Risk assessment key to address anti-corruption risk exposure

Canadian companies operating abroad would be well-advised to conduct comprehensive risk assessments to guard against anti-corruption risk exposure, recommends a recent post by John Boscariol on Lexology.

“Canadian companies operating abroad can face particularly high anti-corruption risk exposure depending on the countries in which they operate and their interactions with foreign government officials, whether directly or through agents, consultants or other third parties,” Boscariol, a partner with the Toronto office of McCarthy Tétrault, writes in the Aug. 13 post.

In light of recent enforcement activities in Canada under the Corruption of Foreign Public Officials Act, Canadian companies are starting to understand the risks and costs of non-compliance with the CFPOA and other anti-bribery regimes that may apply to them, Boscariol notes. There may be a “very substantial impact of compliance failure on their directors, executives and employees, share price, the inherent value of their company, as well as their attractiveness to others as a business partner or acquisition target.”

Many companies see the next step as developing, adopting and implementing compliance mechanisms, Boscariol says. Before doing so, a thorough risk assessment is essential to ensure companies are well-positioned to develop anti-corruption compliance processes and procedures on a targeted and cost-effective basis. 

A sampling of the many key questions and considerations for Canadian companies follow:

*            What current controls, due diligence and training programs are in place? Are they being taken seriously? Do employees follow these procedures?

*            Where are operations located? Is the business vulnerable to risk of regime change? In addition to the CFPOA, how do other potentially aggressive anti-bribery regimes, such as those of the United States, the United Kingdom or the host country apply to our activities?

*            What are the government “touch points” through all stages of the business’ operations? What permits and licences does the company require? Does the business need to import goods, equipment and heavy machinery for operations and how does it deal with customs authorities in that process?

*            Which executives or employees have responsibilities for dealing with government officials or authorizing related expenditures? What financial incentives may exist for individuals within the company to engage in bribery of government officials?