Your Internal Anti-Corruption Policy is Just as Important as Your External Policy

Your Internal Anti-Corruption Policy is Just as Important as Your External Policy

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Have a good external @anticorruption program? What about internal? It's just as important. Just ask the SEC.

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Monday, March 9, 2015 - 12:40pm

CONTENT: Article

Corruption risk and anti-corruption compliance don’t only reside with big corporations or big global brands. Small to mid sized companies are also at risk of corruption and also have to concern themselves with having an anti-corruption policy that is effective. Companies of all sizes are looking to expand their operations, with the hopes of increased sales and revenue. What this means, for any small to mid-sized organization that is trying to expand their operations, really need to focus on the risk of doing so. Internal protocols must meet Securities and Exchange Commission standards and must be inline with helping in controlling and stopping corruption.  Thomas Fox, of the FCPA Blog website, writes how in the early stages of SEC enforcement, liability was a major concern with how compliance worked. The SEC is now looking to see how stable your internal controls and protocols are and how effective you are at implementation.  Take the Smith and Wesson case as an example:

“Smith & Wesson failed to devise and maintain sufficient internal controls with respect to its international sales operations. While the company had a basic corporate policy prohibiting the payment of bribes, it failed to implement a reasonable system of controls to effectuate that policy.”

In most cases the risk in doing business abroad lays on the 3rd parties you do business with. According to Kara Brockmeyer, Chief of the SEC Enforcement Division’s FCPA Unit, cases such as the Smith and Wesson and Oracle serves as wake up call for even small or midsized business’:

“This is a wake-up call for small and medium-size businesses that want to enter into high-risk markets and expand their international sales. When a company makes the strategic decision to sell its products overseas, it must ensure that the right internal controls are in place and operating.”

Ultimately it is the same consensus across the board. If you’re doing business abroad, or plan to expand your companies operations, systems need to be in place in order for you to manage and mitigate your corruption risk. Not only does this require you to focus on external factors, but this also means your internal policies and procedures need to be in good order. Most companies, due to cost of such implementation internally, cannot afford a robust anti-corruption program. If the investment is not made into such a program the risk can outweigh the reward, and companies can find themselves looking at an SEC investigation and fines. Cost effective solutions are available, for both internal and external anti-corruption efforts, to learn more click here.