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Some Asian companies recently have been facing major financial penalties as a result of anti-corruption legislation. Despite these high-profile cases, a prevailing attitude of ambivalence continues among Asian companies, which has historically resulted in substantial losses both tangible and intangible.

Losses surrounding violations of the FCPA are well illustrated in the recent fallout from the Bonny Island Bribery Scheme, while the case further highlights that the reach of prosecutors extendswell beyond the shores of the US.

In January 2012, Japanese trading company Marubeni agreed to pay a US$54.6 million criminal penalty for the role it played in a decade-long Bonny Island scheme.  Marubeni sought to bribe Nigerian government officials for contracts on behalf of its client, TSKJ joint venture, a clear FCPA violation. 

Previously, in 2011, Japanese engineering and construction company JGC agreed to pay a US$218.8 million criminal penalty for the role it played in the same scheme. 

Fines from Western regulators can be hefty, but they are often the first of many bodies to impose penalties against companies in violation of anti-corruption legislation. 

Companies typically face further fines in the market where the infringement occurred, as well as the jurisdictions in which they operate or are registered.  Furthermore, organizations found guilty of a violation are required to return the profit they made from their corrupt practices, and local governments are increasingly collaborating with US, UK and other participating regulators to allow access to assets outside of the their home jurisdiction. 

Asian multinational corporations (MNCs) with operations overseas can actually find assets seized as a result of this collaborative enforcement.

Companies can face further “fallout” costs as a result of corruption, even in the absence of a formal violation. 

In August 2010, Singapore plastics manufacturer JLJ saw the company’s share price plummet following the arrest of Apple executive Paul S Divine, who was charged with receiving kickbacks from JLJ in exchange for confidential information on Apple products.

While JLJ claimed no wrong-doing and were not prosecuted under the FCPA, the fact a former JLJ employee was indicted in a related civil suit was enough to drive down the stock price.

“Misconceptions about the enforceability of global anti-corruption legislation seem to remain across Asia," says Violet Ho, senior managingdirector, Kroll Greater China. "Companies need to realise that in a globalised world, they are responsible for the actions of their employees in every market they operate."

The consequences of inaction can be severe and there are no more havens in which to hide, says Ho. 

"‘Ignorance is not a defense’ is a clear and consistent message in all  key international anti-corruption legislation.  It is thus critical to design, implement and monitor a thorough compliance program to mitigate these real risks.”

Abigail Cheadle, managingdirector, Kroll Southeast Asia, adds that with the recently implemented UK Bribery Act, companies need to double their anti-corruption efforts not only to comply with legislation but to avoid the fines, disclosure requirements, possible arrests, and costs of remedial action which frequently accompany violations. 

"Falls in stock price and intangible reputational damage are further compelling reasons to maintain the highest compliance standards,” says Cheadle.

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