What To Make of the US Reversed Position on Anticorruption
Would you prevent corruption in your business if there were no immediate regulatory requirements? This fundamental question is on the table as the US pauses the enforcement of the Foreign Corrupt Practices Act. Louise Brown, anticorruption expert at Advisense had the opportunity to comment in Swedish media earlier this week.
On the 10th February, Donald Trump issued an executive order to pause the enforcement of the Foreign Corrupt Practices Act. Anticorruption requirements hinder American companies from doing business it is said.
Since 1977, the FCPA has been the most tangible incentive for companies world-wide to conduct business in a clean and corruption free manner. Its extraterritorial reach has had impact all the way to Scandinavia. For Telia Company, violating the FCPA cost the company almost a billion USD in fines. There are plenty more examples.
Observers suggest this turn of tides is a crisis and the international corporate compliance community has expressed deep shock, fearing that this will have a negative impact on how – or if – boards and senior management chose to prioritize ethics and compliance going forward.
A few fundamental and undisputable facts:
- Corruption as an enabler for economic crime – It is an enabler of multiple other forms of economic crime – money-laundering, fraud, embezzlement, insider crime, market abuse etc. Infiltration and insider crime is on top of the agenda in most companies today in Sweden and now recognized as a security issue.
- Corruption as a cost driver – Corruption increases the cost of doing business significantly. Pick your figure – 5-10-25% added cost or more. Once you agree to pay, it is a negative spiral. Differently expressed, anti-corruption is a clear business efficiency issue.
- 60% of organized crime uses corruption as a means to operate. This if nothing else should make even those with only a very remote interest in transparent and ethical business reflect on their options.
Most of us agree that compliance should not be driven by the fear of getting fined. And we agree with international experts who suggest that this crisis might be an opportunity, to move away from formalistic checkbox compliance and that a fundamental look at managing anti-corruption risks and ethical business governance as a key competitive advantage.
