The legal framework is getting tougher regarding anti-corruption worldwide, but it is also up to businesses themselves to make a difference at promoting fair and open markets by strictly complying with those rules − that was one of the main messages of a conference on the corporate compliance challenge hosted by AmCham.
Hungary is an attractive investment target thanks to a skilled workforce and a great location, among other things, noted David Kostelancik, Chargé’d Affaires of the U.S. Embassy in Budapest in his opening remarks at “The Corporate Compliance Challenge: Crisis Prevention and Threat Management” event. No matter how much of a pro-business approach the country has, though, corners cannot be cut when it comes to compliance and corruption.
And yet, Hungary is gaining a reputation for cronyism and favoritism, in particular in the strategic fields of banking, media and energy, and it ranks very low according to the corruption perception index of Transparency International, Kostelancik said.
European Union development funds are also widely viewed as magnets for corrupt activities. Widespread bribery is bad for business, as many international companies seated in Hungary complain that their competitiveness is hurt because they are not ready to participate in irregular practices, Kostelancik added.
The negative impact on the talent pool takes its toll, too; an alarming percentage of the young believe you need to be engaged in corruption to get ahead in Hungary, and so, instead, they leave the country.
“At every company, corruption should be put on the top of the priority list,” Kostelancik said. “You have a powerful voice; you can make a difference promoting fair and open markets which will trigger more investments and growth.”
In his keynote speech, Fabien Ganivet, partner at DLA Piper and former advisor to the cabinet of Homeland Security and the French minister of defense, highlighted that negotiated settlements are increasingly used rather than prosecution in foreign bribery charges by the United States, United Kingdom and other national authorities. International anti-corruption standards have a common thread that finds its roots in the U.S. Foreign Corrupt Practices Act of 1977. The U.K. Bribery Act of 2010 took the fight to the next level, becoming the toughest anti-corruption legislation in the world.
The ISO 37001 standard, in turn, works as a sort of “soft law” that applies to all public bodies, large companies, SMEs and NGOs, and specifies policies, procedures, and controls reasonable and proportionate to the risks faced by any given organization.
Ganivet elaborated on the new French legal framework known as Sapin II, the main provisions of which he hopes will raise France to the highest standards in the fight against corruption. A new governmental agency, lʼAgence française anticorruption (AFA), has been set up and entrusted with investigative and reporting responsibilities as well as the duty of assessment and recommendation.
The French criminal code was already quite strict, punishing corrupt practices by up to ten years imprisonment, with fines of up to EUR 1 million and EUR 5 mln applied to private individuals and legal entities, respectively.
But the new law strengthens the existing French sanctions arsenal even further. Even foreign companies belonging to a French corporate group are under the scope of the legislation if certain thresholds are met.