Cultural Influences in Anticorruption Training

Cultural Nuances in Global
Anti-Corruption Training
18 October 2012
Agenda
Introduction
Bribery and Anti-Corruption
Anti-Corruption Training
Cultural Issues in Corruption
Cultural Complications in Training
Tools for Evaluating Culture
Steps to Intercultural Competency in Training (and Beyond)
Copyright 2012 | SAI Global Ltd. | Confidential
About SAI Global

www.saiglobal.com/compliance
Partnering with clients to build organizational integrity by integrating ethics and

compliance, understanding and controlling risk, and enabling good governance
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integration specialists
Programs across 120 countries and over 45 languages
2011 SAI
Global
Ltd.Global
All Rights
Copyright
2012
| SAI
Ltd. Reserved.
| Confidential
Biography
Ethics and Compliance Consultant for SAI Global

Written practitioner and academic articles on culture, decision
making, and ethics.
PhD. candidate at University of Southampton (England) in
Business Ethics; dissertation focuses on how firm culture is
related to ethical decision making.
Previously, Director at iGate (Based in India with a 90% Indian
workforce)
Extensive international business experience as a business
strategy consultant for Accenture, including:
India
China
Australia
UK
Scandinavia
Why countering bribery matters
More than 1 Trillion Dollars are paid in bribes globally each year.
(Word Bank)
$1 out of every $30 is being spent on bribes, often in the countries
that can least afford the diversion of resources. (Transparency
International)
Bribery is estimated to raise the cost of living in some countries
15% or more (Transparency International)
"Each time a company pays a briber it is contributing, even in a
small way, to perpetuating a system of corruption that embeds
poverty and inequality. Stopping this supply-side bribery is vital if
the fight against corruption is to be successful." Chandu Krishnan
While much bribery happens in the developing countries, many of
the recent bribery scandals have taken place in developed
countries.
The legal framework to combat supply-side corruption
Enforcement Trends
Bribery and Corruption: Why the Concern?
Foreign Corrupt Practices Act
U.S. Law, enacted 1977
Anti-bribery and Books & Records provisions
Enforced by DOJ and SEC

Bribery Act 2010
UK law, enforced as of July 1, 2011
Enforced by Serious Fraud Office (SFO)

Most other countries have anti-bribery legislation
Enforced to varying degrees
Enforcement leaders are Germany, Norway,

Switzerland, US
Organization for Economic Cooperation and Development
The OECD Convention requires signatory countries to

criminalize the bribery of foreign officials.
The laws are complicated and continuously evolving

US companies operating globally are subject to the laws of other
countries
Bribery and corruption enforcement activity continues to increase
in volume and sophistication
The penalties for violations are potentially enormous
Companies are responsible for the actions of associated third
parties
Personal liability exists for executives
Corruption scandals make headlines and can ruin companies and
individuals
Bribery and
corruption
risks (and
liabilities)
exist beyond
your
corporate
boundaries
Risk Exposure
Corporation
Joint Ventures
Agents/Partners
Suppliers
Customers

Penalties imposed upon violators can include fines, investigation, outside legal
fees, disgorgement, potential debarment and the possibility of prosecutions in
multiple countries
Additional onerous and costly repercussions can include the imposition of
monitors, audits, mandated reporting, and bolstered compliance programs
Company
Penalties
Other Associated
Costs*
Siemens AG
$1.6B
$1B
KBR/Halliburton
$579M
Not Disclosed
BAE Systems
$400M
Not Disclosed
Pending
$106M
Baker Hughes
$44M
$50M
Daimler
$185M
>$500M
Weatherford
* Associated costs are conservative as

they only reflect disclosed amounts

2010 witnessed an 85% increase in enforcement actions over 2009, which was
also a record year
8 of the top 10 monetary settlements in FCPA history were reached in 2010
Source: 2010 FCPA Update, Gibson Dunn


The Enforcement Trend is Likely To Continue
2010-Lanny Breuer announces that
DOJ is currently hiring additional
prosecutors in the Fraud Unit to
handle FCPA Cases
UK Bribery Act 2010 in force and includes

new bribery offenses, setting stage for
future enforcements
FBI has dedicated FCPA agents
German authorities more vigorously

prosecuting bribery cases since Siemens
settlement
SEC expanding FCPA focus; creates

FCPA unit in 2009 and opens new
office in San Francisco in 2010
Number of individuals prosecuted for
FCPA was 44 in 2009, up from 9 in
2008
OECD pledges to monitor anticorruption commitment and
enforcement by signatory countries
Transparency International lauds

Germany, Norway, Switzerland, and US
as active enforcers of OECD
Convention
Australian Federal Police currently
investigating allegations of bribery by
Securency International

Additional Enforcement Techniques and Theories Are Being Utilized
Increased cooperation between US Department of Justice and other

governments, including use of Mutual Legal Assistance Treaties (MLATs) to
facilitate assistance
Increased effort to pursue foreign third parties, including foreign officials,
involved in bribery
FBI now using traditional criminal law enforcement techniques such as
wiretapping, surveillance, informants and undercover sting operations for
detecting and prosecuting bribery
DOJ enforcement strategy increasingly includes prosecution of individuals to
hold them accountable and gain leverage over corporations
Use of Travel Act to criminalize commercial bribery, making all bribery of
concern to US companies
No Double Jeopardy
The Regulations: FCPA & UK Bribery Act Details

FCPA
UK Bribery Act 2010
Corporations registered in the U.S. (issuers), domestic

concerns (individuals and corporations), and non-U.S.
registered foreign companies under certain circumstances
Applies to employees and agents
British nationals and corporations

Commercial organizations which have a business presence
in the UK*
Applies to associated persons
Bribery of foreign officials

Deceptive books and records
Paying or receiving commercial bribes *

Bribery of foreign officials
Failure to prevent bribery *
Facilitating payments (exception)

Payment lawful under written laws of foreign country
(defense)
Bona fide expenditure related to the promotion of products or
services or performance of a contract (defense)
Corrupt intent required
Company had adequate procedures in place to prevent

bribes*
No exception or defense for facilitating payments*
No exception or defense for bona fide expenditures*
No corrupt intent required*
Penalties
Criminal penalties up to $2,000,000 and five years

imprisonment per violation
Add'l penalties may be levied under other laws
Civil fines, debarment, disgorgement, private actions also
likely
Enforcing
Authority
Department of Justice (DOJ) - criminal

Securities Exchange Commission (SEC) - civil
UK Serious Fraud Office (SFO)
Of Interest
Books and Records provision greatly expands jurisdiction

and penalties
Effective ethics and compliance programs can lower
culpability score under Federal Sentencing Guidelines
Draft Guidance has been released for comment

Act in force as of July 1, 2011. Not retroactive.
*Different from FCPA
**Not written in Act, but appears possible
Jurisdiction
Prohibitions
Defenses &
Exceptions
Criminal Statute only

Up to 10 years in prison
Unlimited fines *
Mandatory debarment under UK Public Contracts Regulation
2006**
What Does it Mean to Me?

Components of an Effective Program-USSG & Recent DPAs
Risk assessment
Clear anti-corruption culture supported by board & senior officers
Regular reporting to Board on anti-bribery and corruption initiatives
Code of Conduct and relevant written policies prohibiting bribery
Clear procedures for hiring and conducting due diligence on 3rd
parties (background investigations)
Ongoing assessments of 3rd party risk
Training & communication plans for employees and third parties
Appropriate and consistent disciplinary procedures
Well advertised hotline and strong anti-retaliation policies
Rapid and thorough investigation capabilities
What Does it Mean to me?

Types of Organizations at Most Risk
Any global company that has a significant distribution channel, uses

a significant number of agents or engages in joint ventures
Oil, Gas and Energy (extractives)
Pharmaceutical, Medical Device and Healthcare
High Tech and Telecommunications (newest target)
Aerospace and Defense
Chemicals
Conglomerates

Countries with Most Risk (Transparency International)

Risk Posed to Corporations & Executives
Significant corporate fines

Reputational loss & front page headlines
Diversion from business
Personal liability (fines and/or prison) to senior management, board
members and anyone involved in the act of bribery
Dealing with monitor, management of Corporate Integrity
Agreement, etc.
Career derailment

Factors Increasing Bribery and Corruption Risk
Industries relying upon government customers, contract work or

government approval
Use of 3rd parties, particularly in certain geographic regions
Reliance upon 3rd parties to interact with government officials
Inconsistent hiring and due diligence procedures (background
investigations)
Unclear gift policies and use of petty cash
Weak auditing function, or audits not directed towards this risk area
Lack of management commitment to ethical standards (eg. lack of
discipline for violations, or pressure to make sales at any cost)
Lack of training, communication, and awareness of policies
Lack of Ethics and Compliance resources
Culture of retaliation against whistleblowers

Common Third Party-Related Red Flags (Non-Exhaustive)
The country where the transaction is taking place has a history of corruption, bribery or FCPA
violations.
The partner, consultant or agent was specifically recommended by a foreign official.
You are not clear or are suspicious about the reputation of a partner, agent or consultant
because they are not forthcoming with information.
The partner, consultant or agent will be interfacing with governmental officials
The requested method of payment is unusual for a business transaction, or cash is requested.
For example, the partner, consultant or agent requires that payment be made to a third party
or in some other country.
The partner, consultant or agent seems unqualified or lacks the resources to perform the
services offered. The only qualification the representative has is influence over foreign
officials.
The partner, consultant or agent has undisclosed principals, associates or subcontractor with
whom fees or commissions are split.

Practical Advice
You cannot help your firm or yourself by participating in prohibited

behavior
Seek assistance from Legal or Compliance with questions and
before taking any actions
Do not turn a blind eye to suspicious behavior or circumstances
Pay attention to employees potentially exposed to corruption risk
Always ensure third parties are properly vetted and remain
compliant
Ensure your employees are trained and understand firm policies

Practical Advice, cont.
Encourage employees to report suspected wrongdoing

Be careful with Gifts & Hospitality expenses.
Avoid facilitation payments
Pay particular attention to all dealings with foreign
governments (including government-owned businesses)
Help incorporate anti-bribery initiatives into standard
business processes
Help promulgate tone from the top
Integrity has become a larger issue
Increased scrutiny by governments

New legislation like Dodd-Frank, UK Bribery Act, etc
Stakeholder demand for transparency
Fines and criminal prosecutions have reputational,
management and financial impact
Client and business partner requirement for partnerships
based on integrity
Global reach of companies increases span of risk
No one wants to be associated with an organization
that isnt ethical
Walking the walk and not talking the talk is more than an
oft-repeated phrase, but an expected part of what
organizations do
Finding & fixing problems has become more difficult

due to both the volume & the complexity
Quality
ISO14000
European
Quality
ISO9000
SA 8000
CSR
FSG
GRI
WebTrust
National,
State/Provincial
&
SysTrust
Baldridge
IIA
EPA
AML
GuidanceLocal Jurisdictions
FFIEC
CMM CISA
USA
Turnbull
PATRIOT
CCGG
Antitrust
Competitive
Global
&
IRSMarkets
& Tax
AFL-CIO
Practices
Jurisdictions
TIAA
CREFF
AS 4269
NACD
HIPAA
OECD
SAS 94
NYSE
rules
AS 3806
Anti-Fraud
Human
Capital CMM
Used with permission of Corporate Integrity, LLC
COCO
FCPA
FDA
COBIT OFEHO
ISO 17709
ERM
GLBA
AS 4360
NIST
Employee Information
Outsourcing &
Extended Enterprise
Hiring & Retention

Whistleblowing
Prosecutorial Guidance
NASDAQ
Contingent
AntiHHS Guidance
rules
Workforce Harassment
Thompson Memo
M&A
Workplace Wage &
SOX
PCAOB
Legal Compliance
Violence
Hour
SEC
Employment & Labor
Government Contracts
Whats the same and whats different
Size of an organization
Industry
Global reach
Specific regulations
Culture of the organization
Culture of the industry
Regional/country culture
Culture is what is assumed
Greetings:
U.S: One handed handshake
Japan: Bowing and accepting a handshake.
Egypt: Kiss on both cheeks (depending on relationship)

Gifts
Japan: Exchanging gifts symbolizes the depth and

strength of a business relationship to the Japanese and
are usually exchanged at the first meeting. One is
expected to be prepared to reciprocate.
Germany: Giving gifts is considered inappropriate.
Muslim nations: No gifts of food during Ramadan.
China: Gifts are given upon leaving. Giving a gift of a

clock is bad luck.
Culture is hard to talk about
Its nearly impossible to talk

intelligently about corporate
culture.
Culture means different things
at different levels of analysis.
You only notice it when its
different from your own/when
someone makes a mistake.
Specic to the individual
Inherited and learned

Personality
Specic to group or category
Universal
Culture
Human Nature
Learned
Inherited
Layers of Social Abstraction
Individual
team
functional
organizational
social identity
group
national/
societal
Hofstedes Dimensions of Culture

Hofstede (1997) has postulated five different work-related values
which characterize different cultures around the globe Power distance index (PDI): Power distance is the extent to
which the less powerful members of organizations and institutions
(like the family) accept and expect that power is distributed
unequally.
Individualism (IDV) vs. collectivism: The degree to which
individuals are integrated into groups.
Masculinity (MAS), vs. femininity: The distribution of emotional
roles between the genders.
Uncertainty avoidance index (UAI): a society's tolerance for
uncertainty and ambiguity.
Long term orientation (LTO), vs. short term orientation: First called
Confucian dynamism, it describes societies time horizon.
Dimensions of Culture: U.S.A.
Dimensions of Culture: Brazil
Dimensions of Culture: China
Dimensions of Culture: India
dissimilar from the Eastern European.

Co untry Clusters Ac cording to GLOBE
Figure 1:
GLOBE Cluster Analysis
Ang
lo
E a st
er n
ce
Gr ee ry
ga
Hun nia
b
Al a nia
e
Sl ov nd
l
o
P a ia
Russ i a
rg
Ge o stan
akh
Ka z
E as t
uro
er n E
Af
r
Turk
e
Kuw y
a it
Egy
Mor pt
occ
Qa ta o
r
ica
n
le)
Zi m
Na babw
mi e
Za
mb bia
So Ni ge ia
r ia
(Bl ut h
ack Af
Sa rica
mp
pea n
Lat in Europae n
p a in
S
u l
Por tag
r ance
F
me
ric
Ec
an
El ua d
Sa o r
Co lva
d
lu
Bol mb i or
ivi a
Gu Br az a
i
Ar at em l
Co ge nt ala
Ve sta R ina
n
ic
Me ezuel a
xi c a
o
in
A
La
t
P
h i lipip n es
In d
o n e si a
M
a layis a
In dia
h
T ali and
Ir an
Th A
e N us
S
(G w et t ri
h a
erm it
z er
Ge an S erla l an
rm pea nd ds
an kin
y g)
ic
ian
uc
nf
Midd
le
n
ma
Co
e
or g
ap n
ng Ko
Si ng an
Ho aiw ina rea
T
Ch Ko
h
ut pan
So Ja
oS utheast Asian
Can
ad
U. S. a
Aust A.
ra
Ir ela lia
Eng nd
Sout land
hA
(W h
ite S fr ica
Ne w a m ple)
Zeal
and
r
Ge
k
mar
Den and
Finl en
d
Swe
( er nch S peaki ng)

F
dic
Is rael
It aly
w itzerland
S
No r
6
4
An example of using public

domain data to predict
corruption risk.
Transparency International
Corruption Perception Index,
2010
Hofstede 2008
index
Power distance and

corruption
20
40
60
pdi
80
Appendix A: Other Models of Culture
Fons Trompenaars Dimensions of culture
Universalism versus particularism
Universalism: People place a high importance on laws, rules, values, and

obligations. They try to deal fairly with people based on these rules, but rules come
before relationships.
Particularism: People believe that each circumstance, and each relationship,

dictates the rules that they live by. Their response to a situation may change, based
on what's happening in the moment, and who's involved.
Individualism versus communitarianism
Individualism: People believe in personal freedom and achievement. They believe

that you make your own decisions, and that you must take care of yourself.
Communitarianism: People believe that the group is more important than the
individual. The group provides help and safety, in exchange for loyalty. The group
always comes before the individual.
Specific versus diffuse
Specific: People keep work and personal lives separate. As a result, they believe
that relationships don't have much of an impact on work objectives, and, although
good relationships are important, they believe that people can work together
without having a good relationship.
Diffuse: People see an overlap between their work and personal life. They believe
that good relationships are vital to meeting business objectives, and that their
relationships with others will be the same, whether they are at work or meeting
socially. People spend time outside work hours with colleagues and clients.
Fons Trompenaars Dimensions of culture
Neutral versus emotional
Neutral: People make a great effort to control their emotions. Reason influences
their actions far more than their feelings. People don't reveal what they're thinking
or how they're feeling.
People want to find ways to express their emotions, even spontaneously, at work.
In these cultures, it's welcome and accepted to show emotion.
Achievement versus ascription
Achievement: People believe that you are what you do, and they base your worth
accordingly. These cultures value performance, no matter who you are.
Ascription: People believe that you should be valued for who you are. Power, title,
and position matter in these cultures, and these roles define behavior.
Sequential time versus synchronous time
Sequential: People like events to happen in order. They place a high value on
punctuality, planning (and sticking to your plans), and staying on schedule. In this
culture, "time is money," and people don't appreciate it when their schedule is
thrown off.
Synchronous: People see the past, present, and future as interwoven periods. They
often work on several projects at once, and view plans and commitments as
flexible.
Internal direction versus outer direction
Internal Direction: People believe that they can control nature or their environment
to achieve goals. This includes how they work with teams and within organizations.
Outer Direction: People believe that nature, or their environment, controls them;
they must work with their environment to achieve goals. At work or in relationships,
they focus their actions on others, and they avoid conflict where possible. People
often need reassurance that they're doing a good job.
The GLOBE Project's Dimensions of Culture
Power Distance: The degree to which members of a collective expect power to

be distributed equally.
Uncertainty Avoidance: The extent to which a society, organization, or group
relies on social norms, rules, and procedures to alleviate unpredictability of future
events.
Humane Orientation: The degree to which a collective encourages and rewards
individuals for being fair, altruistic, generous, caring, and kind to others.
Collectivism I: (Institutional) The degree to which organizational and societal
institutional practices encourage and reward collective distribution of resources
and collective action.
Collectivism II: (In-Group) The degree to which individuals express pride, loyalty,
and cohesiveness in their organizations or families.
Assertiveness: The degree to which individuals are assertive, confrontational,
and aggressive in their relationships with others.
Gender Egalitarianism: The degree to which a collective minimizes gender
inequality. Future Orientation: The extent to which individuals engage in futureoriented behaviors such as delaying gratification, planning, and investing in the
future.
Performance Orientation: The degree to which a collective encourages and
rewards group members for performance improvement and excellence.
The Global Leadership and Organizational Behavior Effectiveness (GLOBE)
42
Questions?
JAMES MEACHAM, CRISC
Ethics and Compliance Consultant,

Advisory Services
Compliance Americas
James.Meacham@saiglobal.com
www.saiglobal.com/compliance
5637 E 2nd Street

Long Beach
CA 90803
+1 562 219 2389 O
+1 206 650 7490 M
+1 562 200 0184 F

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Copyright 2012 | SAI Global Ltd. | Confidential

About SAI Global

Partnering with clients to build organizational integrity by integrating ethics and

3 fully staffed offices around the world

Americas: Plainsboro NJ, Houston TX and Waltham MA

AsiaPacific: 3 Australian locations

Fully hosted, highly scalable technology: case/issue management, Registry,

Learning & communication: training, awareness, certifications, disclosures,

All supported by in-house advisory services; adult learning and technology

Programs across 120 countries and over 45 languages

Ethics and Compliance Consultant for SAI Global

Copyright 2012 | SAI Global Ltd. | Confidential

Why countering bribery matters

Copyright 2012 | SAI Global Ltd. | Confidential

The legal framework to combat supply-side corruption

Copyright 2012 | SAI Global Ltd. | Confidential

Copyright 2012 | SAI Global Ltd. | Confidential

Bribery and Corruption: Why the Concern?

Foreign Corrupt Practices Act

U.S. Law, enacted 1977

Anti-bribery and Books & Records provisions

Enforced by DOJ and SEC

UK law, enforced as of July 1, 2011

Enforced by Serious Fraud Office (SFO)

Enforced to varying degrees

Enforcement leaders are Germany, Norway,

The OECD Convention requires signatory countries to

Copyright 2012 | SAI Global Ltd. | Confidential

Bribery and Corruption: Why the Concern?

The laws are complicated and continuously evolving

Copyright 2012 | SAI Global Ltd. | Confidential

Bribery and Corruption: Why the Concern?

Copyright 2012 | SAI Global Ltd. | Confidential

Bribery and Corruption: Why the Concern?

* Associated costs are conservative as

Bribery and Corruption: Why the Concern?

Copyright 2012 | SAI Global Ltd. | Confidential

Bribery and Corruption: Why the Concern?

Source: 2010 FCPA Update, Gibson Dunn

Bribery and Corruption: Why the Concern?

UK Bribery Act 2010 in force and includes

FBI has dedicated FCPA agents

German authorities more vigorously

SEC expanding FCPA focus; creates

Copyright 2012 | SAI Global Ltd. | Confidential

Transparency International lauds

Bribery and Corruption: Why the Concern?

Increased cooperation between US Department of Justice and other

The Regulations: FCPA & UK Bribery Act Details

UK Bribery Act 2010

Corporations registered in the U.S. (issuers), domestic

British nationals and corporations

Bribery of foreign officials

Paying or receiving commercial bribes *

Facilitating payments (exception)

Company had adequate procedures in place to prevent

Criminal penalties up to $2,000,000 and five years

Department of Justice (DOJ) - criminal

UK Serious Fraud Office (SFO)

Books and Records provision greatly expands jurisdiction

Draft Guidance has been released for comment

Copyright 2012 | SAI Global Ltd. | Confidential

Criminal Statute only