

11 REGISTRY Includes all respondents Reports only audited scores Not certification Includes other providers lists

12 MNC FCPA Requirements Prevention Mitigation Cost Effectiveness

13 BENEFITS MNC FCPA REQUIREMENTS PREVENTION: Vendor selection MNC: SELF-EVALUATION Potential due diligence tool VENDOR: Improved qualifications PREVENTION: Vendor management MNC and VENDOR Education; identification of key issues; creation of common language; due diligence standards MITIGATION MNC: Systematic attempt to educate 3 rd parties COST EFFECTIVENESS MNC and VENDOR Standardization and centralization

14 MNC FCPA REQUIREMENTS SELF-EVALUATION REGISTRY PREVENTION: Vendor selection BENEFITS MNC: Potential due diligence tool VENDOR: Improved qualifications MNC: Screen prospects VENDOR: Improved market position PREVENTION: Vendor management MITIGATION COST EFFECTIVENESS MNC and VENDOR Education; identification of key issues; creation of common language; due diligence standards MNC: Systematic attempt to educate 3 rd parties MNC and VENDOR Standardization and centralization MNC and VENDOR Forum for best practices, information resources, idea exchange MNC: MNC: Public evidence of compliance program Easier identification of low risk vendors VENDOR: Cost-effective marketing

15 POTENTIAL ADDITIONAL ACTIVITIES Develop benchmarking and other research data Include other registries: individuals, certification providers, Russian Charter Develop anonymous employee and trade partner surveys Organize industry group to work with enforcement authorities Develop on-line best practices forum Provide compliance resource library

16 RCA ROLE Competitor Synergy Catalyst Convener

17 NETWORK BUSINESSES 3M ABB AbbVie Alcatel-Lucent Alfa Bank ALP Group Alstom Amgen AMSC Aton Group ATR Baxter Healthcare Black & Veatch Special Projects Corporation Boeing Company Chrysler Group LLC Coca Cola Delonghi Ecoteam LLC Enel-OGK European Aeronautic Defence and Space Co. Federal Grid Company of Unified Energy System Ford Sollers GAZ Group LLC General Electric IKEA Investment Company LC Russ-Invest Kraft Lean4Systems Group MTS Nordea Bank Novotel Moscow Centre Pfizer Russian Gas Turbines Radius Group Russian Venture Company Sequoia Debt Management Shellstone Chemicals Siemens Tebodin Eastern Europe B.V Total Group VTB Bank BUSINESS ASSOCIATIONS Aim-Progress American Chamber of Commerce (AmCham) Association of Certified Fraud Examiners Association of European Businesses Chamber of Commerce and Industry of RF Delovaya Rossiya Directors and Officers Association International Assn.of Microsoft Channel Partners International Medical Device Manufacturers Moscow Entrepreneurs Club (Delovar) Russian Union of Industrialists & Entrepreneurs U. S. Chamber of Commerce PROFESSIONAL SERVICE PROVIDERS Baker & McKenzie Buchanan, Ingersoll & Rooney, PC Control Risks Dechert Deloitte Eagle Consultancy International Energy Consulting (Tatneft Oil Company) Ernst and Young Interdean Relocation Services International Compliance Services K & L Gates LLP King and Spalding Law Firm KPMG Morgan Lewis & Bockius LLP Orange Business Services PwC Risk Advisory Group Plc. Secretan Troyanov Schaer S.A. SNR Denton law firm Squire Sanders Staffwell T. Thomson & Associates, LLC Uijtendaal International Accountants and Advisors Upravlenie Delami - M Vinson & Elkins L.L.P. White Case law firm NGOs ABA Rule of Law Initiative Center for International Private Enterprise Centre of International Business Technologies Eurasia Foundation International Business Leaders Forum Internatl Centre of Internal Control & Risk Mgmt New Eurasia Foundation Social Investment Agency The Center for Responsible Enterprise and Trade TRACE International Transparency International UNIVERSITIES American Institute of Business & Economics CBSD/Thunderbird Russia Center for Social Entrepreneurship and Social Innovation Studies European University Financial University Higher School of Economics International University in Moscow Moscow State University RGGU St. Petersburg State Polytechnical University St. Petersburg State University of Economics State University of Management The Wharton School of the U. of Pennsylvania GOVERNMENT Federal Antimonopoly Service Office of the Presidential Commissioner for Entrepreneurs' Rights U.S. Department of Commerce

18 Margaret Mead

19 10% can change the world!! When the number of committed opinion holders is below 10 percent, there is no visible progress in the spread of ideas... Once that number grows above 10 percent, the idea spreads like flame..regardless of how or where that opinion starts and spreads in the society. Social Cognitive Networks Academic Research Center Rensselaer Polytechnic Institute

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