How to Prevent Foreign Corruption

When doing business with foreign countries it can be tricky to navigate the “dos” and “don’ts.” By learning how to spot red flags and by asking the right questions, you can prevent your company from going down the wrong path. The first step is understanding that foreign corruption, such as a bribe, can take place in many forms and not just in the form of exchanging money. More often, you’ll see corruption taking place in the form of gifts.

“It’s exceedingly rare these days that a bribe paid or offered or promised takes the form of cold hard cash. It is more likely a favour in the form of travel or employment for the minister’s nephew,” says Kris Robidoux, a partner with Gowling Lafleur Henderson LLP.

In order to get a good understanding of the “dos” and “don’ts,” Thomson Reuters Canada reports on a panel of experts answering a series of scenarios regarding corruption.

Scenario one: What would you do if a foreign language newspaper ran a story accusing your company, a telecommunications company, of bribing the former telecommunications minister in the country you were operating in to obtain a key license. Would you ignore the piece or investigate?

“You can’t ignore it. Where there is smoke there’s fire,” said Jane Fedoretz, vice president and general counsel with industrial services provider CEDA International Ltd. based in Calgary. “The authorities don’t ignore the foreign press and neither should you.”

Scenario two: Consider a sales team at a medical device company working in China that was asked to provide certain gifts to the doctor and distributors in the country during the two festival seasons. The gifts included mooncakes, vouchers, envelopes with cash and watches.

The panel advised against gifts; however, doing business in China is different. In China, there’s a thin line between influencing decisions and building relationships. Culturally, it’s rude not to provide or accept a gift.

Suzanne Rich Folsom, chief regulatory and compliance officer and deputy general counsel with ACADEMI LLC, said, “A doctor in a state-owned hospital is going to fall under the category of public official…A distributor is a link to the doctor and therefore the company would still be liable under FCAP.”

In order to comply with FCAP, the sales people in this scenario can’t offer these gifts, unless maybe it’s a mooncake. It’s more important to comply with the FCAP, even if it means losing business.

“It’s a hard message but the bottom line is your company can’t afford not to comply,” says Rich Folsom. “All of those gifts listed are going to be found to be in violation, except maybe a mooncake.”

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