Focus on corporate liability for corruption in ASEAN: holding businesses responsible for corruption offences  

UNODC supports ASEAN jurisdictions in implementing regulations against bribery involving the private sector

Posted on 16 November 2018.

Panelists at the ASEAN Responsible Business Forum on
27-28 August 2018 in Singapore, addressing business integrity in the ASEAN region

Private companies in Southeast-Asia are both perpetrators and victims of corruption. In addition, the private sector has been continuously plagued by human rights abuses and environmental disasters and various reports indicate that corruption enables these violations. For instance reports highlight how some foreign companies pay off local organized crime groups to operate safely, fueling the crime economy. Because of corruption, Laotian, Burmese and Cambodian undocumented workers are left in forced labor on board of fishing vessels. Corrupted allocations of land to extractive companies in Indonesia, Malaysia and the Philippines are depleting forests and threatening livelihoods.

In 2018, ASEAN economies have attained a record level in attracting massive foreign direct investment relative to GDP, which are expected to remain high.  Investment needs in infrastructure up to 2030 in the region are estimated by ADB at $1.7trillion per year. Rising investment opportunities require a growing and active role for ASEAN jurisdictions and the business community to fight pervasiveness of corruption in the region. In 2017 in Cambodia alone, 88% of firms were still expected to give gifts to secure government contracts (World Bank). In recent cases, foreign companies operating in the region have been prosecuted by their respective jurisdictions for paying large amounts of bribes to intermediaries to secure contracts: for example in the 2017 Rolls Royce case, $18.8M in bribes were given in Thailand. In another 2018 case, Panasonic executives illegitimately paid $7M to at least 13 sub-agents in Asia. In order to enable ASEAN countries to effectively regulate business practices of both domestic and foreign companies, a lot remains to be done. In the first place, the development and implementation of regulatory frameworks to forbid bribery of foreign public officials and establish the liability of legal persons are key. ASEAN Member States have all ratified the United Nations Convention Against Corruption (UNCAC), which includes requirements to introduce these norms.

The need to develop compliance and corruption prevention programmes for businesses is another important priority; this was discussed at the Regional Seminar on Effective Measures for the Private Sector to Prevent Bribery, organized by UNODC with the National Anti-Corruption Commission of Thailand, the Thai Institute of Directors and the American Bar Association, on 2-3 August in Thailand. Participants shared their latest developments in combating foreign bribery and introducing prevention of corruption mechanisms. The new guidelines developed by NACC in Thailand on legal requirements and internal control measures to combat bribery were presented. Securities regulators, stock exchange and business associations illustrated how they can support each other to create a level-playing field: 'In Thailand, for example, 11 asset management companies, controlling over 90% of the domestic market share, introduced 'corporate governance funds' contributing 40% of their fund management fees to support anti-corruption programmes' noted Mr. Sucharitakul, Securities and Exchanges Commission (SEC).

In order to be truly effective, strategies to combat corruption must be built on the joint actions of States, private sector and civil society. With this in mind, UNODC supported the ASEAN Responsible Business Forum organised by the ASEAN Corporate Social Responsibility Network (ASEAN CSR)   on 27-28 August 2018 in Singapore, providing a platform for key stakeholders to engage in practical discussions about the future of businesses and their role in fighting corruption. Discussions illustrated the business case for companies to operate in an ethical way and the pressing need for action: 'Our entry point is to start with companies listed in the Stock Exchange Commission (SEC) in Thailand, having clear anti-corruption policies' noted Dr. Nonthasoot, Thailand's Representative to the ASEAN intergovernmental Commission on Human Rights (AICHR). 'Climate change goes hand in hand with corruption': Mr. Gerard Forlin, lawyer, gave useful insights on how governments can tackle corruption and its impacts on the environment by implementing international legal standards such as the UK Bribery Act.

The fact that companies can now be punished by ASEAN jurisdictions is a cultural change, given the traditional maxim that requires moral culpability for the commission of criminal offences. Positive trends since the 1st review of the UNCAC Implementation Review Mechanism can be noted, as legislations on liability of legal persons are progressively being introduced in ASEAN -Indonesia, Singapore, Malaysia and Thailand being the most prominent examples, but significant gaps remain, pertaining mostly to the enforcement of these norms.

On the second day of the Forum, the Regional Working Group on Promoting Integrity in ASEAN, led by ASEAN business associations, developed its 2018-19 private sector's engagement action plan.

Some useful UNODC tools:

Interactive learning modules on the UN Global Compact's 10th principle and UNCAC, translated in Bahasa and Vietnamese, targeted at everyone who acts on behalf of a company

A Resource Guide on State Measures for Strengthening Corporate Integrity

The Anti-Corruption Ethics and Compliance Handbook for Business, developed by companies with support of the OECD, UNODC and WB, provides further assistance through case studies