Heightening Risks

MoFo Partner and Singapore Head of Litigation Dan Levison was quoted in a recent article, “Heightening Risks” in Asian Legal Business magazine.

The article explores how companies with operations in Southeast Asia must navigate a complex legal landscape to protect themselves against corruption compliance risks.

Dan explains, “If the region can be characterized broadly, it is that it is incredibly diverse in terms of economic development, legal systems, and bribery risk, and there is a lack of uniformity with respect to laws and regulations targeting bribery and corruption.”

He adds that most companies with cross-border business will likely need to comply with the FCPA or UK Bribery Act at some point. “That is because, even if not subject to the broad jurisdiction of the FCPA or UKBA, most companies with cross-border business operations will be expected to comply with those laws by some portion of their customers and other partners. While there is no one-size-fits-all compliance approach to the region and regulator expectations are not static, companies that adopt best practices that have developed over recent years to comply with these expectations will be best prepared to minimize anti-corruption risk no matter where in the region they do business,” he says.

Culture also plays a part as a risk factor with anti-bribery compliance in the region. Dan adds, “Cultural perceptions towards bribery and corruption are extremely varied across the region. In some countries, despite being illegal, bribery and corruption are viewed as a cost of doing business, and employees and business partners may not be as attuned to corruption risks. Companies operating in such an environment should keep in mind that a belief that bribery is commonplace is no defense under most anti bribery laws. On the opposite end of the spectrum, just because a jurisdiction is perceived to be relatively free from bribery and corruption, does not mean it is risk-free. Because these countries are often viewed as business-friendly due to a relative lack of domestic public bribery, they are used as jumping off points for business activities in some very high-risk neighboring jurisdictions. Companies should, therefore, not let their guard down, even when basing their operations in these business centers perceived to be low risk.”

Dan advises companies to engage in strong compliance education efforts, not just through training, but also by communicating a strong tone at the top and “mood at the middle.”

He says, “Strong compliance messaging should come not just from global leaders based in headquarters outside the region but also from senior regional and local management so that local employees know these issues are taken seriously by their direct managers and those in-region. Of course, the ‘buzz at the bottom’ should also be monitored to gauge how well the cultural messaging is reaching all levels of employees. This is consistent with regulator expectations that companies make sure that their compliance program goes beyond just the paper on which it is written, and is reflected in the corporate culture broadly.”

Looking ahead, companies operating in Southeast Asia can still implement procedures effectively despite the inherent challenges in its jurisdiction. Dan explains, “Each company will have its own unique risk profile, which will depend on the company’s industry segment and business model, as well as its geographic footprint. Will the business depend on crucial licenses and permissions? Will it require frequent interaction with public officials? Will there be regular corporate hospitality? What is the anti‑bribery landscape in the jurisdiction? Regulators will expect that the company’s compliance program be tailored to the company’s risk profile. This highlights the need for conducting a robust risk assessment and is why there is no one-size-fits all compliance program. Off-the-shelf policies may be a helpful starting point, but must be customized for a company’s unique risks. These risks evolve as the business evolves, which is why it is important to periodically test the compliance program and make adjustments and enhancements, as necessary.”

Dan also addresses issues relating to employee use of personal devices, messaging applications, challenges regarding the application of the attorney-client privilege, and how to effectively address problems when they do arise.

Read the full article.