Part 1 of this post lists 21 countries plus the Canadian province of Quebec that have taken measures to get corporations to join the fight against corruption. Thanks to a bad case of jet lag, the post’s author ran out of steam before explaining what he meant by a company’s “joining the fight” or how countries got them to join it. Herewith an explanation of both along with my apologies to readers puzzled by part 1.
To begin, a table summarizing the laws to which part 1 referred along with summaries of bills pending in the Irish and Vietnamese legislatures appears here: National Compliance Rules. (Thanks to readers who caught errors in the part 1 list; similar scrutiny of the table solicited.)
As the table shows, the laws referenced require — or provide incentives for — companies under their jurisdiction to prevent their employees from paying bribes or engaging in other forms of corrupt conduct. Some laws prescribe in detail the elements such an anticorruption compliance program should contain; others leave it to regulations or the courts to decide what companies must do. With the October 2016 publication of ISO 37001 setting standards for corporate antibribery programs, most authorities will likely converge around the elements it recommends. The recommendations are sensible and quite consciously track the experience of those countries that required corporate compliance programs, especially the United States, where guidelines on what constitutes an “effective” compliance program, drafted to help courts when deciding the culpability of corporations for the corrupt acts of employees and agents, have been in force since 2004.
Where national corporate compliance laws differ is in how countries “encourage” companies subject to their laws to institute a compliance program. The table reveals several approaches.
- Mandatory. Eight jurisdictions require some or all companies subject to their laws to have a corporate compliance program: Colombia, France, Quebec, the Republic of Korea, Russia, Tanzania, Ukraine, and the United States. If the Vietnamese legislation passes, it would be the ninth. The eight that mandate a compliance program split down the middle on the provision’s reach. The requirement in Quebec, Tanzania, Ukraine, and the United States extends only to companies seeking or holding a public contract; in Tanzania, the requirement applies to procurement contracts of any size; in the others only to those above certain thresholds. The other four – Colombia, France, Russia, and the Republic of Korea plus Vietnam if the National Assembly approves the pending bill, mandate that all companies have a compliance program period.
- Absolute Defense. In ten jurisdictions, and eleven if the Irish government’s bill is approved, governments provide corporations a powerful incentive to adopt a corporate compliance program by shielding those that do from liability for the corrupt acts of those who act on its behalf. Chile appears to have pioneered this approach. Under article 3 of law 20.393, promulgated in 2009, a firm is criminally responsible for employee bribery if it failed to provide the employee adequate direction and supervision (“incumplimiento … de los deberes de dirección y supervision”). Article 3 contains an absolute defense to this criminal liability, however, if, prior to the bribery, the corporation had adopted and implemented a compliance program containing the elements spelled out in article 4. (“Se considerará que los deberes de dirección y supervisión se han cumplido cuando, con anterioridad a la comisión del delito, la persona jurídica hubiere adoptado e implementado modelos de organización, administración y supervisión para prevenir delitos como el cometido, conforme a lo dispuesto en el artículo siguiente.”)
- Leniency Considerations. Five countries – Brazil, Italy, Mexico, Switzerland, and the United States – provide corporations with a somewhat weaker incentive to implement a compliance program than those that five those with a program an absolute defense to criminal liability. In these five, courts are directed to consider the existence of a compliance program either i) when determining a firm’s liability for employee or agent’s criminal acts or ii) when assessing a fine or other penalty for these acts. A 2001 Italian legislative decree appears to be the first law of this type. Italian courts may excuse a corporation from responsibility for the criminal conduct of its agents if it had “a well-tailored” compliance program in place. Better known is “Sentencing of Organizations, chapter Eight of the U.S. Sentencing Guidelines. First promulgated in 2004, it recommends that when levying a fine or other penalty on a company for the actions of its employees or agents the court consider whether, in the language of current section 8B2.1 of the guidelines, it had “an effective compliance and ethics program.”
It is worth noting that the U.S. is the only jurisdiction with both a mandatory compliance law (for companies awarded a federal procurement contract valued at more than $5 million and requiring more than 120 days to perform) and, with the sentencing guidelines, leniency provisions applicable to any company subject to American federal criminal law. Some might conclude that the U.S. has gone overboard. Or that it has more corrupt firms than elsewhere. Or that it has fewer public resources to devote to the fight against corruption than other nations. Or perhaps its policymakers have realized that the more ways to enlist corporations in the fight against corruption, the better.