Corruption causes high financial damage to companies every year. In addition, there is regularly a considerable loss of reputation for the institution concerned. The topics of preventing and fighting corruption have therefore been in talks for years.
More and more frequently, companies are not only faced with the question of what to do if corrupt activities have already taken place. Rather, it is of central importance what can and must be done to protect the company adequately and preventively (in the future).
This applies given some rules, according to which it is important to assess whether the company has installed an efficient compliance management system. Optimization of corresponding regulations after the discovery of a corruption offense can also be considered when assessing the fine.
Corruption prevention: Definition and importance
That corruption can lead to significant penal sanctions is nothing new. The same applies to the obligation of company management to take those supervisory measures that are suitable, necessary, and reasonable to prevent criminal offenses originating from within the company.
For example, the board of directors of a stock corporation has to set up a monitoring system that recognizes developments that endanger the continued existence of the company at an early stage and prevents subsequent liability of the legal entity.
However, how an effective and sufficient organization must be designed in detail cannot be found. Finally, the reason for this may be that corruption is a very broad term, which includes a wide variety of cases of abuse of entrusted power in the professional environment for one’s private benefit or the benefit of a third party, for example, the employer.
Corruption prevention in companies – also through anti-corruption guidelines
Regardless of the legal requirements that have not been fully clarified, the core elements of an adequate compliance organization have emerged.
The starting point and basis of every implementation of new compliance systems and their appropriateness is the so-called risk analysis. Because the scope, content, and necessary resources of an adequate compliance organization cannot be defined in absolute terms, but depend on the individual risk situation of the company concerned.
The core elements of a functioning compliance system include internal corruption guidelines, which define a company-wide code of conduct and corresponding control mechanisms. There are also guidelines for setting up the compliance department, performing forensic accounting, and setting up whistleblower hotlines.
Corruption prevention through training
Another important building block is employee training. There is no legal standard that obliges companies to carry out such corruption training. Nevertheless, such training courses are a suitable measure for controlling and monitoring compliance risk.
The USA is already a step ahead in this regard. A company convicted of corruption can hope for significant reductions in penalties if it can demonstrate an effective compliance program in which employee training is a key element. The UK Bribery Act even recognizes a lack of compliance measures as a separate reason for liability, and here too employee training is explicitly mentioned as a preventive measure.
This content is meant for information only and should not be considered as an advice or legal opinion, or otherwise. AKGVG & Associates does not intend to advertise its services through this.