What are the two most regarded international legislative provisions that offer “adequate procedures”
The Most Powerful Tool an Organization Can Use to Demonstrate “Adequate Procedures” as an Effective Bribery Defense and Deterrent Strategy.
As the international outcry against bribery and corruption practices tightens its grip around rogue players in the private and public business sectors, global organizations continue to ramp up their efforts to develop effective frameworks to prevent, detect and report bribery and corruption. And by fortifying their anti-bribery management systems, such organizations are further helping their cause as such systems can play a pivotal role in establishing “adequate procedures” as a compliance defence in a bribery accusation.
“Adequate procedures” is a term made popular through the U.K. Bribery Act of 2010 poses the potential of a company avoiding liability for failing to prevent bribery if that organization can demonstrate sound and established policies and procedures that deter individuals (inside and outside of the organization) from partaking in questionable or corrupt conduct.
However, a key challenge is that “adequate procedures” often carry their unique definition depending on what country or jurisdiction one may reside. Further, most enforcement agencies and government authorities offer little guidance that pinpoints what “adequate procedures” means when considered a possible defence in a legal proceeding.
Let’s take a look at the two most regarded international legislative provisions that offer “adequate procedures” as a possible legal defence consideration and learn how a new international standard is beginning to gain a foothold in offering multi-national organizations specific guidelines in developing a globally accepted anti-bribery management system that may support most “adequate procedures” defences.
U.K. Bribery Act of 2010
Under the U.K. Bribery Act, an “adequate procedures” defence would be considered during an investigation into a corporate failure to prevent bribery. The Act provides commercial organizations with a defence to liability when commercial organizations can prove and demonstrate that they had proper procedures designed to prevent persons associated with them from undertaking bribery-related conduct.
Consequently, corporations that are otherwise liable for violating the corporate failure to prevent bribery provision can escape criminal liability from the provision if they can prove that they had “adequate procedures” to prevent the relevant illegal conduct from occurring. This defence is unique in that it contends that corporations are acting in good faith and taking proper precautions throughout the organization to implement adequate compliance procedures and avoid being held criminally accountable for the failure to prevent bribery. This defence is significant because there is no such defence under the FCPA (see below) or most other foreign anti-bribery laws.
FCPA (U.S. Dept. of Justice)
While corporate compliance procedures are not considered in the liability phase of the FCPA, they are taken into account during the sentencing phase by the U.S. D.O.J. is relevant to the FCPA. The United States Sentencing Commission outlines through its Federal Sentencing Guideline Manual six factors — four aggravating and two mitigating — that a sentencing court must consider in determining the appropriate penalty on organizations convicted under the FCPA. The existence of an effective compliance program is one of the two mitigating factors. Subsequently, an organization convicted of FCPA violations can use the existence of an effective compliance program to reduce a penalty against it potentially.
Demonstrating “Adequate Procedures” through ISO 37001 Certification
ISO 37001 Anti-Bribery Management System is an internationally accepted standard that specifies the procedures an organization should implement to prevent bribery while detecting and reporting any bribery incident.
The standard requires organizations to implement these procedures on a reasonable and proportionate basis according to the type and size of the organization and the nature and extent of bribery risks faced. It applies to small, medium and large organizations in the public and private sectors and can be implemented in any country. Though it will not provide absolute assurance that bribery will completely cease, the standard can help establish that the organization has in place reasonable, proportionate and adequate anti-bribery procedures.
To achieve ISO 37001 certification, an accredited, third-party Conformity Assessment Body first undertakes a bribery risk assessment and audit for the scope of the standard. The audit methodology is evidence-based, meaning any issues raised will be confirmed by adequate evidence that the auditor discovered during the audit.
Auditing techniques take a risk-based approach to examining the organization’s Anti-Bribery Management System (ABMS). The auditor will increase the scale of the investigation if they determine that a specific process presents a higher risk side. Factors such as Impact, Negligence, Minor, Major, and Critical are considered during the audit.
A separate audit method is a process-based approach where the auditor examines the organization’s processes while considering the interaction between those processes. Finally, there is a sampling-based audit approach. The auditor incorporates an appropriate sampling plan utilizing samples from different ABMS. processes to conclude and support the audit findings and results.
The audit is extremely thorough in its approach, which results in accredited certification for the scope of the ISO 37001 Anti-Bribery Management System. Because of the standard’s international acceptance and the thoroughness of the audit process, such certification can provide a valuable safeguard in demonstrating an “adequate procedures” compliance defence in cases posing a liability for a company’s failure to prevent bribery. Indeed, from an FCPA perspective, certification may provide tangible evidence that a compliance program was in place at the time of the alleged bribery actions. And from a U.K. Bribery Act perspective, the certification could provide the company with tangible prima facie (or “first look”) evidence presented by an accredited certification body attesting to the establishment and effectiveness of the organization’s compliance program.
Perhaps someday shortly, international standards will be set whereby the availability of a globally recognized “adequate procedures” definition will act as an acceptable “insurance policy” for corporations entangled in corruption litigation. But for now, the most powerful “insurance” tool that public and private sector organizations can use in their defence strategy is ISO 37001 ABMS certification.
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Anti-Bribery Anti-Corruption (ABAC®) Center of Excellence is an independent certification body that provides education and certification services for individuals and organisations on a wide range of disciplines and ISO standards, including:
- ISO 31000:2018 Risk Management- Guidelines;
- ISO 37000:2021 Governance of Organisations;
- ISO 37002:2021 Whistleblowing Management System;
- ISO 37301:2021 (formerly ISO 19600) Compliance Management system (CMS); and
- ISO 37001:2016 Anti-Bribery Management Systems ABMS.
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ABAC® is accredited by the United Kingdom Accreditation Service (UKAS CB number: 10613) against ISO/IEC 17021-1:2015 Conformity assessment — Requirements for bodies providing audit and Certification of the scheme’s management systems of ISO 37001:2016 Anti-Bribery Management Systems (ABMS). This makes ABAC® Certification the leading accreditated certification body specialising in global anti-bribery and anti-corruption, risk and compliance management system standards. ABAC® experts audit any existing compliance and anti-bribery anti-corruption management systems to assess effectiveness and vulnerabilities while ensuring your organisation complies with Internal Standards, FCPA, UK Bribery Act, Anti-Money Laundering regulations, and all other global, regional and local regulations while maintaining a competitive edge in the world marketplace.
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