By: Ernesto Gómez Gallardo A.
The acronym AB&C, which we can often see -like so many others in the field of business- sounds quite basic, and may even have different meanings, but in relation to Compliance, it has an especially important connotation in the context we live in today. It refers to “Anti-Bribery and Corruption”. An AB&C policy, or at least mentioning the subject in its Code of Conduct, is very common in large, particularly multinational, companies, but I would like to comment on why it is very important that not only such organizations consider it in their operation.
It sounds like something obvious; no one wants to participate – openly at least – in bribery and corruption activities… but there is a little more to it and I intend to explain so.
As context, it should be noted that there are many regulations, that increase day by day in different countries. Mexico has anti-corruption legislation, like many others. Even in international cooperation organizations between nations, it is a documented issue (the OECD, for example). But I think it is of the utmost importance to comment specifically on two regulations that practically detonate this AB&C culture, one from the United States and the other from the United Kingdom:
- FCPA (Foreign Corrupt Practices Act) was published in 1977 in the United States to prohibit bribery by U.S. companies, as well as their subsidiaries (no matter where they are located) or directly or indirectly encourage bribery of public officials abroad with the intent of benefitting the company or employee.
- THE UK Bribery Act was approved in 2010 to improve regulation on international bribery issues. It basically has the same purposes as FCPA, but the British go very deep considering a breach of regulation even not having effective detection systems to prevent bribery. They consider being preemptive and not just reactive.
Both regulations are important, even for those who do not have presence or employees from the United States or the United Kingdom. First, because these rules have been dictating how other countries regulate anti-corruption issues; but secondly, because of its international component, it can affect the way we do business with many other organizations.
The United States and the United Kingdom are huge economic powers and their footprint in business (especially in our country) is extremely difficult to avoid. To put it very directly and briefly, if the anti-corruption and bribery standards in your organization are not up to the level, many potential business partners will not be able to do business or interact with your organization.
An example is Walmart, the retail store chain. After many investigations and indictments by U.S. authorities, the company was fined $282 million for AB&C-related issues. While the fine was for violations in Brazil, China and India, it was also for violations in Mexico. According to serious investigative newspaper articles, it is mentioned that “in the case of Walmart, alleged illicit payments in the four countries would have been made through third parties.” That is to say that neither Walmart nor its subsidiaries in Mexico were the ones that directly carried out acts of corruption or bribery, those were performed by third parties, maybe suppliers… the construction company building a store, for example.
A consequence of this and other similar cases, all multinational companies have established very strict measures to review all companies that want to do business with them. Even to the extent of auditing these companies and expecting for them to take this issue into account if they pretend to have any kind of relationship with them. So as examples: a SOFOM that wants to make a factoring program or similar with companies of this size for its suppliers, a local producer of goods sold in stores of this style, a company that seeks credit from an international bank –any of these– better think of an AB&C program, or its business possibilities will be extremely limited.