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A Very Useful Toolkit for Corruption Risk Assessment — SMEs Operating in South East Asia (and Beyond)

April 20, 2021

By Nicola Bonucci, Shaun Wu,
& Jian Wu

On March 31 2021, the Organisation of Economic Co-operation and Development (“OECD”) officially launched a Self-Evaluation Tool for Corruption Risk Assessment Processes ,specifically tailored for small and medium-sized enterprises (“SMEs”).  The launch took place during an OECD event on “Business Integrity Trends in Asia-Pacific: Beyond the Covid-19 crisis” (for the recording of the event please click here).

The tool follows the publication of an OECD/UNDP Report on Responsible Business Conduct and Anti-Corruption Compliance in Southeast Asia, which was discussed at length on the Paul Hastings International Regulatory and Enforcement blog, and on our March 2021 webinar on the topic.

The Self-Evaluation Tool for Corruption Risk Assessment Processes is intended for SMEs that have an anti-bribery and corruption compliance programme in place.

This tool is not intended to help companies build their own corruption risk assessment processes from scratch, but rather to assist them in identifying any weaknesses in their assessment processes, and to understand the level of maturity of their assessment methodology in order to improve further.  Similarly, the tool is not designed to provide any certification or endorsement, but rather to allow companies to better invest their resources and refine their procedures.

The tool is built around 12 questions. Based on the answers provided to the 12 questions, the anti-bribery and corruption compliance programme is classified as belonging to one of four categories: “nascent”, ”emerging”, ”established”, and “leading”. 

A number of recommendations and benchmarking documents are attached to each category of assessment.  The tool is quite simple to use and does not require large investment of time or resources, which is very important and highly valued from the perspective of SMEs.

The tool is currently available in English only but it is expected to be translated shortly into Thai, Vietnamese, Bahasa Indonesia and Bahasa Malaysia.  All versions will be available here.

While the tool has originated with South East Asia in mind, it could certainly help SMEs operating well in other parts of the world. Thus, the OECD would be well advised to make it available in other languages such as French, Spanish, Portuguese, and, last but not, least Chinese.

The tool can help companies identify potential risks that could create problems or hindrance in operating regular business activities and address them properly in a timely and effective manner.  Considering the context of anti-bribery and corruption compliance, the assessment for corruption risk is essential for the construction of an effective compliance programme, especially in the post-pandemic era.  For instance, companies with  weakened control environments  due to remote work or staff cutbacks may be subject to an increased risk of misconduct or fraud.  Meanwhile, conducting due diligence for joint venture partners, third parties, and agents is becoming increasingly difficult in a COVID-19 world.

Recently, more and more countries have set out their comprehensive legal requirements or guidance under their existing anti-corruption laws and regulations for companies to conduct risk assessments.  In the U.S., the Department of Justice (DOJ) released its “Evaluation of Corporate Compliance Programs” [link to DOJ document; Link to PH alert] in June 2020 to assist  companies with understanding the potential legal risks associated with doing business in foreign countries within the context of the U.S. Foreign Corrupt Practices Act (FCPA), and to take steps to implement and update their compliance programs accordingly.  In Malaysia, the newly amended Malaysian Anti-Corruption Act took effect in 2020, intending to introduce an adequate procedure defence similar to that set out in the UK Bribery Act.  Thailand also enacted similar legislation and issued guidance for private businesses in assessing and managing their corruption risks.

Overall, in a complex and globally connected world, SMEs’ exposure to the risk of corruption increases by the day.  Making use of tools like the one that has been developed by the OECD, not only helps maintain a high standard of compliance but also shows self-awareness in encouraging and assisting the  SME community.  The real benefit and value of such a tool is that it indeed provides a roadmap of improvement for SMEs’ anti-bribery and corruption compliance programmes which are really willing to stay on top of things.

Contributors

Image: Nicola Bonucci
Nicola Bonucci
Partner, Litigation Department
Image: Shaun Wu
Shaun Wu
Partner, Litigation Department