ANTI-CORRUPTION SOCIETY OF CORPORATE COMPLIANCE & ETHICS NOVEMBER 15, 2013 Martin Wolin Chief Risk & Compliance Office North & Latin America Boston, MA Alan K. Halfenger Chief Compliance Officer Boston, MA Agenda Case studies in Anti-Corruption References and where to get help MERCER October 28, 2013 1 1
Strong culture of ethics and compliance Clearly articulated policies Education Risk assessments Third party due diligence MERCER 2 Commitment from senior management Assign responsibility to senior executives for implementation and oversight of the compliance program Establish strong tone at the top, supplemented by messaging in the middle Disciplinary measures to enforce the code of conduct and violations of corporate policy should be clear and supported by management Code of conduct should encourage employees to speak up when they see acts of misconduct Hotlines are important tools to enable employees to report instances of misconduct anonymously MERCER 3 2
Clearly articulated policies Code of conduct Regardless of the form, we do not bribe or use any other means to improperly influence the decisions of clients, potential clients or government officials. We do not offer or provide bribes directly or through a third party. We do not bribe even where it might be a generally accepted practice, when competitors do so, or for any other reason. Supporting compliance policies and procedures Improper Payments - Describes items of value that may be considered improper payments when dealing with government officials and non-governmental clients. Gifts & Entertainment - Provides rules and guidance on giving or accepting any gift, entertainment, travel, lodging, favor or other benefit in connection with any actual or potential business Working with Governments - Establishes rules on interacting with government officials, lobbying or participating in political activity Contributions - Addresses contributions to charitable and other not-for-profit organizations MERCER 4 Education Code of conduct training Anti-bribery & corruption training Periodic reminders through newsletters and other communications, particularly in higher-risk locations Certifications of compliance Monitoring and auditing programs provide evidence that policies and procedures may not be adequately understood MERCER 5 3
Risk assessment Should be designed to determine which countries, clients and activities present high risk Factors included in the evaluation could include items such as: Transparency International Corruption Perception Index scores Amount of work performed for government clients, or clients from industries deemed to present higher-risk Amount of gifts and entertainment provided/received Reputation of different government agencies in the market Information could be collected from public sources, internal systems (e.g., financial systems) and discussions with leaders, employees and others in the market The risk assessment should drive action Look for situations where certain activities appear abnormal (e.g., higher than usual entertainment, unusually priced services, etc.) Consider enhanced education and monitoring Picture Source: Transparency International, http://cpi.transparency.org/cpi2012/results/#myanchor2, October 11, 2013. MERCER 6 Third party due diligence Goals of due diligence Verify that relationships make good business sense Reduce corporate exposure for wrongdoing by agents Key elements to the program include Identification of higher risk third parties Submission of a business case for review by compliance Completion of a questionnaire by the third party Background checks Agreements that include anti-corruption provisions and rights to audit Payment protocols MERCER 7 4
Case Studies Overview UK Bribery Act of 2010 Local Law Issues Chinese Anti-Bribery Laws US Domestic Bribery - State and Local Laws - Federal/Election Laws Third Party Rules - Public Pension Funds/ERISA Funds - Universities and Endowments - Corporate Issuer Policies 8 UK Bribery Act of 2010 Key Provisions Differences from FCPA Enforcement Mechanisms / Interpretations Extra Territorial Impact 9 5
Local Law Chinese Anti-Bribery Laws Conflicts with Global Policies (US and UK) Implementation of Local Policies Enforcement Regime Global Surveys 10 US Domestic Bribery State and Local Laws Contractors/Vendors Lobbyists Pay to Play Rules Federal Rules State and Local Rules Federal/Election Laws Contractors/Vendors Election Laws Bribery Laws 11 6
Third Party Rules Public Pension Funds/ERISA Funds Universities and Endowments Corporate/Issuer Rules 12 Resources and Where to Get Help Professional Service Firms Law Firms Consulting Firms Accounting Firms Websites Gov.UK (Ministry of Justice Bribery Act of 2010 Quick Start Guide) Transparency International PricewaterhouseCoopers Website DOJ FCPA Site SEC FCPA Site Industry Conferences 13 7