COVID-19 Anti-Corruption Considerations

March 13, 2020

As companies come to grips with a pandemic and wildly fluctuating markets, they must identify and prioritize the particular risks they each face and dust off their crisis management plan – that’s assuming they have one. 

Under these unusual circumstances one of the potential risks that may not be immediately apparent to all multinational companies as one of their top risks, but perhaps should, is the increased risk of corruption that runs afoul of the Foreign Corrupt Practices or UK Bribery Acts and other similar statutes and anti-corruption international conventions. 

Some compliance professionals recently have identified this risk as being at the vortex of a perfect storm of market factors, including lower demand, slower and disrupted supply chains, business pressure to meet expectations that undoubtedly were drawn in a bull market, and employees who, without the ability to travel, have lost their usual opportunities to promote their products and to network with customers at conferences and other events. Taken together, these factors may place additional pressure on salespersons and third-party intermediaries to cut corners or to evade anti-corruption compliance procedures and protocols. 

In considering these risks, it is worth noting that violations committed in times of crises often don’t become apparent until the crisis passes. It has been said that while a high tide floats all boats, a receding tide will expose all those who have been swimming without their shorts. As has often been the case in the past, as it was, for example in the wake of the 2008 financial crisis, regulators surely will be looking for those skinny dippers when this crisis passes.

In consideration of this, compliance professionals should consider the best defense to be a pre-emptive offense, which includes not just assessing this risk now, in the midst of the crisis, but taking steps to limit their exploitation. To that end, companies should consider several steps, including:

  1. Messaging – step up efforts to remind employees of their compliance obligations. This type of messaging is often best when it comes from the top, particularly when mixed with some empathy and recognition of the challenges employees face in these very trying times;
  2. If employees are telecommuting, consider whether processes and protocols ought to be adjusted to accommodate new operational paradigms;
  3. Work with senior management to re-evaluate expectations, for example, whether sales targets remain realistic in these challenging markets – consider ways to de-incentivize non-compliant actions; and 
  4. Compliance professionals should reassure employees that they are aware of the increased risks and eager to work with them to help navigate the new compliance challenges..