Recently, as regulators in various countries generally heighten enforcement efforts against bribery, domestic authorities are also improving their efforts in the fight against corruption. For multinational companies, observing anti-corruption regulations in and outside the PRC are both important. Foreign enforcement bodies mostly require or encourage companies to establish an anti-bribery compliance system. While in practice many bribes are offered by or through individuals, for example salespersons, the company is eventually held accountable. Overseas regulators are mostly unlikely to be convinced by companies reacting on the ground of “personal activity”, if there is no evidence that an effective anti-bribery system is in place.
According to the US Federal Sentencing Guidelines, penalties may be mitigated for companies with an effective compliance system. The Department of Justice (DOJ) and US Securities and Exchange Commission (SEC), the two main enforcement bodies under the Foreign Corrupt Practices Act (FCPA), consider whether an allegedly non-compliant company has established an effective compliance mechanism when deciding whether to lodge a suit, how to measure a penalty, whether to solve the case by way of settlement, and what conditions should be met in the case of settlement.
Therefore, measures such as effective compliance training, investigation and rectification are helpful for avoiding or mitigating penalties under the FCPA.
According to provisions of the UK Bribery Act governing “failure of commercial organizations to prevent bribery” – which state that a criminal offence is committed if a business organization fails to prevent a person associated with it (e.g., an employee, agent or subsidiary) from bribing another person with the intention of obtaining or retaining business or a competitive advantage for the organization – companies are legally obliged to fight against bribery, and “inaction” will expose them to criminal risks. However, a full defence is made if companies are able to prove sufficient procedures are maintained to prevent their associated persons from bribing.