Q&A with ABB Legal Counsel on Anti-Corruption Compliance

CIPE’s Anna Kompanek Director of Multiregional Programs interviews Lisette van Eenennaam Group Legal Counsel Integrity, Vice President, ABB Asea Brown Boveri Ltd about anti-corruption compliance for international corporations.

What attracted you to the field of anti-corruption compliance?

I became interested in related topics quite early when I was in law school in the Netherlands and I chose to specialize in International and European law – specifically human rights. I had the opportunity to do an internship at a Dutch multinational company where I supported the drafting of their first anti-corruption policy. About a year later, for my Master Thesis, they asked me to research the United Nations draft norms on human rights for international corporations. To my slight surprise, my first job saw me at a corporate investigations company where I started as an investigations analyst. Corporate investigations was fun and exciting, and as a result I moved on to several jobs in the field of private and public fraud and corruption investigations. I became more involved in and intrigued by corporate compliance topics when I started working for my current employer as an internal investigator. I have had the opportunity to travel a lot and see the issues from a broader perspective. I realized that understanding the mechanics of ethics in the world of business is more complex than just looking into a breach of your internal code of conduct. It required a level of understanding of cultural, geographical, legal and economic circumstances that influence a global corporate culture. This is how I became more and more interested and engaged in working on preventive measures as well as remedial efforts.

From an international corporation’s perspective, what do you see as the biggest challenges in anti-corruption compliance when you work with companies in emerging markets?

I can only express my personal views on this question. Companies that are listed on several stock exchanges must abide by several specific laws and regulations as well as local anti-bribery and corruption laws such as the US FCPA or the UK Bribery Act for example. Understanding and willingness to adhere to such laws create a situation where larger businesses are perhaps a few steps ahead in how to do business in an ethical way. Of course there is a stick/carrot mechanism to such laws as adherence and a good relationship with anti-bribery and anti-corruption regulators can prevent not only financial losses but also protect a company’s reputation. Next to this, I hear from my peers in smaller or mid-size companies that in their opinion bigger companies have more “bite” when it comes to saying no to corrupt business proposals because they will not default the next day if they lose business due to refusing to pay a bribe or a facilitation payment. I tend to agree with this statement. Take a small example of a truck remaining stuck for another day at the border. It will costs some money in terms of lost time and an apology to the customer but the company’s reputation and the overall financial standing should not be affected too much. This may not be the case for a smaller or financially less stable company. It can be a challenge to explain to business partners in emerging markets, who are often smaller companies and legally perhaps not bound by the same laws you are, the importance of their compliance with such laws for you. Therefore, you have to put time and energy into properly explaining the importance of doing business in an ethical way, what it means to your organization, and to establish a level of agreement and understanding to abide by the same ethical standards. At the end of the day they are often the ones confronted directly with solicitation for bribes or facilitation payments by local authorities and they need tools and back up in order to refuse such requests.

CIPE works with chambers of commerce and business associations in many countries where compliance is still a fairly new concept. We help these organizations make a business case to their members that committing to ethical standards, while often difficult, makes them more attractive partners for corporations like ABB. When you are evaluating a local company as a potential business partner, how big of a consideration is it that this company has a compliance system in place?    

Most larger companies have extensive processes in place to do due diligence on their business partners. Next to the basic checks and regular follow-ups that one can do I see a benefit in building up a strong relationship with your business partner. It makes sense to have frequent contact and communication on potential bribery and corruption risks in the industry or geography where you and your business partner operate.

My personal view is that it can make a big impact if larger companies support their business partners in setting up their own internal compliance programs or even provide their staff with training in compliance processes as well as acknowledging and assessing potential red flags. If you can help business partners – be it an agent, a distributor or a supplier – to understand that they can have a long-lasting business relationship with your company, they will have an incentive to abide by those rules and regulations. I have personally supported such activities in the past and it makes a huge difference to the business partner to see that their customer is strongly invested in their ethical business practices. Not only can it create a sense of pride, it is something of value that becomes a selling point to most of their customers. I strongly believe that in the current anti-corruption and compliance climate most larger companies will always choose a business partner with a strong compliance set up over a company that has nothing, or nothing effective, in place.

With these checks and balances you establish a good and lasting relationship with your business partners in which everyone wins when playing by the rules.

Let’s close with a bigger picture question. The world has evolved quite a bit in the last couple of decades, from corruption being a taboo subject to being at the core of efforts of both corporations and development organizations. Do you feel hopeful about this trajectory continuing?

Yes, I am a full-blown optimist. Even if you only go back ten years, you see the development of not only global anti-corruption laws and standards but also compliance programs that companies are implementing. Countries are increasingly enforcing corruption breaches globally. The media is in its own way raising awareness and promoting political, corporate and civil society discussions on business ethics.

Corporations are often perceived and portrayed as the “bad guys” but a lot of companies do fight corruption within and outside of their corporate structures. There are many companies that are undertaking serious efforts to improve the ethical standards of the geographies and industries in which they do business by trying to enforce their internal compliance cultures outside their own doors. Politicians, NGOs and civil society have their respective realms of fighting corruption and do great work. I think that there is significant progress here and that companies are one of the biggest drivers of this change but of course we need a combination of all those initiatives to come together. Communication lines between different anti-corruption actors need to remain open and I think that this is definitely moving in the right direction.