June 2017 - Kinstellar is honoured to have been part of this year’s IBA Anti-Corruption Conference, supported by the Organisation for Economic Co-operation and Development (OECD), which took place in Paris on 13–14 June.
Jitka Logesova, Partner and head of our firm-wide Compliance, Risk and Sensitive Investigations practice, and Vice-Chair of the IBA’s Anti-Corruption committee, was part of the panel addressing ‘Bribery dynamics in the boardroom: How a company responds to bribery and corruption’. In the context of their role in setting strategies and managing risks, boards of directors are increasingly expected to ensure that their companies minimise the risk of incurring criminal violations and appropriately react to such occurrences.
We can observe, in certain parts of the world, an increased calling for personal accountability of management as well as key officers for corporate misconduct, rather than putting the blame solely on companies or their regular employees. This is true mainly for companies falling under the scope of the US Foreign Corrupt Practices Act (FCPA). According to some recent studies, US executives are reporting fewer instances of alleged bribery and corruption than their global counterparts. US-based organisations tend to be “first movers” in the anti-corruption compliance space, which is also due to the strict FCPA regulations. Other countries are following the US by creating similar regulations or enhancing previously dormant anti-corruption laws and following through with more robust enforcement. Shifting focus to personal accountability for wrong-doings can be, in good part, attributed to the Yates memo (issued in 2015 by then US Deputy Attorney General Sally Yates), which sets out guidelines for Justice Department officials investigating alleged FCPA infractions. Executive should also understand that the Yates memo sets expectations not only for prosecutors but also for companies, which are required to fully investigate and report individual misconduct in order to receive cooperation credit. The message is clear here: management is no longer shielded by the corporate entity, and plausible deniability is no longer a viable defence from bribery.
In CEE, however, the situation is different. The concept of corporate criminal liability for wrong-doing is still relatively young and companies are in the process of learning – firstly, how to prevent bribery (as they can be held criminally liable for corruption crimes committed by their executives, employees and third parties) by implementing compliance systems, as well as how to react to actual situations where their executives committed a bribery offense. It is still apparent that companies tend to settle with their management instead of bringing the case to the authorities, which is not often the case if the offense is committed by a regular employee. In general, because of the lack of self-reporting and settlement regimes in CEE jurisdictions, companies tend not to turn to state prosecutors with alleged corruption misconduct.
The panel was moderated by Bruno Cova, Partner and chair of Paul Hastings’ Milan office, and also included as speakers Karina Litvack, Independent Non-Executive Director, Eni; Alberto Mora, Senior Fellow, Harvard Kennedy School of Government’s Carr Center for Human Rights Policy; and Peter Solmssen, Executive Vice President and General Counsel, American International Group, New York.
For more information about this topic and Kinstellar’s Compliance, Risk and Sensitive Investigations practice, please contact Jitka Logesova, Partner, Head of the Compliance, Risk and Sensitive Investigations practice, at .