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The Legal Pitfalls of Non-Compliance with Anti-Bribery and Anti-Corruption Provisions

20 February 2024

Understanding the legal pitfalls of non-compliance with ABAC regulations and the far-reaching consequences that can unfold for organisations.

Increasingly, in global business operations and interconnected economies, combating bribery and corruption has become a priority for governments, international organisations, and businesses alike. Anti-Bribery and Anti-Corruption (ABAC) provisions form a critical component of legal frameworks around the world, aiming to promote ethical conduct, transparency, and fair competition. However, the legal landscape surrounding ABAC compliance is complex and fraught with pitfalls for businesses that fail to adhere to these provisions.

Anti-Bribery and Anti-Corruption Provisions:

Anti-Bribery and Anti-Corruption provisions are laws and regulations designed to prevent and combat bribery and corruption in various contexts. Key international instruments, such as the United Nations Convention against Corruption (UNCAC) and the Organisation for Economic Co-operation and Development (OECD) Anti-Bribery Convention, provide a framework for member countries to establish and enforce ABAC regulations. Additionally, many countries have enacted their own domestic legislation to address bribery and corruption. Countries such as the United States of America, the United Kingdom and Australia, among others,  have enacted laws that extend the jurisdiction of those countries to include inter alia persons or corporations which are not only within them but any person or corporation that has ties to them.

Non-compliance with ABAC provisions exposes businesses to severe penalties and fines, and regulatory authorities worldwide are increasingly vigilant, with substantial financial sanctions potentially being imposed for violations. The resultant effect is that businesses that operate within or have ties to multiple jurisdictions, need comprehensive and strategic management systems in place to ensure compliance with various ABAC laws.

Risks associated with non-compliance of ABAC:

Other risks associated with non-compliance of ABAC laws, include, but are not limited to:

  • Civil Litigation: Entities harmed by corrupt practices, such as competitors or parties in business transactions, may pursue civil litigation against the offending organisation;
  • Supply Chain: Organisations can be held accountable for the actions of their business partners and suppliers. Non-compliance within the supply chain can lead to legal repercussions for the primary organisation, necessitating robust due diligence measures;
  • Reputational Damage: businesses found guilty of bribery or corruption can suffer a loss of trust from customers, partners, and investors, impacting their market standing and long-term viability.

How to mitigate these risks?

Adoption of a strong management system to maintain robust ABAC compliance is critical. This includes undertaking regular risk assessments and due diligences, engaging with suppliers, sub-contractors and business partners to develop internal controls, ensure transparency and to implement grievance mechanisms, developing and implementing policies and providing employee training are among the mitigation measures businesses should employ to ensure ABAC compliance.

It is recommended that businesses set up an audit mechanism to identify, assess and prioritise the possibility of bribery and corruption within the organisation and to trigger follow up action from management. 

Parting thoughts

In the global business environment, ethical conduct is paramount, and non-compliance with ABAC provisions can have severe legal implications. The legal pitfalls extend beyond mere fines, encompassing reputational damage, criminal liability, and potential exclusion from business opportunities. Organisations must invest in comprehensive programs, due diligence, and proactive risk management to navigate the intricate legal landscape successfully and, in doing so, safeguard their business interests, maintain stakeholder and public trust, and contribute to a culture of integrity and transparency in the global marketplace.

By Steven Marais and Gillian Niven

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