Execs ill-prepared for anti-corruption laws

Private equity compliance officers have a tough task getting portfolio companies up to speed with US and UK anti-corruption legislation, according to a new survey from Kroll.

A majority of senior executives say their companies are inadequately prepared for increased enforcement of the Foreign Corrupt Practices Act (FCPA) in the US and the Bribery Act in the UK, according to Kroll’s latest global fraud report. 

The issue is of increasing importance to private equity firms, who as financial sponsors can be responsible for addressing corruption concerns at the portfolio company level.  

The twin pieces of legislation require firms to adopt internal controls and policies to prevent bribery or corruption. 

Less than half (43 percent) of executives say their senior management, agents, vendors and foreign employees are familiar and compliant with the UK Bribery Act and FCPA. Only a slim majority of respondents (54 percent) said their company has in place adequate procedures to prevent bribery at all levels of the organisation.  

As such, fraud and corruption concerns are dissuading companies from entering emerging markets where these risks are more pronounced, said Melvin Glapion, Kroll’s head of business Intelligence, during a panel discussion at the Private Equity International Emerging Markets Forum on Tuesday. 

Compliance therefore means a thorough investigation “of who you are partnering with in emerging markets”, he added.