Addressing Anti-Corruption Risks From the Coronavirus
Though the immediate concerns of the coronavirus relate to employee health and safety, the outbreak—and its business disruption—may increase the risk of bribery and corruption.
March 04, 2020 at 12:23 PM
5 minute read
As companies address the coronavirus outbreak, compliance officers would be wise to consider how the coronavirus raises anti-corruption risks. Though the immediate concerns of the coronavirus relate to employee health and safety, the outbreak—and its business disruption—may increase the risk of bribery and corruption.
Due to the coronavirus, companies are experiencing greater business pressure. Many companies have salespeople who cannot travel due to precautions taken, canceled flights, or worse, quarantines. They cannot visit customers or partners, leading to slower sales. Global supply chains are disrupted, with shortages of parts and products. Company events and conferences are being canceled, resulting in fewer opportunities to build relationships with customers and market products. Customer demand for company products may be falling and companies may be declining to make revenue projections during this time of uncertainty about the spread and effects of the coronavirus.
These disruptions can increase the pressure on salespeople to meet their sales targets. Salespeople may feel additional pressure now, when sales may be sluggish, and again when business gets back to normal, and they want to make up for the time lost. That pressure can lead some people to act inappropriately—to engage in bribery or other misconduct—in order to generate business. In addition, the heightened emphasis on business priorities due to the losses from the coronavirus can push anti-corruption compliance further down on the priority list.
If law enforcement agencies or regulators discover bribery or corruption that follows the coronavirus outbreak, they most assuredly will not be accepting a coronavirus defense from companies. Compliance officers should be aware of situations like the coronavirus that could raise corruption risks and try to guard against them.
What can compliance officers do to combat the potential of increased risk from the coronavirus?
First, engage with other groups in the company to make sure that employees' health and safety concerns are being addressed. Messages and training from the compliance function will have much more weight if the compliance function has credibility from prioritizing employees' welfare first.
Second, reinforce existing anti-corruption policies through targeted communications. Compliance officers might want to refer explicitly to the disruption caused by the coronavirus and emphasize that the company is committed to complying with anti-corruption laws. The communications should be directed at the employees who need to see them, such as salespeople who interact with customers, or "gatekeeper" functions like finance who review financial transactions. Include compliance messages in company communications about the coronavirus, especially communications from leaders, to make the link that compliance is not suspended during this time.
When there are increased sales pressures and stress, employees are less likely to sit through a training session willingly, or even click on a link in an email. The communications should be short, engaging and specific. Communications that are sent to employees in offices outside of company headquarters would be even more effective if they are country-specific, to refer to the effects of the coronavirus in that country, and remind employees about their local anti-corruption laws.
Third, work with senior executives and the board, if appropriate, to make sure that the business pressures resulting from the coronavirus do not overshadow the company's commitment to compliance. Compliance officers have a role to play reminding others of the company's long-term values and ethics, especially when short-term business pressures are intense.
Fourth, encourage senior executives and managers at all levels to have the right "tone from the top" and "tone from the middle" and reinforce that the company values compliance and acting with integrity. Business people will feel more confident in walking away from a deal that involves potential corruption, even under increased business pressure, if their managers and leaders have stated that they support doing business legally and ethically, instead of getting a deal at any cost.
Fifth, consider temporarily lowering any financial thresholds for reviews of transactions, expenses, third-party agent deals, and other aspects of company business that are looked at for corruption risks. Companies that evaluate potential deals over a certain financial threshold for potential corruption, or review gifts, meals, travel and entertainment expenses, might temporarily lower any review thresholds to include more transactions and expenses in those anti-corruption checks. Companies that review deals only in certain high-risk countries, for example, might consider temporarily reviewing deals from countries hit by the coronavirus that have experienced business disruption even if those countries normally are not perceived as having a high risk of corruption.
Finally, make sure that the critical compliance functions can continue even if employees all work remotely during the coronavirus outbreak. Remote work can strain companies' IT networks and internal processes. Compliance officers will want to ensure that they are accessible, employees still have access to mechanisms for reporting potential misconduct, and internal systems used in anti-corruption compliance can continue.
Pressure to generate business and meet sales expectations can incentivize people to act inappropriately at even the best of times. During this widespread coronavirus epidemic, when many companies are under heightened business pressure, compliance officers should consider how the corruption risks in their companies may have increased and how they can mitigate those risks.
Rebecca Rohr is the Vice-President of Anti-Corruption and Global Trade within the Ethics & Compliance Office of Hewlett Packard Enterprise. She previously served as Principal Deputy Chief of the Fraud Section of the Department of Justice's Criminal Division, which prosecutes Foreign Corrupt Practices Act cases.
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