Anti-Bribery Laws- Risk Management Considerations

20150814_154034Anti-bribery laws have become center stage in the last few years.  Not only has the DOJ expanded the enforcement of the FCPA outside of the US, but other countries, such as the UK and Korea have implemented anti-bribery laws too.  In Korea, the Kim Young Ran Act not only implements an anti-bribery law that is quite drastic, but it may now be enforced against teachers, quasi-public officials as well as companies whose employees have violated the Act.  The Kim Young Ran Act (the Act on the Prevention of Improper Solicitation and Receipt of Money and Goods) recently went into effect, and promises to not only penalize various acts of public corruption but also extends the reach of the anti-bribery laws into certain areas of the private sector.

In strengthening various provisions of Korea’s current anti-bribery and corruption laws and regulations, the Kim Young Ran Act (the Act) focused on 4 areas: (I) the expansion of the acts that may be punished; (2) the expansion of the definition of “public official”; (3) the prohibition of improper solicitation without the payment of money; and (4) the introduction of liability provisions to ensure corporate accountability. Now, domestic companies must be concerned about employees violating the Act as well as the risk of reputational damage. According to the Act, a public official, journalist, or teacher or administrator of a private school can be subject to imprisonment of 3 years or less or penalty of KRW 30 million or less for receiving a favor with value exceeding KRW 1 million regardless of whether the favor was given as a bribe or was related to the recipient’s works. Even if each favor is worth less than KRW 1 million, an annual cap of KRW 3 million applies. Also, even if the amount given is less than KRW 1 million, if the favor was given in connection with the recipient’s works, administrative fines of the amount equivalent 2 to 5 times the favor given can be imposed.

To mitigate exposure to the criminal penalties of domestic and foreign anti-bribery laws, it is obvious that companies, whether based in Korea, the US, UK or elsewhere need to establish a robust corporate compliance program as well as revise the ones already established, if any, to meet the high standards of conduct required by the FCPA, and other anti-bribery laws such as the Kim Young Ran Act or the UK-Bribery Act.  But establishment of compliance programs will not in and of itself result in protecting the company.  Early identification of wrongdoers within a company or organization may help limit a company’s criminal and civil liability under the Act but also the FCPA and Anti-Bribery act.  This means that besides considering compliance guidelines or a code of conduct, companies are now under great pressure to implement guidelines and procedures covering internal investigations as well.

What Should Companies Consider When Conducting Internal Investigations?

Conducting an investigation can be an emotion-charged, time-consuming process that requires expertise and effective planning. Managers and other staff who investigate sexual claims in an organization including corruption or bribes, harassment, discrimination, employee fraud and other allegations should be prepared to conduct interviews and document the investigation in a proper and thorough manner.

Of course, the ultimate goal of an investigation is to enable the company’s decision-makers to resolve matters fairly and effectively. The immediate goal of an investigation is to obtain the facts. Therefore, to be effective, an investigation must be:

    1. Thorough and accurate.
    2.  Fair and impartial.
    3.  In compliance with the requirements of law and the company’s ethics program.
    4.  Commenced and competed in a timely manner. The investigators must establish a good rapport with those individuals involved in the investigation .

So companies are now forced to take drastic action as well as ask the really tough questions concerning compliance, investigations,  and  corporate risk management policies.

Tough Questions

  1. Does the company have a compliance program in place to address the FCPA, UK Bribery and other anti-bribery laws?
  2. Is there a training program in place to cover the various anti-bribery laws?
  3. If a training program is not in place, is the company willing to establish the program?
  4. Does the company have an internal investigation policy in place?
  5. Does the company’s compliance program comply with the FCPA and the Kim Young Ran Act?
  6. What steps has the company taken to address the various risks posed by non-compliance with the anti-bribery laws?
  7. Is Upper Management involved in implementing a robust compliance program to address anti-bribery concerns?

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