As the international outcry on bribery and corruption practices continues to tighten its grip around rogue players in the private and public business sectors, global organisations continue to ramp up their efforts to develop effective frameworks to prevent, detect and report bribery and corruption.\u00a0And by fortifying their anti-bribery management systems, such organisations are further helping their cause as such systems can play a pivotal role in establishing “adequate procedures” as a compliance defense in the event of a bribery accusation.<\/p>\n
“Adequate procedures” is a term made popular through the UK Bribery Act of 2010, which poses the potential of a company avoiding liability for failing to prevent bribery if that organization can demonstrate sound and established policies and procedures that deter individuals (inside and outside of the organisation) from partaking in questionable or corrupt conduct.\u00a0A key challenge, though, is that “adequate procedures” takes on different meanings, depending on what country or jurisdiction one may reside.\u00a0 Further, most enforcement agencies and government authorities offer little guidance that pinpoints what exactly “adequate procedures” means when considered as a possible defense in a legal proceeding.<\/p>\n
Consider two international legislative provisions that offer “adequate procedures” as a possible legal defense consideration along with the most recent National Anti-Corruption Plan of the Malaysian Government, and discover how a newly adopted international standard can offer multi-national organisations specific guidelines in\u00a0developing a globally accepted anti-bribery management system that may support most “adequate procedures” defenses.<\/p>\n
Under the UK Bribery Act, an \u201cadequate procedures\u201d defense would be considered during an investigation into a corporate failure to prevent bribery.\u00a0 The Act provides commercial organisations with a defense to liability when commercial organizations can prove and demonstrate that they had in place proper procedures designed to prevent persons associated with them from undertaking bribery related conduct.<\/p>\n
Consequently, corporations that are otherwise liable for violating the corporate failure to prevent bribery provision can escape criminal liability from the provision if they can prove that they had in place “adequate procedures” to prevent the relevant illegal conduct from occurring.\u00a0 This defense is unique in that it contends that corporations are acting in good faith and taking proper precautions throughout the organization in implementing adequate compliance procedures, and subsequently can avoid being held criminally accountable for the failure to prevent bribery.\u00a0 This defense is significant in that there is no such defense under the FCPA (see below) or most other foreign anti-bribery laws.<\/p>\n
While corporate compliance procedures are not considered in the liability phase of the FCPA, they are taken into account during the sentencing phase by the U.S. DOJ relevant to the FCPA.\u00a0 The United States Sentencing Commission outlines through its Federal Sentencing Guideline Manual six factors — four aggravating and two mitigating — that a sentencing court must consider in determining the appropriate penalty on organizations convicted under the FCPA.\u00a0 The existence of an effective compliance program is one of the two mitigating factors.\u00a0 Subsequently, an organization convicted of FCPA violations can use the existence of an effective compliance program to potentially reduce a penalty against it.<\/p>\n
Under Section 17A (3) of the Malaysian Anti-Corruption Commission act, if the commercial organisation is found liable under the corporate liability provisions, a person who is the director, controller, officer or partner of the organization, or a person who is concerned with the organization\u2019s management affairs at the time of commission of an offense, is deemed to have committed that offense unless such person can prove that the corrupt act was committed without his consent or connivance and that he exercised due diligence to prevent that commission of the offense as he ought to have exercised with regard to the nature of his function in that capacity and the circumstances.<\/p>\n
Hence, there is a need for the company to put in place \u201cadequate procedures<\/strong>\u201d as a defense in case there is proven corruption by the associated individual.\u00a0 The Malaysian Anti-Corruption Commission MACC has issued guidelines which constitute \u201cadequate procedures.\u201d In the National Anti-Corruption Plan, Tun Dr. Mahathir bin Mohamad, Prime Minister of Malaysia on 29th January 2019 developed initiative number 2.1.3 which seeks \u201cTo introduce Anti-Bribery Management System (ABMS)MS ISO 37001 certification in all Government agencies<\/em>\u201d\u00a0 within two years (Jan 2019-Dec 2020). The guidelines further state in initiative 6.2.4 \u201cTo propose Anti-Bribery Management System (ABMS) MSISO 37001 certification as a requirement for State-Owned Enterprises (SOEs), Company Limited By Guarantee (CLBG) and the private sector to bid for Government contracts<\/em>\u201d.<\/p>\n In complying with these guidelines and to prove \u201cadequate procedures\u201d, public and private sector organizations should implement the ISO 37001 certification process which would provide proper assurance that the organization has succeeded in establishing, implementing, maintaining, reviewing and improving its Anti-Bribery Management System.<\/p>\n ISO 37001 Anti-Bribery Management System is an internationally accepted standard that specifies the procedures by which an organization should implement in preventing bribery while detecting and reporting any bribery incident that occurs.<\/p>\n The standard requires organizations to implement these procedures on a reasonable and proportionate basis according to the type and size of the organization, and the nature and extent of bribery risks faced.\u00a0 It applies to small, medium and large organizations in the public and private sector and can be implemented in any country.\u00a0 Though it will not provide absolute assurance that bribery will completely cease, the standard can help establish that the organization has in place reasonable, proportionate and adequate anti-bribery procedures.<\/p>\nDemonstrating “Adequate Procedures” through ISO 37001 Certification<\/strong><\/h3>\n