Foreign bribery: To ISO or not to ISO

Wednesday, 10 May 2017

Since its release, we’ve asked our clients if they will seek to have their anti-bribery processes certified under the Standard. Responses have ranged from ‘maybe’ to ‘no’. Reasons for choosing not to seek certification include the cost of certification, and the lack of sufficient guidance upon which to establish and maintain a comprehensive anti-corruption compliance program.

It is also far from clear whether ISO certification would provide protection from regulatory intervention and sanction. US sentencing guidelines as they relate to the Foreign Corrupt Practices Act (FCPA) have however provided for penalty mitigation based on various factors, including having an effective compliance program. The UK Bribery Act provides a defence to a bribery charge where the relevant entity can establish that it had ‘adequate procedures’ in place. Having in place an effective compliance program based on guidance such as the FCPA Resources Guide or the UK Bribery Act Adequate Procedures guidance has mitigated, and will continue to mitigate, bribery risk regardless of whether certification under the Standard occurs.

Irrespective of whether a company opts to become ISO certified, companies with global operations must have a comprehensive and effective anti-bribery and corruption compliance program in place. Whilst companies should have acted long before now, there should be an increased urgency to now act due to:

• actual and proposed legislative changes in Australia; and
• increased enforcement efforts on the part of the Australian Federal Police (AFP).

Legislative changes include last year’s implementation of the ‘false accounting’ provisions in the Commonwealth Criminal Code and proposed changes such as:

• creating a new offence of failing to prevent bribery;
• creating a new offence of recklessly bribing a public official;
• replacing the concept of a benefit ‘not legitimately due’ with ‘improperly influencing’ an official;
• extending the foreign bribery offence to cover instances where the advantage sought is ‘personal’ in nature, rather than limiting it to business advantages;
• removing the requirement of influencing a foreign official ‘in their official capacity’;
• clarifying that the accused did not need to have had a specific advantage in mind; and
• extending the definition of 'foreign public official' to include candidates for office.

The AFP has significantly increased resources to investigate allegations of foreign bribery. According to public sources, there are now numerous investigations under way, and more are likely to follow^1,2. The proposed legislative changes will assist these efforts.

In our view, the key change that will drive the need for companies to take real action is the proposed introduction of an offence of ‘failing to prevent bribery’. This was one of KordaMentha’s recommendations to the Senate Economics References Committee inquiry into foreign bribery and mirrors an offence that was introduced under the UK Bribery Act. The introduction of this offence will create a greater incentive for companies to closely examine their compliance programs to ensure that they are adequate and effective in preventing bribery.

Whether you opt for certification or internally review to enhance your anti-bribery and corruption compliance program, an appropriately experienced, independent set of eyes will provide objective feedback and suggestions for enhancement to your current program. Either option involves a cost, but that will be insignificant compared to the cost of investigating breaches or the cost of regulatory sanctions.