Perception is reality, as Andre Agassi was fond of saying in the 1990s. Recently three areas caught the attention of The Man From FCPA as very large changes in the way that corporations understand the public’s perception of them. The first is in the area of tax avoidance. Of all the many things the Apple tax imbroglio in Europe and Ireland has demonstrated is many businesses have changed their views on tax avoidance, to be more compliant because many companies fear that legal tax planning may well damage their brand and their reputation.
In Sweden, the cross-holding positions of one of the country’s largest business empires Industrivärden which owned up to 10 entities in several industries was brought to an abrupt end by a travel scandal, where corporate jets were provided to the wives, girlfriends, and families of corporate executives, who all reviewed and approved each other’s travel statements. Yet this cozy relationship was not simply about nefarious travel, as these companies tended to be underperforming financially and the other shareholders finally took action.
The third is the arena of terrorism where recently U.S. Secretary of State John Kerry made the explicit connection between corruption and terrorism. Simply put, where the economic winners are determined by corruption and there is no hope of financial success, there often follows corruption. Secretary of State Kerry went on to say that the United States will increase its efforts to fight corruption across the globe and will encourage other countries to do so as well.
These seemingly unrelated events point to the ever-increasing importance of compliance programs and the compliance profession for companies to navigate the ever daunting world of social media and business. The compliance profession is the corporate discipline most often charged with stopping actions, which while legal, damage a company’s brand and reputation. Whether it be obtaining a 0.005 tax rate in a jurisdiction which has nothing to do with your core business, jetting your wives, families and WAGS around on the corporate jet; these actions while legal, have very negative optics. Finally when the US Secretary of State encourages not only the US but the world to increase anti-corruption enforcement to combat corruption, one can only anticipate greater FCPA enforcement going forward.
Continue the conversation at Compliance Week Europe: 7-8 November at the Crowne Plaza Brussels. Join us as we look at changes in global anti-corruption regulations, slave labor risks in your supply chain, and how to detect fraud, to name just a few topics. Learn more
No comments yet