One of the things compliance professionals must understand is that risks change. This means you must not only stay on top of the changing business risks within your company but also the risks in specific countries that evolve due to the political landscape.
While many feel this is the Trump Risk in action, The Man From FCPA is focused more on the geopolitical risks for countries outside the United States. It is all the more impactful when this change comes from the democratic process.
Two of the most recent examples come from South Africa and Malaysia. Both countries have significant U.S. investment and are seen as key American allies in their geographic regions. Both are also going through a domestic upheaval due to the effects of bribery and corruption.
For South Africa it was the corrupt Zuma regime, which was changed when the African National Congress persuaded President Zuma to resign and he was replaced by Cyril Ramaphosa. Ramaphosa has moved to end the corruption engaged in by Zuma associates, the Gupta family, who had run wild in the country, engaging in one of the largest instances of state capture recently seen.
In Malaysia it has been through the election of new Prime Minister, Dr. Mahathir Mohamad who succeeded the prior Prime Minister Rajib Nazar. In Malaysia, the scandal was around the country’s sovereign wealth fund 1MDB and its looting by Nazar, his friends, family, and cronies.
Yet the problem for U.S. companies in both countries is the same. If they have done business with the government or with the countries’ state-owned enterprises, there is the chance one of the corrupt facilitators in the country may have paid bribes to garner business.
All of this means that every U.S. company that did business in those countries needs to scrub their own business operations. It should begin with a full forensic review of the entire process for every contract, to make sure all controls in place were met and not over-ridden. Companies should also review all third-party agents utilized to see if they had any obvious contacts with the corrupt individuals known at this point. All sales payments and rebates need to be reviewed to see if bribes were facilitated.
Corruption risks can change. As a compliance officer you need to be aware of not only the surroundings inside your organization but those outside it as well.