6 challenges for compliance officers in 2020

The job of a compliance officer can be a difficult one. Organisations from large corporations down to small government agencies rely on their compliance officers to keep them within ethical and legal boundaries. They also rely on them to maintain monitoring and reporting requirements, and stay abreast of any changes in the compliance landscape. For professionals in this field, the bad news is that challenges will continue to increase in the near future (as we’ll explain in this article). The good news is that there are trained experts available to work hand-in-hand with organisations’ compliance officers to minimise risk and help them remain in compliance.

The stakes are high, as organisations in both the public and private sectors face new laws and regulations in jurisdictions around the world, along with increasingly strict enforcement and punishments. Investigations of violations can, and often do, lead to heavy fines. In some cases, criminal charges may result – and these can be levied against the organisation, or individuals, or both. Here are some of the biggest challenges facing compliance officers today:

 1. Anti-money laundering (AML) regulations

The Panama Papers and other major scandals, including the illicit funding of certain terrorist actions, brought money laundering issues firmly into the spotlight. Many governments have been stirred to action to create stronger measures meant to prevent the illegal funding of criminal or terrorist enterprises. In the European Union, this resulted in the 5^th Money Laundering Directive (5MLD), which takes effect in January 2020. 5MLD impacts organisations most directly in how they handle their know-your-customer (KYC) processes.

In the run-up to the 5MLD, there was increased attention on high-risk countries. Clients or transactions engaged in high-risk countries are now subject to enhanced due diligence when performing onboarding checks. Compliance teams need to ensure KYC is not a simple “tick box” exercise during the onboarding phase, and ongoing monitoring processes need to be implemented to manage changes throughout the customer lifecycle.

5MLD requires enhanced due diligence when dealing with high-risk countries. In addition to obtaining evidence of the source of funds and source of wealth, information on beneficial ownership and background to the intended transaction must also be recorded. The EU may also designate a ‘blacklist’ of high-risk countries for money laundering.

2. Conflicts of interest

Risks related to conflicts of interest are significant at every level of the company. Starting with the board of directors, an effective board must be transparent about potential conflict issues and address them on an ongoing basis. Board decisions that either suffer from actual conflicts can risk the board’s adherence to its duties and create real legal risks. Even the appearance of a conflict can raise real issues and transparency becomes even more important in these contexts.

This same level of risk can undermine the integrity of senior management. When senior executives fail to address real and significant conflicts, the integrity and overall leadership trust factor can deteriorate. A compliance executive must be willing to take on these issues, even when it is difficult to confront senior executives.

Within the private equity (PE) industry, conflicts and their adequate disclosure remain problematic. In recent years regulators have made examinations of PE firms and their complex structures top priorities. Most major organisations – and their compliance officers – see outside business activities as a risk.

3. Innovation driving new demands

New innovations are providing increased efficiency in compliance processes, which is a major plus for organisations. Always a double-edged sword, however, technology also creates more issues in data security, not to mention the training and expertise required to master it.

For many ‘non-tech’ professionals such as compliance officers, rapidly changing technology can be a concern, as the importance and integration of technology into the compliance suite continue to evolve. Compliance officers may not need to become technology experts, but they do need to ensure that tech-related risks are addressed within their firm’s framework. Compliance must be aware of rules and regulations from every jurisdiction with authority over the firm’s activities. This is another area where partnering with an outside firm that provides training and technology resources can be a major advantage.

4. Regulatory and political change

Recent years have seen a flurry of new regulations from various governmental bodies and jurisdictions, from the General Data Protection Regulation (GDPR) act to 5MLD. The GDPR, for example, has extraterritorial reach. It also serves as a model for future possible regulations in the critical area of data privacy and cybersecurity.

In Europe, Brexit creates real uncertainty for the UK’s regulators, and the industries that they regulate. But Brexit also impacts EU member states and any organisations doing business within or through the UK. The impact is far-reaching, and regulators face major challenges in responding to profound changes in policy, the legislative framework and the wider economic context.

Politics in the United States and other nations have also seen similar dramatic shifts in governmental control and resultant effects in policy, which can impact regulatory laws and how they are implemented and enforced worldwide. One thing is certain – investigations and legal actions based on violations of the Foreign Corrupt Practices Act (FCPA) continue to increase, and organisations must remain diligent in conducting risk assessments and implementing control measures to remain in compliance.

5. Personal liability

One area of concern sure to grab the attention of any compliance officer is the issue of personal liability. Recent news stories have reported criminal convictions, some leading to prison sentences, of executives, “middle men” and other individuals involved in various scandals. Compliance officers should take heed, as their responsibilities to their company can also extend to their own professional conduct being placed under a microscope. Many compliance professionals are aware of this, as a recent Thomson-Reuters survey found that 60% of them expect personal liability to increase.

New initiatives underline this reality, such as the Senior Managers and Certification Regime (SCMR) in Europe. It places a focus on firms’ senior managers and individual responsibility, and extends to all Financial Conduct Authority (FCA) solo-regulated financial services firms. The FCA itself has been increasing enforcement notices against individuals. We can expect an increase in these types of measures and they will apply to industries beyond those in the financial sector.

6. Ethics and integrity

Today’s business landscape brings an increased emphasis on the culture of an organisation, with an eye toward ethical practices and principles. With growing scrutiny from both regulators and stakeholders, the pressure is on for compliance professionals and their superiors to take broader responsibility for policies, procedures and controls to create a truly ethical business.

The Cambridge Analytica scandal is a notable example of how data misuse has serious brand and societal implications, on top of legal and compliance penalties. The public outrage was so intense that governments were forced to act, calling on Facebook and other involved parties to testify and explain themselves. The market’s reaction was also punishing, with more than $100 billion knocked off Facebook’s share price in days, while Cambridge Analytica went out of business.

In conclusion, AML regulations, conflicts of interest, innovation driving new demands, regulatory and political change, personal liability, and ethics and integrity issues are among the biggest challenges facing today’s compliance professional. This is the time to address solutions. There is expert help and a wealth of resources available, with no better time to leverage them than the present.

Let us know if you would like to learn more! Contact us today and get your FREE QUOTE now!

Who is CRI Group?

Based in London, CRI Group works with companies across the Americas, Europe, Africa, Middle East and Asia-Pacific as a one-stop international Risk Management, Employee Background Screening, Business Intelligence, Due Diligence, Compliance Solutions and other professional Investigative Research solutions provider. We have the largest proprietary network of background-screening analysts and investigators across the Middle East and Asia. Our global presence ensures that no matter how international your operations are we have the network needed to provide you with all you need, wherever you happen to be. CRI Group also holds BS 102000:2013 and BS 7858:2012 Certifications, is an HRO certified provider and partner with Oracle.

In 2016, CRI Group launched Anti-Bribery Anti-Corruption (ABAC®) Center of Excellence – an independent certification body established for ISO 37001:2016 Anti-Bribery Management Systems, ISO 37301 Compliance Management Systems and ISO 31000:2018 Risk Management, providing training and certification. ABAC® operates through its global network of certified ethics and compliance professionals, qualified auditors and other certified professionals. As a result, CRI Group’s global team of certified fraud examiners work as a discreet white-labelled supplier to some of the world’s largest organisations. Contact ABAC® for more on ISO Certification and training.

Filed under: Anti-Bribery Anti-Corruption Solution, Automotive, Aviation, Business Intelligence, Compliance Solution, Due Diligence, Finance & Professional services Industry, Insurance, IT & Telecommunications, Oil, Gas & Energy, Pharmaceutical & Healthcare, Property, Resources by admin
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Risk & Compliance magazine: interview with our CEO

Interested in employee integrity due diligence and pre-employment screening? Or are you engaging in a merger or acquisition, an IPO, engaging suppliers, contractors, or new clients and looking for third-party risk management solutions? Background checks and necessary screenings are vital to avoid horror stories and taboo tales that occur within HR, your business or even your brand – simply investing in sufficient screening can save you time, money and heartbreak.

Learn the benefits and best practises of background investigations from the industry leader Mr. Z. Anjum, CEO at CRI Group.

Click here to download the insights on Background investigations in a one-on-one interview published in Risk and Compliance magazine, 2019.

Have you read?

• Brexit poses new bribery challenges, ISO 37001 provides solutions
• Bribery and corruption plague Middle East, how can ISO 37001 help?
• As South Asia Grapples with anti-bribery compliance, ISO 37001 provides solutions
• Whitepaper: Organised catastrophe of international Pakistan airlines
• Rolls-Royce Case study: Ethics & Compliance
• ISO 37001 FAQ
• Are you ready for ISO 37001?
• Don’t have an ethical code of conduct? Your organisation needs one

Who is CRI Group?

Based in London, CRI Group works with companies across the Americas, Europe, Africa, Middle East and Asia-Pacific as a one-stop international Risk Management, Employee Background Screening, Business Intelligence, Due Diligence and other professional Investigative Research solutions provider. We have the largest proprietary network of background-screening analysts and investigators across the Middle East and Asia. Our global presence ensures that no matter how international your operations are we have the network needed to provide you with all you need, wherever you happen to be. CRI Group also holds BS 102000:2013 and BS 7858:2012 Certifications, is an HRO certified provider and partner with Oracle.

In 2016, CRI Group launched Anti-Bribery Anti-Corruption (ABAC®) Center of Excellence – an independent certification body established for ISO 37001:2016 Anti-Bribery Management Systems, ISO 37301 Compliance Management Systems and ISO 31000:2018 Risk Management, providing training and certification. ABAC® operates through its global network of certified ethics and compliance professionals, qualified auditors and other certified professionals. As a result, CRI Group’s global team of certified fraud examiners work as a discreet white-labelled supplier to some of the world’s largest organisations. Contact ABAC® for more on ISO Certification and training.

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Top 10 Bribery and Corruption Cases of 2019

There is a never-ending stream of news stories documenting bribery and corruption cases around the world. Some of those cases rose to the top of the headlines in 2019. All of the stories help illustrate the need for organisations to have proper controls in place to prevent further bribery and corruption cases popping up. A certification such as ISO 37001 – Anti-Bribery Management Systems standard can provide a comprehensive approach to mitigating bribery and corruption risk. Organisations of all sizes and industries should take steps now to ensure that they don’t end up on a future list of top bribery and corruption cases and scandals.

Here, we count down the stories we’ve chosen as the 10 most eye-popping bribery and corruption cases reported in 2019.

#10 – Juniper Networks

California-based cybersecurity firm Juniper Networks was ordered by the U.S. Securities and Exchange Commission (SEC) to pay more than $11.7 for violations of the Foreign Corrupt Practices Act (FCPA). The SEC alleges that some of the sales employees in Juniper’s Russian subsidiary “secretly agreed with third-party distributors to fund leisure trips for customers, including government officials through the use of off-book accounts.” In the settlement, Juniper did not explicitly admit nor deny the SEC’s claims – but it did agree to “cease and desist from committing or causing any violations”. (Reuters, 2019, SEC, 2019)

#9 – Alstom

Paris-based Alstom came under the attention of the UK Serious Fraud Office (SFO), resulting in a £16.4 million judgment in fines and costs for a corruption scheme. Alstom Network UK Ltd was ordered to make the payment after an SFO investigation revealed a fraudulent contract with an intermediary that was “simply a conduit for bribes”. To hide the corruption, Alstom went so far as to provide fake paperwork and fraudulent compliance checks. Three former Alstom employees were jailed in the case.

The multinational conglomerate, which serves the rail industry in locations worldwide (and formerly included interests in the power industry), has seen trouble at several units in various regions. In 2014, Alstom SA pleaded guilty in the U.S. to violating the Foreign Corrupt Practices Act (FCPA). The company bribed officials in Saudi Arabia, Egypt, Indonesia and the Bahamas, resulting in $772 million in criminal penalties. In 2016, Alstom Power Ltd pleaded guilty in the UK for corruption involving a Lithuanian power project. (WSJ 2019, FCPA Blog, 2019)

#8 – Microsoft

In Hungary, a wholly-owned subsidiary of Microsoft (aptly named Microsoft Hungry) was busted for a bid-rigging and bribery scheme, costing the corporation $25.3 million in combined criminal and civil penalties. The action was brought by the U.S. Department of Justice (DOJ) and the SEC for violations spanning from 2013 until “at least” 2015.

The scandal centered around the sale of Microsoft software licenses to Hungarian government agencies. Microsoft Hungary employees, including executives, were found to have falsely represented steep “discounts” in order to conclude deals with resellers, in violation of the FCPA. The SEC further found Microsoft’s subsidiary in Turkey “provided an excessive discount to an unauthorized third party in a licensing transaction for which Microsoft’s records do not reflect any services provided”.(Compliance Week, 2019)

#7 – KPMG

Big Four accounting firm KPMG found itself in all sorts of embarrassing (and costly) trouble over allegations that some of its former employees used stolen information to alter previous audit work – and cheated on training exams. The firm admitted to the allegations and agreed to pay the SEC $50 million to settle the charges. The case is significant as it marks the largest fine imposed on an auditor by the SEC to date.

“The breadth and seriousness of the misconduct at issue here is, frankly, astonishing”, said Steven Peikin, one of the SEC’s enforcement directors. “This settlement reflects the need to severely punish this sort of wrongdoing while putting in place measures designed to prevent its recurrence”. (Reuters, 2019)

#6 – Samsung Heavy Industries

A subsidiary of Samsung Group, South Korea-based Samsung Heavy Industries Company Ltd. (“SHI”) found itself under investigation for involvement in the Petrobras scandal. Specifically, the company was charged in a scheme to pay millions of dollars in bribes to Petrobras official in return for Petrobras chartering one of SHI’s oil drillships. Petrobras is the Brasilian state-owned energy company caught up in a major, ongoing investigation over widespread corruption.

According to the DOJ, SHI conspired to pay commissions, including some of that money for bribes, to Brasilian intermediaries beginning 2007 and continuing until 2013. The amount topped $20 million. SHI admitted to the charges and entered into a three-year deferred prosecution agreement with the DOJ. As per the agreement, SHI will pay 50 percent of the total penalties to the U.S. and the remaining 50 percent to the Brasilian authorities. (Lexology, 2019)

#5 – Fresenius Medical

Fresenius Medical Care AG & Co. KGaA (based in Bad Homburg, Germany) agreed to pay $231 in penalties for bribing doctors and public health officials in at least 17 countries. Fresenius is the world’s largest provider of dialysis equipment and services. It will make the payments to the DOJ and SEC to settle violations of the FCPA in various countries and continents, including Africa, the Middle East and Europe.

According to the SEC, in some locations, Fresenius failed to train employees or conduct due diligence on agents, and “in many instances, senior management actively engaged in corruption schemes and directed employees to destroy records of the misconduct”. Fresenius paid about $30 million in bribes “using sham consulting contracts, falsifying documents, and funneling bribes through a system of third party intermediaries”. (FCPA Blog, 2019)

#4 – Walmart

Retail giant Walmart is alleged to have engaged in corrupt payments to governments and officials around the world for more than 10 years, according to an agreement reached with the DOJ and SEC. Walmart will pay $282 million to settle the charges that it violated the FCPA in an effort to open new locations in various countries and jurisdictions around the world. Notably, Walmart’s Brasilian subsidy pleaded guilty to breaking U.S. federal law – but allegations included cases in Mexico, China, India and other locations.

Federal regulators said Walmart looked the other way as subsidiaries on three continents paid millions of dollars to middlemen who helped the company obtain permits and other government approvals from July 2000 to April 2011. (The New York Times, 2019)

#3 – TechnipFMC

London-based TechnipFMC was charged with making illicit payments to advance the company’s interests in Iraq and Brasil. The company paid a $296 million settlement to the DOJ for the two bribery schemes. In Tuesday’s enforcement action, the DOJ said the charges against TechnipFMC “arose out of two independent bribery schemes: a scheme by Technip to pay bribes to Brazilian officials and a scheme by FMC to pay bribes to officials in Iraq”.

The SEC alleged that from 2003 until at least 2013, Technip conspired with Singapore-based Keppel Offshore to pay $69 million in bribes, disguised as “commission payments” passed in part to Petrobras – as well as more than $6 million in payments to the Workers’ Party in Brazil and to Workers’ Party officials. In Iraq beginning in 2008 and continuing until at least 2013, FMC bribed at least seven government officials “through a Monaco-based intermediary company”, the DOJ said. (DOJ, 2019)

#2 – Ericsson

Number two on our list is Swedish telecom giant Ericsson. The company paid a blockbuster sum of more than $1 billion (U.S.) to the U.S. Department of Justice (DOJ) and Securities and Exchange Commission (SEC) for “violating the anti-bribery, books and records, and internal controls provisions of the FCPA.”

According to the DOJ, the corruption scandal spanned 17 years and at least five countries. It involved high-level executives and was geared toward increasing Ericsson’s profits. Ericcson allegedly used slush funds to bribe officials in various countries including China, Vietnam, Indonesia and Kuwait.

In China, for example, Ericsson subsidiaries paid millions in bribes that were ultimately delivered to officials, including about $31.5 million for services that were never performed. (DOJ, 2019)

#1 – Unaoil

And finally, number one on our list: The massive Unaoil scandal continued to make headlines. Four businessmen pleaded guilty in London courts in 2019, admitting that they were involved in paying millions in bribes. According to investigators, the illicit payments were made to officials in nine different countries over a span of 17 years. As part of the scheme, participants were alleged to have engaged in widespread money laundering and attempts to destroy evidence.

It is alleged that two of the key players in the scandal made millions of dollars in bribe payments to government officials in Algeria, Angola, Azerbaijan, the Democratic Republic of Congo, Iran, Iraq, Kazakhstan, Libya and Syria. Fallout continues from the massive Unaoil case, which some have said is the largest bribery scandal in history. The family business from Monaco is alleged to have systematically corrupted the global oil industry, paying our millions of dollars in bribes for big-name companies including Samsung, Rolls-Royce and Halliburton. (The Guardian, 2019, The Age)

Let us know if you would like to learn more about other bribery and corruption cases or our solutions!

If you have any questions or interest in implementing compliance solutions, please contact us.

CRI Group has safeguarded businesses from any risks, providing investigations (i.e. insurance fraud), employee background screening, investigative due diligence, business intelligence,  third-party risk management, forensic accounting, compliance and other professional investigative research services. In 2016, CRI Group launched Anti-Bribery Anti-Corruption (ABAC®) Center of Excellence – an independent certification body established for ISO 37001:2016 Anti-Bribery Management Systems, ISO 37301 Compliance Management Systems and ISO 31000:2018 Risk Management, providing training and certification. ABAC® operates through its global network of certified ethics and compliance professionals, qualified auditors and other certified professionals. Contact ABAC® for more on ISO Certification and training

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Can you Run an International Background Check?

Pre-pandemic, global workforce mobility was an increasing trend. The demand for skilled workers had put employers on a hunt worldwide. According to a Finaccord research study, the total number of expatriates worldwide amounted to around 66.2 million in 2017 – which is 0.77% of the total global population. This figure had grown at a compound annual rate of 5.8% since 2013. By 2018 the global expatriate population had reached 66.2m and was predicted to rise to 87.5 million by 2021. And as of today, according to The Expat Survey, 232 million people are living outside of their nation of origin.

According to HSBC Annual Survey 2020

Finaccord forecasted that the number would reach around 87.5 million by 2021. Fast forward to today, COVID-19 is creating a new reality. The pandemic has an enormous impact on workers’ mobility across borders, mainly due to strict limitations on international travel. Many businesses have shifted to online modalities, recruiting nationally and preparing for safe and fair recruitment practices once travel restrictions are lifted. None of us could have anticipated the challenges of 2020 brought about by the global pandemic. The impact on global mobility has been significant, with lockdowns and ongoing travel and immigration restrictions affecting the majority of markets around the world. The latest HSBC 2020 report with 40 countries participating

The implementation of remote working is broader and deeper than most organisations realise. To be successful in the long term, a structured approach is needed and a significant investment to change corporate culture.

Overseas recruitment 

We understand the complexities and requirements businesses face with overseas recruitment and the need for international employee vetting to ensure your candidates meet the job-specific requirements.

COVID-19 changed how your workforce is working. 

The odds are good that the pool of top candidates for an open position may include someone from a foreign country. Along with making sure that person is right to go in terms of the documentation needed to live and work in the U.S., do you run an international employment background check in addition to a domestic one? What about a criminal background check? How about a credit check?

The answer to all is yes, especially if your candidate has recently relocated to this country. You need to verify that the information on his or her resume is accurate, and be informed about his or her criminal past, just like you would for any other candidate.

The good news? Verifying education and references internationally are both relatively straightforward. For education verification, a phone call to the schools the candidate claims to have attended will do the trick, although some schools will only allow the student to request those records. Similarly, a phone call or email to the listed reference is usually all that’s needed. However, the language barrier can be a significant stumbling block in both cases.

Unfortunately, conducting an international background screening is a complicated matter, and without the capabilities, you will face a tangle of bureaucracy and red tape. Here’s why international background screening is difficult without experts:

No Global Database

In this age of big data, smart everything, and increasing concerns about national security, you’d think there would be one central, global database where people could check, at the very least, a candidate’s criminal history. There isn’t. To run any pre-employment screening internationally, you need to contact the candidate’s country of origin.

Each Country Has Its Own Rules

Country rules vary in storing and releasing data about its citizens. Where to go to get the information varies, too. You can work through their embassy in Washington, D.C, for some countries. For others, you must request the data from the country directly. Some prohibit U.S. companies from obtaining records, and some have endless hoops to jump through and a mountain of red tape to untangle. And the documentation you need to provide to get the records varies by country. Photographs, fingerprints, parents’ names, birth certificates, proof that the candidate applied for a job at your company — the variations are seemingly endless. It’s no mystery to see why it will take a while, up to 20 days or more if you get any information at all.

Employment information Won’t Be Uniform.

If you’ve run a successful employment background check on a candidate from a specific country before, don’t expect to get the same results again. Why? In many cases, it’s up to the employer to decide whether to release any information.

Credit Score? What Credit Score?

Each country has its way of reporting credit and debt. While some are similar to the U.S., others don’t keep those sorts of records at all, and still, others have their own rules about who can and can’t get access to that information.

Bottom line, the value of remote working, now and after the crisis

Remote working is an opportunity for your organisation to work more sustainably and reap the medium to long term benefits. With less office space, less commuting, fewer business trips, shorter breaks, greater focus from employees and fewer short absences due to illness. However, it is more important than ever to run background, employment, and credit checks to make informed, solid hiring decisions. Still, the process is difficult and time-consuming if you’re dealing with another country, leaving you with a vacant position for longer than you had planned. This is the time to call in the pros.

CRI® Group Employee Background Checks

Employee background checks, also known as EmploySmart™, is a robust new pre-employment background screening service certified for BS7858 to avoid negligent hiring liabilities. We are a leading worldwide provider, specialising in local and international employee background checks, including pre-employment and post-employment background checks. Ensure a safe work environment for all – EmploySmart™ can be tailored into specific screening packages to meet the requirements of each specific position within your company.

How do you know the candidate you just offered a role to is ideal? Are you 100% sure you know that everything they’re telling you is the truth? 90%? They showed you a diploma; how do you know it’s not photoshopped? Did you follow the correct laws during your background checks process? Employee background checks and necessary screenings are vital to avoid horror stories and taboo tales within HR, your business, or even your brand – simply investing in a sufficient screening can save you time, money and heartbreak.

VIEW EMPLOYSMART™ BROCHURE

CRI® Employee Background Checks are an investigation into a person’s character – inside and outside their professional lives. Some checks you probably already carry out in-house, such as candidate’s qualifications (documents provided), work history (with a reference check), right to work in the country and even a quick social media presence scan.

However, we provide a full in-depth background screening service for candidates and employees at all levels – from senior executives through to shop-floor employees:

• Address Verification (Physical Verification)
• Identity Verification
• Previous Employment Verification
• Education & Credential Verification
• Local Language Media Check
• Credit Verification & Financial History (where publicly available)
• Compliance & Regulatory Check
• Civil Litigation Record Check
• Bankruptcy Record Check
• International Criminal Record Check
• Integrity Due Diligence
• and more.

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Beating bribery leadership and culture, in risk and anti-bribery management systems

Beating bribery leadership and culture

Beating bribery leadership and culture. Global corruption costs trillions in bribes. Samsung Group’s third-generation leader, Lee Jae-Yong, has been accused of bribing Choi Soon-Sil, a friend of former President Park Geun-Hye. Following Lee Kun-hee’s (Lee Jae-Yong’s father) heart attack in 2014, it has been calculated that Lee Jae-Yong would need to pay $6 billion in tax bills to be able to inherit his father’s shares and maintain control of Samsung. The Beating Bribery Leadership and culture in risk and anti-bribery management systems company’s leaders have a long-standing history of alleged tax evasion but, up to now, the white-collar crimes have been pardoned by Park Geun-Hye and other South Korean presidents. The easier option was for Lee Jae-Yong to pay a bribe to orchestrate the merger of two divisions: Samsung C&T Corp., which is dedicated to construction and trading and Cheil Industries Inc., which owned several entertainment properties. Upon completion, the merger would have given the Lee family more power over the entire Samsung Group.

Now that the plan was looking very promising, Jay Y. Lee used a bribe to execute it. According to Bloomberg in 2017: “The form of the alleged bribe was Vitana V, an $800,000 thoroughbred show horse, plus $17million in donations to foundations affiliated with the friend, whose daughter was hoping to qualify for the 2020 Olympics as an equestrienne.” (Bloomberg, 2017). Following the investigation, the situation took a significant downturn and Jay Y. Lee was sentenced to five years in prison. Chung Sun-sup, chief executive of research firm Chaebul.com said: “The five-year sentence was low given that he was found guilty of all the charges. I think the court gave him a lighter sentence, taking into account Samsung’s importance to the economy.” It is, however, one of the longest given to South Korean business leaders.

As for stock prices, they fell more than one per cent the day after Jay Y. Lee was arrested and then a similar amount after the verdict. Samsung Group’s profit was not hurt but South Korea’s new liberal president, Moon Jae-in, has pledged to rein in powerful, family-owned firms, like Samsung, which are known as chaebols in South Korea. He has promised to empower minority shareholders and end the practice of pardoning tycoons convicted of a white-collar crime. Another example of a company where corruption could be said to be part of company culture is (or was – more on that later) Rolls-Royce plc. Between 2000 and 2013, the company conspired to violate the Foreign Corrupt Practices Act (FCPA) by paying more than $35million in bribes through a third party to foreign officials to secure contracts. The US Department of Justice (DOJ) reported that in Thailand, Rolls-Royce admitted to using intermediaries to pay approximately $11 million in bribes to officials at Thai state-owned and state-controlled oil and gas companies that awarded seven contracts to Rolls-Royce during the same period. The way business was conducted in Kazakhstan, Azerbaijan, Angola and Iraq did not differ. The corrupt practices were spread globally.

In 2003, before the criminal activities came to light, the company’s chief executive, John Rose, who had been appointed in 1996, was honoured with a knighthood. After the engineering giant admitted in a deal with the US prosecutor that it had made corrupt payments, the UK’s Labour party called for him to be stripped of his title. Sir John Rose insists that he did not know of the corrupt practices. Let’s say that is the truth, but did he not fail as a leader simply because of that?

As a result of the scandal in 2016, Rolls-Royce has suffered the biggest financial loss in its history. Other factors include Brexit and the drop in the value of the pound, but the £671 million charges for the penalties the company paid to settle bribery and corruption charges with Serious Fraud Office (SFO), the DOJ and Brazilian authorities left a hole in the company’s accounts. Since then, the authorities have appointed new management and if its praised cooperation with SFO is an indication of the company’s culture shift, Rolls-Royce should no longer be in the news due to corruption scandals.

ISO standards

Failed leadership is the obvious reason for the above bribery cases. ISO 37001: 2016 Clause 5 Leadership outlines what is required from top management in order to obtain ISO 37001:2016 anti-bribery management system certification. Leadership is crucial for an anti-bribery management system to be effective and all points under Clause 5 Leadership are requirements.

As illustrated in the standard: “For a compliance management system to be effective, the governing body and top management need to lead by example, by adhering to and actively supporting compliance and the compliance management system.” Management has a number of other responsibilities, which are outlined in the standard. There are responsibilities that are more obvious than others, such as “ensuring that the anti-bribery management system, including policy and objectives, is established, implemented, maintained and reviewed to adequately address the organisation’s bribery risk” (5.1.2. a) and “deploying accurate and appropriate resources for the effective operation of the anti-bribery management system” (5.1.2. c). There are also requirements that are not so obvious but just as important; “promoting an appropriate anti-bribery culture within the organisation” (5.1.2. h) and “promoting continual improvement” (5.1.2. i). These requirements highlight that obtaining ISO 37001:2016 certification is not just a box-ticking exercise. In order to obtain the certificate, a company needs to illustrate that compliance with anti-bribery legislation is integrated within its business model and, crucially, its culture. In practical terms, that means that the tone at the top needs to align with the ISO’s anti-bribery management system (ABMS) and the message needs to be understood from the boardroom to the factory floor.

Adopting bespoke policies

ISO 37001:2016 is a strategic approach to bribery risk identification and subsequent risk mitigation. Risk knowledge is a necessary factor for effective management. The adoption of ISO anti-bribery management system-tested principles and practices allows an organisation to tailor recommendations to its contextual business environment. ISO 37001:2016 has had the impact of making companies adhere to the international anti-bribery management system standard. As an international standard of high repute, ISO 37001 has brought changes to market dealings and firm operations. Organisations have a guideline of rules and code of ethics to follow to mitigate the risk of being involved in corruption charges. The international nature of the ISO 37001 management system allows organisations to align their internal policies with national laws where the organisation is operating. It is important to note that state-nations are increasingly internalising globally recognised legal anti-corruption frameworks and actively prosecuting offenders.

The assurance that an organisation is operating within international standards and processes helps cultivate social legitimacy in the operation of that company which directly serves to boost investor confidence and attract investors. Also, some consumers base their purchasing decisions on the ethical operations of a company. As such, the ISO standard serves as a pull factor for new consumers. Bribery is a very serious issue with adverse macroeconomic and microeconomic effects. In particular, it not only distorts markets and competition but also erodes the profitability of private firms and individual enterprises throughout an economy. The ISO anti-bribery management system provides measures that help organisations to prevent, detect, eradicate and address bribery. This is done by adopting anti-bribery policies, hiring personnel to oversee compliance risk management and due diligence on projects and business associates, implementing commercial and financial controls and also reporting and investigation procedures. ISO 37001:2016 can be used in any organisation regardless of its size, type whether public or private or non-profit.

Enhanced transparency

Identification and resolution of bribery risks increase an organisation’s capacity to deliver consistent and improved services to consumers within the law and without engaging in bribery and corruption. In addition, the anti-bribery management system improves the way the organisation protects its people from fraud and ensures that there is a favourable working environment. Therefore, the ISO 37001:2016 anti-bribery management system enhances transparency in organisational culture, thus promoting the optimisation of resources. Protection of the organisation’s assets, shareholders and management from the adverse effects of bribery and corruption is another benefit associated with an ISO standard anti-bribery management system. Often, the negative effects of corruption are economic in nature. For instance, bribery affects the profit margins of a company to the extent that the management has to divert funds meant for either operating capital or assets capital to facilitating bribes.

Additionally, the public knowledge that an organisation is actively involved in bribery or any other form of peddling influence affects brand identity, which erodes the consumer base, thus reducing the overall profitability of an organisation. This system can operate as a standalone facility or function under another system through integration. One advantage that cuts across all organisations is the amplification of confidence in the eyes of external stakeholders. From another perspective, an organisation using this ISO format is assured of a good reputation as well as an excellent working environment. The risk factors are minimised and a solid credential pathway is realised. Indeed, many for-profit outfits have consistently applied anti-bribery systems as a measure of acquiring extensive market penetration goals. The ISO 37001 typically seeks to create an accountability culture around the globe that allows organisations to conduct activities in a clean and healthy environment.

Committed approach

An organisation with an ISO: 37001 2016 certification is open to public scrutiny since its management operates without fear. Further, such an entity displays fidelity and compliance to bribery legislation, such as acts of parliament or the congress. More importantly, subscribing to the system certification demonstrates a commitment to collaborate and work with like-minded organisations in managing bribery and corruption in the world. The chain of responsibility and accountability, additionally, ensures that the supply chain systems used by the organisations conduct clean and verifiable business. Closely related to that advantage is the growth of moral and legal business transactions between businesses and their contractors. Corruption can permeate every corner of an organisation and the anti-bribery certification blocks such realities.

The ultimate beneficiary of ISO: 37001 is the shareholder. When an organisation bribes its way into the business and has its licence taken away, the shareholder loses their investment. If credibility is lost and the activity schedule goes down, it is the shareholder who bears the heaviest burden. However, bribery in organisations practically affects everyone in the political, commercial or social jurisdiction of such a company. Disgrace can lead to the loss of jobs. And a fined or closed company implies lower tax revenues to the government. Therefore, businesses should integrate ISO: 37001 2016 in their management operations as well as in risk and compliance.

Curbing risks

The ISO certification embeds a culture of corporate social responsibility and willingness to collaborate with law enforcement agencies. Cognisant of the backlash and opprobrium associated with corporate obstruction of justice in the investigation of bribery and corruption, the ISO certification allows organisations to document their proactive involvement in reviewing their compliance with global standards of anti-bribery management as well as the concrete measures the management has initiated to show its willingness to prevent and curb bribery risks.

Finally, it is important to note that organisations have a distinct legal personality away from the management and other stakeholders. The separate legal personality of an organisation means that an organisation is liable for bribery activities committed by its employees or its management. Under domestic laws, culpable organisations are subject to legal sanctions, which include hefty pecuniary fines and, in some cases, dissolution of the organisation. Pecuniary fines affect the operations of a company by diverting either operating capital or assets to unintended activities. Overall, diversion of financial resources to foot fines affects the profitability of a company as well. In addition, such diversion of financial resources through fines affects growth strategies, such as expansion into new markets. In this case, the provision of documented evidence to the prosecution or the courts demonstrates that an organisation has taken reasonable measures to prevent bribery and corruption, thus helping the organisation to avoid fines and sanctions, such as winding up.

Who is CRI Group?

Based in London, CRI Group works with companies across the Americas, Europe, Africa, Middle East and Asia-Pacific as a one-stop international Risk Management, Employee Background Screening, Business Intelligence, Due Diligence and other professional Investigative Research solutions provider. We have the largest proprietary network of background screening analysts and investigators across the Middle East and Asia. Our global presence ensures that no matter how international your operations are, we have the network needed to provide you with all you need, wherever you happen to be. CRI Group also holds BS 102000:2013 and BS 7858:2012 Certifications, is an HRO certified provider and partner with Oracle.

In 2016, CRI Group launched the Anti-Bribery Anti-Corruption (ABAC®) Center of Excellence – an independent certification body established for ISO 37001:2016 Anti-Bribery Management Systems, ISO 37301 Compliance Management Systems and ISO 31000:2018 Risk Management, providing training and certification. ABAC® operates through its global network of certified ethics and compliance professionals, qualified auditors and other certified professionals. As a result, CRI Group’s global team of certified fraud examiners work as a discreet white-labelled supplier to some of the world’s largest organisations. Contact ABAC® for more on ISO Certification and training.

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ABAC® training held for 2019 International Anti-Corruption Day

“Manage your business risks with confidence” was the tone for CRI® Group’s ABAC® Center of Excellence anti-bribery anti-corruption training event held on International Anti-Corruption Day (Monday, 9 December) in Dubai. Hosted at Dubai Quality Group’s offices at Emarat Atrium Building, “Introductory Seminar on ISO 37001:2016 Anti-Bribery Management System” provided critical insight on how to protect businesses from bribery and corruption risks. Bribery and corruption do more than just damage businesses and detrimentally affect employees – it also affects the world’s economy. For example, it’s estimated that more than US $4 billion was embezzled in one of the world’s biggest corruption schemes, 1MDB, globally. The ABAC seminar provided effective, real-world solutions laid forth by the ISO 37001 Anti-Bribery Management System to give businesses effective controls to mitigate risk.

Takeaways for attendees included a greater understanding of the globalisation of bribery and corruption, and an in-depth look at Middle East case studies. The seminar also provided an understanding of the background of bribery, and the knowledge of ISO 37001 impact, requirements, training, and certification. Another focus was on how to remain in compliance with ISO 37001. Attendees included top-level management personnel and specialists with expertise in various areas, such as compliance and ethics, legal practises and counseling, internal audit, internal controls, finance, risk management, and supply chains. Many in the group were involved in coordinating, developing, implementing and auditing anti-bribery compliance activities internally. Some attendees were involved in assessing their organisation’s internal and external supply chain. The seminar was also streamed live on Dubai Quality Group’s Instagram page.

ISO 37001 training 

A company’s own employees are its best protection against corruption. Statistics show that most corruption is detected internally. Give your employees the tools they need to prevent bribery and mitigate related risks. Achieving ISO 37001 Awareness, Internal Auditor, Lead Auditor and/or Lead Implementer training is a proactive way of demonstrating your organisation’s commitment to ethical sustainability. Your employees will be able to recognise any form of corruption, and report it. Our trainers are the best in the business. They’re passionate about sharing their knowledge with you and/or your employees.

ABAC® training held for 2019 International Anti-Corruption Day

ABAC® training held for 2019 International Anti-Corruption Day

ABAC® training held for 2019 International Anti-Corruption Day

ABAC® training held for 2019 International Anti-Corruption Day

ABAC® training held for 2019 International Anti-Corruption Day

ABAC® training held for 2019 International Anti-Corruption Day

ABAC® training held for 2019 International Anti-Corruption Day

ABAC® training held for 2019 International Anti-Corruption Day

ABAC® training held for 2019 International Anti-Corruption Day

ABAC® training held for 2019 International Anti-Corruption Day

ABAC® training held for 2019 International Anti-Corruption Day

ABAC® trusted experts have years of hands-on and business experience – they bring the subject matter to life with relevant and contemporary examples.

Lead Auditor training in Pakistan 

Join us for LA training in Pakistan. During this training, you will:

• Understand the operation of an Anti-bribery Management System based on ISO 37001 and its principal processes
• Understand the correlation between ISO 37001 and other standards and regulatory frameworks
• Understand the auditor’s role in planning, leading and following-up on a management system audit in accordance with ISO 19011
• Interpret the requirements of ISO 37001 in the context of an ABMS audit
• Strengthen the personal skills necessary for an auditor to act with due professional care during an audit

Interested?

Our sister brand Anti-Bribery Anti-Corruption (ABAC®) Center of Excellence is an independent certification body established for ISO 37001 Anti-Bribery Management System, providing Introductory, Internal Auditor, Lead Auditor training and ISO ABMS Certification. ABAC’s certification services are accredited by the EIAC for administering the ISO 37001 Anti-Bribery Management Systems standard. ABAC® trusted experts have years of hands-on and business experience – they bring the subject matter to life with relevant and contemporary examples.

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We’re All Paying a High Price for Corporate Corruption

Corruption weakens governments, fuels organised crime, stifles economic growth and discourages development. International corruption continues to undermine the progress of developing nations as rogue politicians, civic leaders and corporate representatives conduct “business as usual” to bypass bureaucratic red tape or circumvent competitive processes. But the world is taking notice and punishing those organisations accused of corruption practices. From damaged corporate reputations that lead to brand and stock devaluation to negative investor perceptions, legal action and even jail terms for corporate directors, the high cost of corruption can have a lasting effect on even the most diligent organisations.

Companies worldwide can fall victim at any time to bribery and corruption practices, particularly those organisations with multi-national operations utilising vast networks of third-party agents, suppliers, distributors and consultants. Navigating the complex web of multi-jurisdiction laws and regulations around the world related to anti-bribery and anti-corruption practices can be daunting, exhausting financial resources and taxing personnel. But now there’s an all-encompassing solution for building strong global compliance frameworks and safeguarding your organisation from third-party risks.

Global efforts to fight bribery and corruption 

The past decade has seen a dramatic rise in the prosecution of organisations accused in bribery schemes. Often regarded in many regions as a standard operating procedure necessary to move business along, the practise of bribery is fast becoming a focal point for governments and global watchdogs’ intent on levying heavy fines and penalties for companies involved in the practice. In this situation which with the course of time, regional and international regulations are becoming stricter, particularly companies that are in the supply chain (importers, exporters, third-party service providers or indenters) for any foreign company.

Foreign companies are now being penalised if discovered that companies in their supply chain are involved in corrupt practices. These companies are increasingly complying with international laws such as the Foreign Corrupt Practices Act (FCPA), Malaysian Anti-Corruption. Commission (Amendment) Act 2018 introduced a new far-reaching corporate liability provision, the UK Bribery Act, Brazilian Clean Company Act. This progress intends to eliminate corruption from supply chains and third-party working relationships of foreign companies. Companies that are not complying with these laws are being panelised and prosecuted heavily.

ABAC® Center of Excellence Limited “ABAC Certification”

Anti-Bribery Anti-Corruption Center of Excellence Limited “ABAC Certification” was created to educate, equip and support the world’s leading business organisations with the latest in best-practice due diligence processes and procedures. We provide world-class services to organisations seeking to validate or expand their existing compliance frameworks to maintain a competitive edge in the world marketplace. The ABAC® Center of Excellence offers a complete suite of world-class services and solutions designed to help organisations mitigate the internal and external risks associated with operating in multi-jurisdiction and multi-cultural environments.

Bribery and Corruption Risk Management

ABAC Certification provides an expert audit of your existing risk management system to assess effectiveness and vulnerabilities while ensuring your organisation adequately complies with FCPA regulations, UK Bribery Act laws, Anti-Money Laundering regulations, and other global, regional and local regulations.

ISO 37001:2016 Certification

CRI Group offers independent global accredited ISO 37001:2016 certification to ensure that your organisation complies with this newly established standard, which is recognised and practised in more than 160 countries worldwide. Our auditors and analysts work with your team to develop policies, communications, training, monitoring and reporting measures that integrate seamlessly with your existing management processes and controls.

ABAC Certification & Strategies

ABAC® Certification’s exclusive Third-Party Risk Management-3PRM-Certified™ solution provides the very best in third-party bribery and corruption risk management, corporate compliance program, providing a proactive approach to mitigating risks from third-party affiliations and protecting your organisation from liability, brand damage and harm to the business. ABAC® presents innovative and globally accepted risk management solutions with an accredited corporate compliance program that can be applied to any organisation.

Becoming Compliant: The Benefits of ISO 37001 Certification

Because ISO 37001 is built around a set of generally accepted requirements, global organisations can become certified in the standard, utilising the services of an accredited third-party certifying body. Certification will add a distinct level of credibility to the organisation’s management systems and must be completed by a qualified, independent third-party specifically versed in ISO 37001:2016 certification. Becoming certified in ISO 37001 enables the organisation to demonstrate that it has adequate procedures in place to detect and prevent bribery on a multi-national level. Additionally, such certification:

• Ensures that the organisation is implementing a viable anti-bribery management program utilising widely accepted controls and systems.
• You are minimising corruption and bribery lawsuit likelihood.
• Lessening the possible litigation penalty through demonstrating an effective and adequate compliance program
• Assures management, investors, business associates, personnel and other stakeholders that the organisation is actively pursuing internationally recognised and accepted processes to prevent bribery and corruption.
• Protects the organisation, its assets, shareholders and directors from the effects of bribery.
• Provides acceptable evidence to prosecutors or courts that the organisation has taken reasonable steps to prevent bribery and corruption.

Bribery continues to be a significant problem on a worldwide scale and conforming to an internationally recognised standard to combat the practice while promoting ethics in business will help organisations succeed in the ever-expanding global marketplace. Contact us today to learn more about safeguarding your organisation from the outside risks associated with multi-national business affiliations.

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CRI® Leads 2019 International Anti-Corruption Day

International Anti-Corruption Day is Monday, 9 December 2019. The campaign was started as a joint venture between the United Nations Development Programme (UNDP) and the United Nations Office on Drugs and Crime (UNODC), and now organisations around the world are united against corruption for this day every year.

United Against Corruption focuses on corruption as one of the biggest obstacles to achieving sustainable development goals. The abuse of entrusted power for private gain can cost people their freedom, health, life and future. Moreover, corruption affects every country, region, and community.

CRI® Group is a strong supporter of International Anti-Corruption Day and an advocate of preventing corruption on all levels. CRI® Group addresses the corruption problem with thought leadership pieces focused on bribery and corruption in various regions, including South Asia, the Middle East, and the United Kingdom. CRI® Group’s experts also published multiple informative articles worldwide to help educate business and industry leaders, government officials, corporate professionals and the public on topics ranging from corruption, due diligence and employee background investigations. These include CRI® Group’s primary research paper, “How Can Life Sciences Companies Prevent Bribery and Corruption? Is ISO 37001:2016 the Answer?” Zafar Anjum, Group Chief Executive Officer for CRI® Group, was featured in Financier Worldwide’s “Annual Review: Corporate fraud & corruption,” discussing the latest corruption risks and best practises for combating fraud in the Middle East and beyond.

This year, CRI® Group celebrated its 29^th anniversary as a global leader in compliance and risk management. The firm cultivates this leadership role in many ways, including hosting anti-fraud, anti-bribery and anti-corruption conferences and summits, and participating in other hosted events, around the world. These include CRI® Group’s own Anti-Bribery Anti-Corruption Summits n Islamabad, Karachi and Kuala Lumpur; and participation in the Malaysian Anti-Corruption Commission (MACC) Seminar Benchmark on Governance, Integrity & Anti-Corruption. At this year’s MACC Seminar, Mr. Anjum presented “Anti-Bribery Management System (ABMS 37001) Case Study and Implementation – UK Experience.” He provided an overview on ISO 37001 Anti-Bribery Management System Accreditation & Certification as an effective and “adequate procedure” for organisations in the region and beyond.

Join us for the ABMS training on 9th December

CRI® Group’s ABAC® Center of Excellence will be hosting an important seminar on Monday during International Anti-Corruption Day. The “Introductory Seminar on ISO 37001:2016 Anti-Bribery Management System” will provide insight on how to protect your business from bribery and corruption risks. Attendees will gain a greater understanding of the globalisation of bribery and corruption; learn case studies in bribery and corruption in the Middle East; understand the background of bribery; gain knowledge of ISO 37001 impact, requirements, training, and certification; and learn how to remain in compliance with ISO 37001. Register today.

Lead Auditor training in Pakistan

This year, ABAC® also presents “ISO 37001 Lead Auditor Training”. This intensive course helps attendees understand the operation of an Anti-bribery Management System based on ISO 37001 and its principal processes. It also focuses on the correlation between ISO 37001 and other standards and regulatory frameworks, and the auditor’s role in planning, leading and following-up on a management system audit in accordance with ISO 19011. Attendees learn to interpret the requirements of ISO 37001 in the context of an ABMS audit. The course also strengthens the personal skills necessary for an auditor to act with due professional care during an audit.

ABAC® has guided many clients through ISO 37001 training and certification. Some of the organisations that have successfully completed ISO 37001 certification include global transport company Apex Shipping, global investment firm Mubadala, and technology services company ISS Middle East FZC – just to name a few.

Interested in evaluating your corporate compliance program?

Let ABAC® experts conduct the Highest Ethical Business Assessment (HEBA) survey to evaluate your organisations’ current corporate compliance programs. It’s the best way to find out if your organisation’s compliance program is in the line with worldwide compliance, business ethics, anti-bribery and anti-corruption frameworks.

International Anti-Corruption Day is a great opportunity to participate in a HEBA survey. ABAC® experts will prepare a complimentary gap analysis of your organisation’s compliance program to evaluate if it meets “adequate procedures” requirements under the UK Bribery Act, DOJ’s Evaluation of Corporate Compliance Programs Guidance and Malaysian Anti-Corruption Commission.

Corruption is found in both rich and poor countries, and among organisations of all sizes and industries. It contributes to instability and poverty and is a dominant factor driving fragile countries towards state failure. On International Anti-Corruption Day, CRI Group stands ready to provide solutions to organisations that aim to reduce their risk and prevent more fraud and corruption. Additionally, ABAC® provides training and certification programs to help ensure continued best practices and prevention measures. These are the types of steps that make a real difference.

Awareness is the first step toward combating corruption – but it isn’t the only step. CRI® Group knows that taking concrete action to prevent bribery and corruption is essential in making a real difference. Contact us today and let us help you to fight bribery and corruption.

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Middle East corruption: how can ISO 37001 help?

Political and governmental unrest can affect a region’s economy and the integrity of business transactions. The current state of the Middle East exemplifies this phenomenon. While governments in the region are making efforts to curb corruption, political instability and regime changes often undermine these measures. Bad actors understand how to take advantage of such vulnerabilities, leading to increased bribery and corruption across international borders. Recent cases and statistics show that the problem persists in most countries in the region. Against this backdrop, most government officials and private sector business leaders view it as a high priority to reduce bribery and corruption. One of the problems, however, is that some dishonest politicians use supposed anti-corruption efforts as a tool against political enemies. This makes clear that the best approach is for government agencies and businesses themselves to lead from the front. By adopting an internationally recognised set of anti-bribery anti-corruption standards, increased business integrity will result. Organisations that are committed this effort are adopting the ISO 37001 – Anti-Bribery Management Systems standard as a comprehensive approach to mitigating bribery and corruption risk. ISO 37001 and its elements can be tailored to any type of organisation, of any size. The key elements include adopting an anti-bribery policy, appointing a person to oversee anti-bribery compliance, training, risk assessments and due diligence on projects and business associates. ISO 37001 also calls for implementing financial and commercial controls, and instituting reporting and investigation procedures.

Corruption a Major Challenge in the Middle East

The Middle East lags behind several other regions when it comes to bribery and corruption. Even as these elements are on a slight decrease globally, the Transparency International Corruption Perceptions Index shows the troubled state of the Middle East and North Africa. “The Corruption Perceptions Index 2018 presents a grim reality in the Middle East and Northern Africa where, despite some incremental progress by a select few, most countries are failing in the fight against corruption”. Syria, Yemen and Libya are at the bottom (worst) end of the list. There are some bright spots, though. United Arab Emirates (UAE) and Qatar, both countries that have taken strong stances on fraud and corruption, score the highest for the Middle East. Morocco and Egypt showed some improvement. Overall, however, the political instability in the region has created a tumultuous business environment. According to the article: “In many Arab governments, powerful individuals have actively influenced government policies and diverted public funds and state assets for their own self-interest and enrichment at the expense of citizens. This reduces anti-corruption efforts to merely ink on paper, where laws pass, but are rarely enforced or implemented.”

This is underscored by limits and obstacles that corruption throws up in the way of those looking to enact real change. “Across much of the developing world, the corruption of courts and other government institutions threatens the free flow of goods and capital that promotes economic growth. Left unaddressed, such threats can lead to heightened tensions among nations and even outright trade wars. Diplomats operate under constraints that limit how much they can call out international bad actors who violate the rule of law. That’s why the role of outside watchdogs is so important in promoting the Rule of Law and holding nations to the standards of fairness and impartiality they claim to meet,” writes National Review.

Iran: Power Structures Hamper Progress

One country that exemplifies the Middle East difficulties with corruption is Iran. The problem is described by one analyst as “deeply rooted,” and even recognised by the country’s conservative rulers. In such a political structure as Iran’s, a campaign to combat “systemic corruption” is often seen as the lens of political reprisals against rivals. “In autocratic systems, every now and then, a campaign emerges under the banner of fighting corruption. The main reason is to buy legitimacy for the system. During the last years of the rule of the former Shah of Iran, in an attempt to tame the revolution, such a campaign led to the arrest of several prominent political figures, including Amir-Abbas Hoveyda, who served for 13 years as prime minister”.

“While the same impetus could be behind the current move by Raisi, there is strong speculation in Iran that the move also, and more importantly, aims to shape a consensus within the country to accept Raisi’s giant leap towards assuming the leadership of the country after Khamenei’s death”.

While there has been some concern that the corruption crackdown is a cover for prosecuting reformers, some disagree – positing that it depends more on which party is leading the effort. “Corruption in Iran is linked to political power. Therefore, whichever of Iran’s two main political factions—fundamentalist or moderate-reformist—takes over the executive branch, corruption among the members of that faction increases. At the end of former President Mahmoud Ahmadinejad’s term in office, for instance, his first vice president, Mohammad-Reza Rahimi, and his Vice President for Executive Affairs, Hamid Baghaei, were imprisoned for economic corruption and embezzlement. Such corruption reached an all-time high during his tenure in office”. In any case, it’s clear that most observers aren’t convinced that the country’s anti-corruption campaign is to be taken at face-value – yet.

Bribery Cases Exposed in UAE

Two bribery cases demonstrate some common characteristics among such schemes. While both of these instances were uncovered (and prosecuted) in the UAE, they are likely typical for the Middle East region and beyond.

In 2018, an Emirates Post revenue officer was sentenced to prison after being convicted of attempted bribery. The officer solicited a Dh100,000 bribe from a corporate customer. He was in a unique position to attempt the crime, as his duties included collecting and auditing profits for the Emirates Post office in Dubai. The Jordanian revenue officer, 28, collected and audited profits, among other duties, on behalf of Emirates Post office in Dubai. The offender perpetrated the scheme by leveraging fines on a shipping company based in India for supposed postal fee violations. The alleged fine, according to the revenue officer, totaled Dh2.4 million, and he attempted to negotiate a scheme with the client to have the fine reduced to Dh400,000 – in exchange for the Dh100,000 bribe. Instead of paying, the client wisely contacted the police. In a sting operation, the client was fitted with a listening device, and met and paid the bribe – under coordination of the police. As a result, the revenue officer was arrested, and subsequently convicted.

In another case, two Asian residents of UAE were sentenced to three years and one year in jail for giving and accepting a bribe. They were also fined Dh5,000. One of the perpetrators was a government officer. The first defendant, a trader, offered a bribe of Dh900 to the government officer, who works as a customs clearance staff member with the Saqr Port in Ras Al Khaimah. The goal was to ship two containers full of scrap iron out of the UAE without paying taxes or undergoing an inspection. When they were caught, the trader who gave the bribe claimed that it was just a loan, and that he had already paid “over DH50,000 in taxes and charges”. The other defendant (the customs officer) agreed, but the court did not accept their explanation. Both defendants will be deported to their home countries after serving their prison sentences. These types of cases are typical among positions of access, and can happen in any jurisdiction. They exemplify the problem that government agencies and companies alike are trying to reduce and prevent.

‘Relationship Building’ v. Bribery

To some degree, the same problems that plague the Middle East are endemic around the world. Among them, the dilemma of misunderstanding in terms of what constitutes bribery. In nearly all cultures, relationship building is considered an essential part of doing business. Often, business associates consist of numerous friends or even family members. When that is the case, there can be a slippery scale in terms of what is merely a favor or a gift, versus what constitutes bribery or corruption. The Foreign Corrupt Practices Act (FCPA) can provide some guidelines here. A case involving Bank of New York Mellon is instructive. “On 18 August 2015, Bank of New York Mellon (“BNYM”) consented to a Securities and Exchange Commission (“SEC”) Order requiring BNYM to pay $14.8 million to settle charges that it violated the FCPA by providing student internships to family members of foreign government officials affiliated with a Middle Eastern Sovereign Wealth Fund (“SWF”). All parties involved, except BNYM, have been anonymised in the Order so that the nationality of the foreign public officials and the SWF is publicly unknown beyond being described as ‘Middle Eastern’.

“The BNYM internships were given to three people: the son and nephew of one key figure of the SWF and the son of another. The internships were given despite the facts that the interns did not meet the rigorous selection criteria usually applied by BNYM and did not go through the standard (or any) recruitment process before being awarded the internships. In addition, these internships were found by the SEC to be more valuable than those offered to the regular applicants, who had endured the competitive admissions process against strict entry requirements. For example, rotation between business units was arranged, which is not an opportunity afforded to regular interns.”

“Emails between BNYM employees clearly demonstrate that the motivation behind the favour to the foreign officials was to influence the latter’s decision-making in the interests of BNYM. There can be no doubt that this was bribery in action – the BNYM employees expected to retain and gain business from the foreign officials in return for offering their relatives valuable internships to which they would not otherwise have had access”.

The case clearly describes what could be considered a “gray area” compared to some of the more extreme realities of bribery and corruption. One study of the Middle East and North Africa in 2016 suggested that people felt the need to bribe officials for basic services. “About 30 percent of those polled said that they had to access basic public services by bribing officials. If that figure holds across the entire MENA region, that would mean that about 50 million people, the majority of whom are poor, feel they must pay bribes in order to have access to basic public services. In five countries, the rich reported being far less likely to have to pay a bribe: 63 percent of poor Sudanese citizens versus 38 percent of wealthy ones, for example, and 23 percent versus 12 percent, respectively, in Algeria”.

ISO 37001:2016 to Combat Bribery & Corruption

Corruption certainly isn’t exclusively a Middle Eastern problem. Organisations around the world are taking action to reduce risk. They’ve found the structure and process they need in ISO 37001. ISO 37001 was issued by the International Organization for Standardization (ISO) in 2016 to help organisations worldwide increase and measure their efforts against bribery and corruption. Through ISO 37001 ABMS, organisations can implement standards at every level. These measures include adopting an anti-bribery policy and appointing a person to oversee anti-bribery compliance, training, risk assessments and due diligence on projects and business associates. It’s also critical that the organisation implement financial and commercial controls, along with reporting procedures and investigation processes.

CRI Group founded ABAC® (Anti-Bribery and Anti-Corruption) Center of Excellence to help organisations of all types and industries implement ISO 37001 certification and/or training. ABAC® has a team of experts around the world that include certified ethics and compliance professionals, financial and corporate investigators, forensic analysts, certified fraud examiners, qualified auditors, and accountants. They are trained and experienced in the implementation of ISO 37001’s key elements, helping clients more effectively prevent bribery and corruption. ABAC Certification is an accredited provider of ISO 37001 ABMS, and it provides certification and training for organisations of various types and industries.

There are requirements and guidance that the ISO 37001 standard prescribes for a comprehensive anti-bribery management system. The following bribery elements are addressed by ISO 37001 in relation to the organisation’s business processes and activities:

• Bribery in the public, private and not-for-profit sectors
• Bribery by the organisation
• Bribery by the organisation’s personnel acting on the organisation’s behalf or for its benefit
• Bribery by the organisation’s business associates acting on the organisation’s behalf or for its benefit
• Bribery of the organisation
• Bribery of the organisation’s personnel in relation to the organisation’s activities
• Bribery of the organisation’s business associates in relation to the organisation’s activities
• Direct and indirect bribery (e.g. a bribe offered or accepted through or by a third party)

Government organisations and companies can reduce the risk of bribery through ISO 37001’s best practices for anti-bribery and anti-corruption. The following are just a few of the ways ISO 37001 helps accomplish this goal:

• Provide needed tools to prevent bribery and mitigate related risks
• Help an organisation create new and better business partnerships with entities that recognise ISO 37001 certified status, including supply chain manufacturing, joint ventures, pending acquisitions and co-marketing alliances
• Potentially reduce corporate insurance premiums
• Provide customers, stakeholders, employees and partners with confidence in the entity’s business operations and ethics
• Provide a competitive edge over non-certified organisations the organisation’s industry or niche
• Provide acceptable evidence to prosecutors or courts that the organisation has taken reasonable steps to prevent bribery and corruption

It is important to note that “Conformity with (ISO 37001) cannot provide assurance that no bribery has occurred or will occur in relation to the organisation, as it is not possible to completely eliminate the risk of bribery”, according to ISO.  The certification is potentially an important piece of evidence, however, that shows regulators, prosecutors, and the courts that the organisation has taken meaningful action to prevent bribery and corruption.

Conclusion

All is not lost. Some Middle Eastern countries, like the United Arab Emirates, have made a commitment and continue to demonstrate positive strides toward combating corruption. UAE has expanded its laws, broadened the definitions of what is considered bribery and corruption, and increased punishments. But the country is largely an outlier in a region that is struggling under the weight of instability and corruption.

In this type of environment, both government organisations and the businesses they serve (and regulate) need ISO 37001. The sooner organisations implement the comprehensive measures prescribed by ISO 37001, the calmer the seas will be for international trade, business agreements and mergers, acquisitions and other positive elements of economic growth.

An established standard like ISO 37001 ABMS can help organisations address bribery and corruption through implementing best practices in a program of training and certification. While following the curriculum, the training process can easily be tailored to the organisation based on its size, type, industry or risk level. Bribery and corruption are pervasive problems that won’t be solved overnight. It will take a concerted effort by all major players in the region to make positive strides and reduce risk factors. ISO 37001 provides a blueprint for making those changes. Twenty or thirty years ago, organisations were mostly on their own went it came to developing an anti-corruption strategy. Today, there is a tried-and-true path forward. Committing to it is the first step toward making real progress in the Middle East.

Sources

1. “Middle East & North Africa: Corruption Continues As Institutions And Political Rights Weaken,” Transparency International, 29 Jan. 2019,

< https://www.transparency.org/news/feature/regional-analysis-MENA> (accessed 25 Oct. 2019)

2. John Fund, “Cleaning Up Corruption Is a Key to Middle East Stability,” National Review, 23 October 2019,

<https://www.nationalreview.com/corner/cleaning-up-corruption-is-a-key-to-middle-east-stability/> (accessed 25 Oct. 2019)  OECD, The rationale for fighting corruption. 2014

3. Shahir Shahidsaless, “Iran’s conservatives are saying it: Corruption is ‘systemic’”, Middle East Eye, 7 Oct. 2019,

<https://www.middleeasteye.net/opinion/whats-behind-irans-crackdown-corruption> (accessed 25 Oct. 2019)

4. Jalil Bayat, “Iran’s Goals In The Fight Against Economic Corruption,” Lobe Log, 18 Oct. 2019,

<https://lobelog.com/irans-goals-in-the-fight-against-economic-corruption/> (accessed 25 Oct. 2019)

5. Salam Al Amir, “Emirates Post worker jailed for seeking Dh100k bribe from customer”, The National, 31 Oct. 2018,

< https://www.thenational.ae/uae/emirates-post-worker-jailed-for-seeking-dh100k-bribe-from-customer-1.786526> (accessed 10 Nov. 2019)

6. Ahmed Sheeban, “Government officer jailed for accepting Dh900 bribe in UAE”, Khaleej Times, 13 April 2019,

< https://www.khaleejtimes.com/nation/ras-al-khaimah/government-officer-jailed-for-accepting-dh900-bribe-in-uae> (accessed 10 Nov. 2019)

7. Andrew Hudson, “Middle East meets West: Where is the line between relationship-building and bribery?,” Al Tamimi 7 Co., September 2015,

< https://www.tamimi.com/law-update-articles/middle-east-meets-west-where-is-the-line-between-relationship-building-and-bribery/> (accessed 25 Oct. 2019)

8. Ben Thompson, “Bribery worsening in the Middle East and North Africa, citizens say,” CSM, 3 May 2016,

< https://www.csmonitor.com/World/Global-News/2016/0503/Bribery-worsening-in-the-Middle-East-and-North-Africa-citizens-say> (accessed 25 Oct. 2019)

9. “ISO 37001:2016 ANTI-BRIBERY MANAGEMENT SYSTEMS — REQUIREMENTS WITH GUIDANCE FOR USE”, www.ISO.org,

< https://www.iso.org/standard/65034.html > (accessed 5 Aug. 2019)

10. Adam Vause, Zara Merali, “The UAE’s fight against bribery and corruption,” DLA Piper, 16 July 2019,

< https://www.dlapiper.com/en/dubai/insights/publications/2019/07/the-uaes-fight-against-bribery-and-corruption/> (accessed 25 Oct. 2019)

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25 Benefits of ISO 37001:2016 ABMS Certification

How to fight bribery and corruption?

Bribery and corruption are a dent on the image of any company. It is an unwanted and unsightly reflection that can be not only be mitigated but prevented in the organisation. The negative representation might result in a loss of trust among customers, affiliates and business patrons. In addition, the lack of internal anti-bribery controls and procedures has been one of the key reasons for deficiency in productivity inside global organisations. ISO 37001 ABMS

To combat these adverse effects, a strong standard is needed where governance, risk management and compliance (GRC) procedures are at the heart of the system. ISO launched ISO 37001:2016 ABMS standard – a global benchmark in the Anti-Bribery Management System (ABMS) which detects, protects and addresses the issues of bribery and corruption in the corporation. It is an assurance of employing the highest ethical standards and harnessing transparency even in the most complex business activities.

What is ISO 37001:2016 ABMS certification?

ISO 37001:2016 ABMS certification demonstrates organisation’s commitment to upholding the best practices in the corporate world. Being a framework that measures, identifies and controls the level of transparent commercial performance combined with international guidelines, it is applicable for all kinds, sizes and natures of organisations By adopting the ISO 37001:2016 ABMS certification, companies, subsidiaries and other affiliates are able to shield themselves from the dent that can tarnish their reputation and decrease their proficiency in the industry.

Through the implementation of ISO 37001:2016 certification, your organisation can cultivate a better anti-bribery and ethics culture along with the trust within the establishment. By adopting the ISO 37001:2016 certification, organisations will be able to combine the GRC strategies with the ISO system across all departmental units in a transparent and operative manner. Built with a set of globally accepted requirements, the ISO 37001:2016 certification is compliant with global, regional and local anti-bribery regulations worldwide, which increases the multi-level integrity of the association.

What are the benefits of ISO 37001:2016 ABMS Certification?

ISO 37001:2016 ABMS certification includes audit assessment procedures, to utilise the application and maintenance of a robust anti-bribery program. Being an all-encompassing standard that is integrated with other management systems, the ISO 37001:2016 ABMS certification provides several benefits:

• Competitive advantage over other organisations
• Greater awareness on the output of bribery
• Enhanced aptitude for the prevention of corruption
• Expansion of business opportunities
• Continual improvement of services and products
• Enhancement of the organisation’s reputation
• Facilitation of efficient management operations
• Apt demonstration of legal compliance and assurance
• Reduction in structural and miscellaneous costs
• Escalation of organisational assets
• Better implementation of compliance programs
• Precise execution of significant measures
• Increase in business efficiency and effectivity
• Superior trust and transparency
• Reduction of malpractice and other hazards
• Protection of resources and other capitals
• Easy integration to existing management systems
• Appropriate utilisation as a due diligence evidence
• Accurate evaluation of organisation’s position
• Recognition and deterrence of immediate threats
• Placement of adequate procedures to combat risks
• Timely observation and development of controls
• Execution of feasible anti-bribery procedures
• Practice of internationally recognised processes
• Establishment of ethical global practices

How can your organisation attain ISO 37001: 2016 ABMS certification?

With the list of returns that ISO 37001:2016 ABMS certification holds, its value is undeniable. The cost and benefits of not adopting a viable Anti-Bribery Management System are far greater than the cost of its implementation. Dedicate your time, energy and capital towards your organisation’s growth and progress. By engaging with a qualified, trained and independent third-party certification body, your company is securing its future against losses and gaining a surplus of rewards. The Anti-Bribery Anti-Corruption (ABAC®) Center of Excellence is looking forward to connecting with you and steering your organisation towards the espousal of ISO 37001:2016 ABMS certification. Provide your company with the credibility to go beyond and reach its envisioned destination. For more information, please feel free to contact our team and visit our website www.ABACgroup.com.

Who is CRI Group?

Based in London, CRI Group works with companies across the Americas, Europe, Africa, Middle East and Asia-Pacific as a one-stop international Risk Management, Employee Background Screening, Business Intelligence, Due Diligence, Compliance Solutions and other professional Investigative Research solutions provider. We have the largest proprietary network of background-screening analysts and investigators across the Middle East and Asia. Our global presence ensures that no matter how international your operations are we have the network needed to provide you with all you need, wherever you happen to be. CRI Group also holds BS 102000:2013 and BS 7858:2012 Certifications, is an HRO certified provider and partner with Oracle.

In 2016, CRI Group launched Anti-Bribery Anti-Corruption (ABAC®) Center of Excellence – an independent certification body established for ISO 37001:2016 Anti-Bribery Management Systems, ISO 37301 Compliance Management Systems and ISO 31000:2018 Risk Management, providing training and certification. ABAC® operates through its global network of certified ethics and compliance professionals, qualified auditors and other certified professionals. As a result, CRI Group’s global team of certified fraud examiners work as a discreet white-labelled supplier to some of the world’s largest organisations. Contact ABAC® for more on ISO Certification and training.

Filed under: Anti-Bribery Anti-Corruption Solution, Compliance Solution, ISO 37001, Resources by admin
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