3 key takeaways from 2020's Airbus anti-corruption scandal
2020-03-20 11:23 Friday
After Airbus' agreed to pay a record U.S.$ 4bn in fines to prosecutors in the U.S., the UK and France last month, the global fallout from high-profile bribery scandal has continued to affect businesses across the world, including in the Asia Pacific region.
Airbus is said to have entered a plea bargain over more than 10 year's worth of alleged corruption and bribery. Prosecutors said the firm used a worldwide network of intermediaries to bribe industry and public officials in different countries including China.
So what can businesses learn from this case when designing and implementing their own anti-corruption program, so that they always stay on the right side of obligations and compliance? Here is a trio of lessons to help your firm maintain a stronger anti-corruption defense.
Scrutinize entertainment and gift and expenses
Airbus paid for lavish, all-expenses-paid outings for decision-makers and influencers to places including Hawaii and Utah. All companies should make sure they have a documented entertainment and gifts policy with proper controls. They should also set a reasonable and modest limit for receiving and giving gifts or entertainment.
If public officials are involved, the normal amount could be lower, just a $.U.S. 100 or less, dependent on pre-approval from compliance departments. They could even be expressly prohibited, to deter noncompliance.
Another key to ensuring controls are effective is that both finance and compliance departments should work in close collaboration to record the flow of entertainment and gifts.
Examine 3rd-party business relationships like a hawk
According to a U.S. court document, Airbus was able to engage in a huge scheme to bribe decision-makers and influencers by taking advantage of "business partners." To hide the amount of money such groups received, the main method used was to funnel payments out of bank accounts affiliated with the company only indirectly.
All companies should ensure they have an independent compliance department or similar, which conducts proper due diligence on any 3rd-party business relationships before making a payment. Basic due diligence must cover questions like: "Why is the 3rd-party critical for the company's business?" and "Who are the beneficial owners of the 3rd-party?"
Whilst it might be impractical for all 3rd-party business relationships to be scrutinized to a deep level, companies can put themselves in better positions by changing the amount of scrutiny toward the 3rd-party according to the level of risk posed.
Pore over internal communications carefully
To keep the scheme in operation, employees at Airbus allegedly sent occasional emails to one another and even shared an internal spreadsheet which noted the initial and true recipients of company payments to "business partners."
Any company should have an appropriate policy regarding surveillance, to look at employees' internal communications depending on its risk factor, including corporate chats and emails (in accordance with all relevant laws).
An independent compliance department should be allocated the responsibility of carrying out the surveillance. Any surveillance team should focus on words that might be employed as euphemisms for the word "bribe" and out-of-the-ordinary discussions or shared files, like internally created 3rd-party invoices.
No matter how reputable or large a company has become, the Airbus scandal shows that any firm can still operate above the law. Noncompliance can lead to very serious commercial consequences. The latest situation highlights the necessity of having an effective compliance department, and the importance of every employee adopting the correct mindset for compliance.