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TACKLING BRIBERY AND CORRUPTION IN 2018 – LESSONS FOR THE YEAR AHEAD

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TACKLING BRIBERY AND CORRUPTION IN 2018 – LESSONS FOR THE YEAR AHEAD

by Lee Kirschbaum, SVP, Product, Marketing, and Alliances at Opus

Siemens. Alstom. Teva. Telia.

Sound familiar? They’re recipients of some of the largest fines levied by the Foreign Corrupt Practices Act (FCPA) in recent years – including, with Telia, the largest single fine to date.

And they’re far from alone. As business becomes more global by the day, bribery and corruption risk grows along with it, with more than $1.5 trillion paid out every year in bribes. As just one example, China and India, the world’s two fastest growing economies, are also in the top 10 countries most acted against by the FCPA. With growth comes risk.

And among the biggest risks of all is third parties. Third parties – such as business partners, agents or distributors — all present extensive financial and reputational risk, especially when it comes to bribery and corruption. A recent OECD reportfinds 75% of enforcement actions involved bribes paid through third parties.

Managing these external risks can seem challenging, especially when a company is doing business with potentially tens of thousands of third parties. Navigating both local and global regulations such as the Foreign Corrupt Practices Act (FCPA) and UK Bribery Act (UBKA), training third parties, and ensuring appropriate policies and procedures to comply may seem like a daunting task.

It’s no wonder companies took ABAC risk seriously in 2017 — and continue to look for help in 2018.

So what ABAC lessons have we learned in 2017 and what should we expect this year?

Lessons Learned from 2017

  1. Enforcement actions remain strong and steady

2017 started out with a cautious “wait and see” approach but it ended confidently in line with previous years, with a total of 39 DOJ/SEC enforcement actions, including the largest fine FCPA enforcement action to date, Telia. Of note, there were more DOJ enforcement actions than since 2010 (29 in total).

Of these combined actions, two stand out in size and scope:

Rolls Royce

The largest case ever investigated by the Serious Fraud Office (SFO) in the UK included the US and Brazilian authorities as well. Rolls Royce was found guilty of systematically paying bribes to foreign officials through third parties between 2000 and 2013.

There were 12 countries in total where this took place including China, Brazil, Angola and Iraq. Fines totalled $800 million with deferred prosecution agreements (DPAs) in the UK and US.

Telia Company AB

At $965 million, Telia Company AB was the largest FCPA enforcement action of all time. Telia paid this sum to the DOJ, SEC, Dutch and Swedish authorities to resolve its FCPA violations in Uzbekistan. The offenses dated back to 2007 when it bought an Uzbek subsidiary, Coscom, to provide telecom services. After Telia acquired Coscom, it paid $80 million through its subsidiary to a government official to acquire mobile phone assets.

  1. ABAC regulation has truly gone global

2017 saw no slow-down in the development of new international ABAC regulations as government appetites to tackle corruption and bribery increased.

France had a banner year for introducing ABAC regulation, with Sapin II coming into force in June to address economic modernisation, transparency and corruption and align itself with the FCPA and UK Bribery Act.

The Australia Criminal Code Act 1995 saw proposed changes following OECD criticism of the Australian regime, while Canada saw its first individual foreign bribery conviction.

Not only are international regulations being strengthened, they’re also being enforced on the global scale first laid forth by the OECD convention in the 1990s. 2017 saw multiple actions with increased co-operation between international regulatory bodies.

The greatest showing of global cooperation in 2017 was seen in the Telia case, in which U.S., Dutch and Swedish regulators came together to bring the $965 million settlement.

  1. A continued focus on holding individuals culpable

In 2015 the Yates Memo signalled a shift toward holding individuals, not just companies, accountable for bribery and corruption.

The Department of Justice (DOJ) continues to demonstrate a focus on culpable individuals with clear language in its documentation and public speakingand following up with clear action. 2017 saw the DOJ charge, making up 70% of its total cases.Additionally, 30% of the SECs total enforcements for 2017 were also focused on individual actions.

Notable cases from 2017 include:

SBM Offshore

The CEO and Sales Director at SBM Offshore faced up to five years imprisonment for commissions paid to intermediaries that went on to bribe officials in Brazil, Angola, Equatorial Guinea, Kazakhstan and Iraq. This was one of the first individual bribery cases brought to court by the US Justice Department relating to Petrobras.

  1. Due diligence on third parties continues to be critical

The common factor in many of the enforcement actions of 2017, as in previous years, is the role of third parties in paying bribes or facilitating payments. Enforcement agencies are committed to taking a tough stance on companies. With 75% of past enforcement actions involving third parties, it’s an obvious place to start an investigation.

Many of the actions we saw involved companies whose internal controls and third party due diligence failed them. Examples of such cases include:

AirBus Group

Launched in July of 2016 and continued into 2017, the Serious Fraud Office (SFO)’s investigation of bribery and fraud concerning the company’s use of middlemen to secure backing from the British government demonstrates the global trend of enforcement when it comes to third parties. Following the SFO’s investigation launch, AirBus initiated its own internal investigation after leaked bank records revealed more than €19m in transactions were unaccounted for.

What to Expect from ABAC Moving into 2018

The last two years have seen significant ABAC activity.  The forecast for 2018 looks no different. These are the key trends for businesses to be aware of:

  1. Enforcement actions will continue to grow globally

In the past, the driving forces behind ABAC enforcements were the U.S. and more recently the U.K. The past few years have seen France, China and many Latin American countries develop their own anti-bribery laws in line with the FCPA and UK Bribery Act. It’s likely enforcement actions will follow suit.

We’re already seeing this happen in Latin America with the Rolls Royce and Odebrecht actions. In both cases we saw the leading enforcement agency reach across its borders to bring the enforcement to a head.

This globalisation of enforcements also reflects a growing awareness corruption is bad for business and bad for society. A clear sign we’ve only just seen the tip of the iceberg of global enforcements.

  1. Continued cooperation in multi-jurisdictional investigations.

The international cooperation between enforcement agencies we’ve seen in the last year will continue into 2018.

As borders are crossed, or even broken down, we see the power of enforcement agencies grow. What does this mean for businesses? Well, it’s increasingly important to co-operate with the authorities with strategies such as self-reporting and DPAs.

With more established relationships and a clear desire to support global enforcement, international governments and their respective agencies are willing to work closely to bring corruption to the fore. What will be interesting to watch this year is which agencies will come together.

  1. Further adoption of globally recognised standards

Based on recent trends, we believe this year will continue to see a rise in the adoption of standards like ISO 37001 for providing a flexible framework for complying with global ABAC regulations. Alstom, Walmart and Microsoft have all been early adopters of ISO 37001 in its first year and other corporations will likely follow suit at this early stage. While there are mixed opinions about the efficacy of ISO 37001, it’s clearthere are many benefits to having this standard in place.

ISO 37001 also forms the basis for the Shenzhen Standard, China’s anti-bribery management system piloted in June 2017. A clear signal by the Chinese they’re taking ABAC seriously, and perhaps more importantly, a step towards creating a truly global anti-bribery and corruption standard.

  1. A focus on holistic third-party management

Based on the history of causes of FCPA enforcement actions, there’s no doubt managing third parties will be a significant part of businesses’ risk and compliance programs in 2018. Third parties represent the largest risk in many areas of compliance, not just anti-bribery and corruption.

We’ve seen a major proportion of companies with over 1,000 third parties – and in one of our recent studies, the number of third parties businesses have is growing by 25% per year.

The starting point for all third-party relationships should be consistent across departments:  identify the third party, know what they do for you, understand what risks they pose and plan how to manage them.

Budgets for risk and compliance are under pressure, just as they are in many other company departments. Do you have enough resources allocated to your own budget to manage all of the above?

Perhaps the answer doesn’t lie in more people and money – it lies in the automation of processes and the reduction of paper-based systems. Using automation to address human capital and funding issues will give you a force multiplying effect, and one that makes for more efficient use of your existing resources.

Tackling bribery and corruption on a global scale isn’t a challenge that can be addressed overnight, but armed with continuous learning, international cooperation and intelligent use of technology, major strides are being made.

Business

Death of the workplace friendship: study shows how remote working is eroding our meaningful connections with colleagues

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Death of the workplace friendship: study shows how remote working is eroding our meaningful connections with colleagues 1
  • Employee experience platform Perkbox’s research on 1,296 employees and 300 business leaders reveal 65% think the ‘new way of working’ will take its toll on workplace friendships
  • 45% of employees say that maintaining emotional wellbeing still remains one of the biggest remote working challenges; yet only 20% of bosses agree

  • Meanwhile 35% of business leaders confess they are struggling to cope with the pressures of keeping employees happy at the risk of their own personal wellbeing

Friendships at work have long been a debated topic pre-COVID: arguments either side profess these to be both conducive or a hindrance to productivity and creativity. Yet, according to new research into the national state of employee wellbeing conducted by employee experience platform Perkbox, 45% of 1,296 respondents say that maintaining emotional wellbeing still remains one of the biggest remote working challenges facing businesses, with 65% believing that workplace friendships – now even more critical in the ‘new working world’ – are suffering because of remote working.

Colleague camaraderie in the age of COVID

The benchmarking study saw that 54% of employees now believe that maintaining ‘social wellbeing’ (how connected we feel with our colleagues and the wider world) presents one of the biggest wellbeing challenges in light of remote working – an increase of 18% from Perkbox’s study of the same sample set the previous month.

Yet there is a clear disconnect between what employees feel and what their employers believe: only 12% of business leaders recognise their employees’ social wellbeing as a significant challenge in the age of remote working, and only 20% of bosses (compared with 45% of employees) believe that maintaining ‘emotional wellbeing’ (how we feel about stress, anxiety and our overall mental health) is a significant challenge that mustbe addressed.

Some employers, however, confess that they are struggling with the pressures of keeping their employees happy, safe and productive during this ‘new normal’, with 35% saying that this has been at the cost of looking after their own personal wellbeing.

Mona Akiki, VP of People, Perkbox, commented: “Many organisations pre-COVID either didn’t pay much attention to friendships at work or focused on it as a way to ensure that it didn’t create any conflicts within the organisation. Today, we’re realising that strong colleague interactions seem to matter to an employee’s social and emotional wellbeing.

Remote working appears to have created nervousness around our sense of connectivity and camaraderie with our colleagues. Forward thinking organisations are quickly realising that this should matter to them as well.

Although organisations didn’t necessarily cause the current climate, the increased sense of anxiety and burnout amongst their employees who are now living and working in silo at home will not only impact the individual’s health but also the wellbeing of the team and the business. Both employees and employers must work together to combat this challenge and achieve wellbeing before it becomes an even bigger issue.”

Sedentary and sad

The third instalment of Perkbox’s benchmarking study also showed, for the first time, how physical health due to less movement has risen to be one of the top three wellbeing challenges for employees (after social and emotional wellbeing). With the removal of the daily commute and longer hours spent at the computer in order to appear more productive and thus more indispensable, 37% of employees believe that their physical wellbeing has suffered – with lack of exercise fuelling the emotional crutch of unhealthy comforts such as takeaways, binge watching and excessive drinking. The government’s recent guidance to “work from home, if you can” could exacerbate the problem further.

Tackling the problem 

Before and during the earlier months of COVID-19, workspace wellbeing (how the safety of our work environment and / or ability to work well from home is affecting us) was the most implemented initiative by 79% of businesses, with initiatives around social wellbeing coming a close second (75%). Yet – perhaps because of the economic uncertainty brought about by COVID compounded by the lack of acknowledgement by bosses that emotional and social wellbeing is a problem felt by employees – 16% of small business say they have no plans to implement initiatives to tackle these challenges; a figure which has doubled from the previous Perkbox study.

Furthermore, 30% of smaller business have no plans to implement financial wellbeing support during this critical period (compared to 9% in the last study); 23% have no plans to implement physical wellbeing initiatives (an increase from 9% previously), and 13% have no plans to implement emotional wellbeing initiatives to support employees’ mental health (compared to 5% previously).

“There is a concerning trend – especially among smaller businesses – about disinvesting in overall employee wellbeing initiatives at a time where support is needed the most,” commented Mona Akiki, Perkbox.

“There seems to be a lack of understanding that these initiatives need not be expensive but considered, human-centric and empathetic to the emotional, social, physical and financial challenges that beset us every day, hindering us from our ability to perform optimally. A team whose wellbeing has been adequately attended to has the resilience, energy and creativity to weather business challenges more effectively than a team whose members are emotionally, physically and socially run ragged. Our research acts as a barometer for how pressing these concerns are to both employees and employers. These challenges, at least for the medium term, are here to stay. It’s time that businesses invest in employee wellbeing as part of a wider essential strategy to ‘keep the lights on’ where others are floundering.”

As part of Perkbox’s New Working World series, a number of surveys and reports are being produced to track employee sentiment towards wellbeing as we exit a post-Covid world. This is being run alongside a survey of UK employers to see the business perspective on wellbeing impact in light of 2020’s events. For more information and full report on the studies findings, visit: https://www.perkbox.com/uk/resources/library/new-working-world

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Half of UK’s finance sector confirms diversity should be more of a priority in the workplace, with calls for action across the industry

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Half of UK’s finance sector confirms diversity should be more of a priority in the workplace, with calls for action across the industry 2

Almost half (45%) of Britain’s banking/financial services workforce think their employer could do more when it comes to diversity, according to a report from UK-based tech-for-good developer, Culture Shift.

Despite 74% of employees in the sector confirming that working somewhere with a diverse workforce is an important factor for their happiness at work, almost half (46%) think diversity seems like less of a priority in the workplace currently, with 52% stating it should be more of a priority. The same report also uncovered that 53% of employees in banking and financial services said their employer makes token gestures that feel surface level when it comes to diversity and inclusion.

Diversity and inclusion have long been key factors for ensuring a positive and happy work environment, however the events of recent months, such as the resurgence of the Black Lives Matter movement, have resulted in these climbing up the agenda of many employers.

“The insights on diversity and inclusion uncovered in Culture Shift’s report really do resonate with me, as they shine a light on the lack of true representation across the UK’s positions of power. Employees are calling for their employers to focus on recruiting people from more diverse backgrounds, while providing training to the workforce on diversity and inclusion, confirming action really does need to be taken.

“If organisations want to create a happy work environment then they should take heed, as most employees confirmed working somewhere with a diverse workforce was an important factor to their happiness at work,” comments Olive Strachan MBE, founder of Olive Strachan Resources Ltd, global business woman and diversity and inclusion specialist.

The research found that fostering a diverse workforce representative of reality is a key factor for creating a positive culture and a key component for most employees’ happiness at work. With many calling for more to be done when it comes to ensuring that not only do under-represented groups have a presence in businesses, but also a seat at the table and a voice, there are various factors organisations should be keeping front on mind whilst planning for the future.

On fostering a diverse workforce, representative of reality, the research revealed that:

  • 80% of employees in banking/financial services said working at a company with a strong ethical background was important to them, with 84% stating that working at a company with a good reputation for treating employees fairly was integral to their happiness at work
  • Almost one-fifth (18%) said their employer could improve workplace culture by recruiting more people from BAME backgrounds, while one-quarter (25%) said by providing training to the workforce on diversity and inclusion
  • 15% said their employer could improve its culture and be more inclusive by recruiting more people from LGBTQ+ (Lesbian, Gay, Bisexual, Transgender and Queer) backgrounds
  • More than one-quarter (26%) said their employer could improve its culture by recruiting more people of varying abilities; while 21% said by recruiting a better gender balance
  • One-quarter (25%) said their employer could improve its culture by recruiting more people of different religions/faiths
  • 15% said their employer should prioritise the promotion of people from minority and marginalised backgrounds to improve its workplace culture

“To create an empowering culture for all employees, it’s absolutely essential for organisations to be diverse, inclusive and showcase true representation across all levels of the business. Not only do recruitment processes need to be inclusive, but promotion opportunities too, and employees from marginalised backgrounds need to be supported through their career, as well as other employees.

“We firmly believe this is an incredibly important conversation to have and the insights uncovered in our research solidify that we’re not alone in believing more action needs to be taken by those at the top. It’s a shift that won’t happen overnight, but there needs to be clear intent from employers to keep diversity and inclusion at the top of their agenda,” adds Gemma McCall, CEO, Culture Shift.

Culture Shift exists to lead positive change in organisational culture, through building products that empower them to tackle harassment and bullying.

“We hope the insights uncovered in our report, combined with the fact that diverse workforces are consistently proven to be more successful, result in employers making some tangible changes across the board to ensure their teams are truly representative of reality,” concludes Gemma.

To see more insights uncovered by the research or to download the full ‘Maintaining workplace culture in a rapidly changing environment’ report, visit info.culture-shift.co.uk/maintaining-workplace-culture.

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American Express and Amazon Business Launch Co-branded Credit Cards for Small Businesses in the UK

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American Express and Amazon Business Launch Co-branded Credit Cards for Small Businesses in the UK 3

The co-branded Cards offer flexible benefits and payment optionality by allowing small businesses to decide between earning rewards or adjusting payment terms on eligible purchases

UK small business Card launch builds on American Express and Amazon’s long-term relationship and co-branded Card programme in the US

American Express (NYSE: AXP) today announced the launch of the new Amazon Business American Express® Card and the Amazon Business Prime American Express® Card for small businesses in the UK. The Cards offer a host of rich rewards and payment flexibility designed to help businesses better manage their cash flow and gain greater insight into their spending.

The Cards provide an enhanced check-out experience on Amazon Business UK and Amazon.co.uk that gives Cardmembers the option to earn reward points or select a deferred payment term for each transaction, enabling them to make the best payment choice for their finances. Reward points can be earned anywhere American Express Cards are accepted and redeemed toward future Amazon purchases or applied to the balance of their monthly Card statement. This new Card programme in the UK has been developed as part of the on-going relationship between American Express and Amazon which includes a co-branded programme in the US and a global Card acceptance relationship.

This launch comes at a time when 63% of British small businesses say cash flow issues have led them to delay purchasing goods and services they need to run their business, according to new research from American Express and YouGov1. Nearly a quarter (23%) of the survey participants said they have put off ‘bigger ticket’ purchases over the last six months until they have funds available, and 38% of them are only buying the ‘essentials’ they need to keep their business operating.

Commenting on the new Card launch, Colin O’Flaherty, General Manager of UK Global Commercial Services at American Express, said: “We have been serving small businesses for over 60 years, and are passionate about helping our small business customers effectively run and grow their businesses, especially during this challenging period. With many UK SMEs facing financial hardships, we want to make it easier for businesses to manage their finances and continue accessing the goods and products they need with more options to pay. We know that a vast number of the UK’s businesses rely on Amazon’s wide-ranging products and services and are excited to launch this powerful and flexible new payment tool that will allow small businesses to select how to pay, purchase by purchase.”

Dave Brittain, Director of Amazon Business UK, said “Working with American Express to launch the small business credit Card was a natural decision for Amazon, given our shared long-standing commitment to helping small businesses flourish globally. We’re incredibly proud to launch this Card programme as it offers small business owners and entrepreneurs the best of both companies: the convenience and value they have come to know and love from Amazon, underpinned by the world-class service, benefits, access and security of American Express. These benefits have never been more important at a time when businesses are navigating the challenges and uncertainty which Covid-19 has presented.”

Amazon Business American Express Cardmembers and Amazon Business Prime American Express Cardmembers will have access to the following key benefits:

  • 2% Amazon Rewards points on the first £120,000 in purchases at Amazon.co.uk, Amazon Business UK and Whole Foods Market UK each calendar year, 1% thereafter or 90-day payment terms on such purchases for Cardmembers who are Business Prime members on Amazon Business UK
  • 1.5% Amazon Rewards points on the first £120,000 in purchases at Amazon.co.uk, Amazon Business UK and Whole Foods Market UK each calendar year, 1% thereafter or 60-day payment terms on such purchases for all other Cardmembers
  • 0.5% Amazon Rewards points on all other purchases for all Cardmembers

Both Cards come with a £50 annual fee, however, this is waived for new Business Prime American Express Cardmembers in the first year. Upon approval, new Cardmembers who are Business Prime members will receive an Amazon gift card with £50 value, and all other Cardmembers will receive a £25 Amazon gift card. As an added benefit for Amazon Business Prime American Express Cardmembers, their Cards will feature a unique vertical design that is composed of metal.

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