From the perspective of global anti-bribery compliance, compliance issues of a systematic nature must always be kept in mind. These may more aptly be categorized as a form of internal controls as they are necessarily applicable throughout an entity and not limited to issues of anti-bribery compliance. One compliance issue of general applicability relates to what an entity’s practices may be to promotions and to awarding compensation.
As the guidance of the UK’s Financial Conduct Authority suggests “remuneration structures [should be assessed to determine whether they] give rise to increased risk of bribery and corruption.”1 For example, a determination needs to be made as to whether “individual bonus awards [are made] on the basis of several factors, including a good standard of compliance, not just the amount of income generated.”2 Where possible, it is a “good practice” for there to be “[d]eferral and clawback provisions for bonuses paid to staff in higher in positions.”3
An entity should not have “[b]onus structures for staff in higher risk position which are directly linked (e.g. by a formula) solely to the amount of income or profit they produce, particularly when bonuses form a major part, or the majority, of total remuneration.”4 As the FCPA Guidance suggests, consideration needs to be given to instituting “positive incentives [that] can also drive compliant behavior.”5
It can be a significant challenge to alter the status quo of the basis on which an entity promotes and compensates its staff as well as the basis on which it retains and compensates third parties. Change in itself can be challenging. But when long-held expectations are put at risk in terms of promotion and compensation, the challenge can be even more daunting. Nonetheless, from a global anti-bribery compliance, serious efforts must be undertaken on an ongoing basis to minimize compliance risk by limiting counterproductive incentives and implementing positive incentives.
1Financial Conduct Authority, Financial crime: a guide for firms, pt. 2, at 35 (Nov. 2012).
5U.S. Dep’t of Justice and Sec. & Exch. Comm’n, A Resource Guide to the U.S. Foreign Corrupt Practices Act, at 59-60 (Nov. 2012).