Dear Governments: Please Don’t Make Private Certification the Touchstone of an Adequate Anti-Bribery Program!!!

A little while back, I posted a couple of critical commentaries (here and here) about the efforts underway to develop an International Organization for Standardization (ISO) standard for corporate anti-bribery programs (ISO 37001), modeled on the already-existing UK standard developed by the British Standard Institute (BS 10500). (For those unfamiliar with these organizations or what they do, these standards are developed by a private consortium, and then private firms conduct–for a fee–audits of companies and provide a “certification” that the company is in compliance with the standard. These standards in the past have dealt with technical or quality control issues — the proposed anti-bribery standard is, to the best of my knowledge, the first ISO standard to deal with a legal issue of this type.) Without rehashing my earlier posts here, I raised questions both about how these certifications were supposed to work in practice, and about what they were for. I raised but dismissed the possibility that law enforcement might treat ISO/BS certification as an adequate indicator that a firm had a satisfactory compliance program (or that absence of ISO/BS certification as an indicator the compliance program was inadequate). I dismissed the possibility because lots of people (including those who work in the compliance certification business and those involved with the development of the ISO standard), assured me that such certification was not intended to have that kind of dispositive legal significance (even if it might be relevant to the law enforcement agency’s inquiry).

I would have left the matter there, and probably not written about it again, but for some remarks at last December’s World Bank International Corruption Hunters Alliance meeting. On a panel about “Fighting Transnational Bribery,” Detective Inspector Roger Cook, with the Operations area in the City of London Police’s Economic Crime Directorate, spoke with great enthusiasm about BS 10500, the model for the proposed ISO 37001. (This is perhaps unsurprising given that, as I just learned from his City of London police bio, he “contributed to the development and implementation of … BS 10500 and the developing ISO 37001.”) I don’t have a transcript or a video, nor am I a trained stenographer, but I tried to copy down Detective Inspector Cook’s remarks on this topic as close to verbatim as possible, and they went (according to my notes) more or less like this:

[If you’re a company, the BS 10500 standard] is going to give you a lot of comfort. Simply by getting accredited, then you have those adequate procedures that the UK Bribery Act requires companies to have [(that is, to satisfy the affirmative defense to the strict liability offense of failure to prevent foreign bribery)]. If the company has BS 10500 [certification], we’re not going to look much further, as long as they’re applying it properly. And an ISO standard [ISO 37001] is also in the works, about 18 months away. Think how good that would be, if every company going for a public contract were accredited. [We should] make that [certification] a condition for public contracts.

Now, Detective Inspector Cook was speaking in his personal capacity, not on behalf of the City of London Police or the British government. And he is not affiliated with the Serious Fraud Office (SFO), which has principal responsibility for bringing enforcement actions under the UK Bribery Act. But I nonetheless found these remarks quite troubling, so perhaps it’s worth restating the reasons why private anti-bribery certification or accreditation, according to something like the proposed ISO standard, should not be considered necessary or sufficient to establish the compliance defense under the UK Bribery Act, and should not be considered necessary or sufficient to engage in government contracting. Continue reading

More on Compliance Program Certification/Verification: The Proposed ISO Standard

My last post, inspired by Transparency International USA’s recent publication of a report on verifying the effectiveness of corporate anti-bribery programs, talked a bit about the emergence of a set of private firms that provide “certifications” for such programs. I expressed some skepticism about the value of these certification services. Some of my concerns — also expressed in the TI-USA report — had to do the opacity and apparent inconsistency in the methodology that certification firms employ. One possible response to this concern might be to develop an “official” international standard for anti-bribery compliance, and to provide certification that firms meet that standard.

Such an effort is already underway, through an organization called the International Organization for Standardization (ISO), a consortium of national (generally private) standard-setting bodies in 163 different countries. Traditionally, the ISO promulgates international standards with respect to quality control, safety, and technical compatibility. External auditing firms then provide certifications that a firm meets the ISO standard(s) in the relevant areas. The ISO is now already in the process of developing an ISO standard (ISO 37001) for anti-bribery programs — which would be the first ISO standard to deal with a topic like bribery. The draft standard is supposed to be available for public comment by 2015.

Before proceeding further, I should disclose that I’ve been involved — very marginally — in the U.S. Technical Assistance Group that’s supposed to provide commentary on this developing standard. (Basically, I’ve listened in on a few phone calls and seen a few documents circulated to the group.) So I need to be careful what I say on this subject, so as not to disclose anything confidential. I actually think there’s little risk of that, because what I really want to do in this post is not to focus on specific features of the proposed standard, but rather to raise questions about the whole enterprise. The more I think about it, the less justification I can imagine for promulgating an international standard like this. Indeed, it strikes me as entirely the wrong way to go about promoting the very worthy cause of improved corporate anti-bribery compliance programs.

Continue reading