Formulationandimplementationofadequateprocedures– InternationalBestPracticeandLessonsLearnt

Adequateproceduresintheprivatesector

WilsonAngPartner,NortonRoseFulbright(Asia)LLP

Corporatecriminalliability

• Withoutaclearandviabletestforcorporatecriminalliability,thereisnolegalsignificanceforcomplianceprogramsoradequateprocedures.

Attributionofliability

• Corporatecriminalliabilitycanbeestablishedvia:– Identificationprinciple:“directingmindandwill”– Respondentsuperior:“Letthemasteranswer”– Failuretoprevent:Crimeofomission,strictliability

Indonesianapproach

• SupremeCourtRegulationPerma No.13/2016• Corporatecriminalliabilityif:

– Criminalactcommittedbyanyperson– Basedonemploymentorotherrelationshipwiththecompany– Actsforandonbehalfofcompany– Withinoroutsidecompany’sbusinessenvironment

Indonesianapproach

• Indeterminingcorporateliability,courttoconsiderifabusinessisfoundtohave:– materiallybenefittedfromacrime;– acquiescedtothecommissionofacrime;or– failedtotakeclearstepstowardthepreventionofacrimeormitigationofitsimpact,

itmayfacefines,haveassetsseizedorpersonneljailed.

Adequateprocedures

• Legalsignificanceofadequateprocedures:– Completecorporatedefence– Sentencingleniency– Prosecutorialdiscretion

Clearsteps– InternationalpracticeUKMOJ SixPrinciples USFCPA TenHallmarks ISO37001:20161.Top-levelcommitment 1.Commitmentfromsenior

managementandaclearlyarticulatedpolicyagainstcorruption2.Oversight,autonomy,andresources

5.1Leadershipandcommitment5.3Organisationalroles,responsibilitiesandauthorities

2.Proportionateprocedures

3.Codeofconductandcompliancepoliciesandprocedures

5.2Anti-briberypolicy8.6Anti-briberycommitments

3.Riskassessment 4.Riskassessment 4.5Briberyriskassessment4.Communication(includingtraining)

5.Trainingandcontinuingadvice6.Incentivesanddisciplinarymeasures

7.3Awarenessandtraining7.4Communication

Clearsteps– InternationalpracticeUKMOJ SixPrinciples USFCPA TenHallmarks ISO37001:20165.Duediligence 7.Thirdpartyduediligence

andpayments8.M&A,pre-acquisitionduediligenceandpost-acquisitionintegration

7.2Duediligenceonemployees8.2Duediligenceonbusinessassociates

6.Monitoringandreview 9.Confidentialreportingandinternalinvestigations10.Continuousimprovement:periodictestingandreview

8.4Financialcontrol8.5Non-financialcontrol8.9Raiseconcerns8.10Investigatebribery9.1Monitor,measure,analyseandevaluate9.2Internalaudit

Targetsgiving ofbribesingeneral

Targetsgiving ofbribestogovernmentofficials

Targetsgivingandreceivingofbribesingeneral

Challenges

• Misplacednationalisticpushbackagainstforeigncorruptionlaws• Blindacceptanceofanti-corruptionundertakingswithout

complianceinfrastructureinplace• Overuseofcertificationinplaceofactualverification• Abuseofculturalguiseandcommunityself-helpascoverfor

corruptionandconflictofinterest• Misconceptionthatcomplianceisthejobofcomplianceofficers• Insufficientresourcesandauthorityforcompliancefunction• Whistleblowinghotlinewithoutinvestigativefollow-upaction

Recommendations• Adoptjurisdictionallyneutral,broad-basedstandards• Activelypromoteimplementationofcomplianceprograms• Clarifylegalsignificanceofcomplianceprogramsinshowingthat

“clearsteps”weretakentopreventcrime• Empowercomplianceofficersthroughprofessionaltrainingand

ensuringclearaccesstotheboardandseniormanagement• Spreadmessagethatcomplianceiseverybody’sresponsibility• Focusonneedforcompanytoconductinternalenquiryon

allegationssoastoreducedamageandpreventrecurrence• Maintainlawenforcementbalancebetweenprivateandpublic,

givingandreceiving,aspectsofbribery