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J A PA N L AW AWA R D S : M O R I H A M A DA & M AT S U M O T O A N D S I M P S O N T H AC H E R S H I N E

AUGUST 2015
ASIA EDITION

MCI (P) 178/01/2015


issn 0219 6875
KDN PPS 1793/07/2013(025520)

CELEBRATING THE REGIONS FINEST CORPORATE LEGAL TEAMS


THE C-WORD

Companies tackle
corruption minefields

EXPANSION PLANS
Bae, Kim & Lee eyes
ASEAN and beyond

HK LAW AWARDS

The full list of finalists


unveiled

INSIDE
n BIG STORY

n LEAGUE TABLES

n DEALS

PAGE 16

PAGE 20

PAGE 50

n APPOINTMENTS

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IN-HOUSE FOCUS

ASIAN LEGAL BUSINESS


AUGUST 2015

CLEARING HOUSE
AS ASIAN COUNTRIES ROLL OUT OR STEP UP THEIR ANTI-CORRUPTION EFFORTS, WHAT
SHOULD COMPANIES DO TO ENSURE COMPLIANCE AND SIDESTEP POTENTIAL MINEFIELDS?
EILEEN C. ANG FINDS OUT

nti-corruption efforts are on an


upsurge across the world, and
nowhere is this campaign more
evident than in Asia, where several
countries have recently passed new laws or
reinforced existing frameworks designed to
clamp down on corruption. Lawyers say that
while multinational companies with Asian
operations continue to focus on U.S. and
UK anti-corruption legislation, including the
U.S. Foreign Corrupt Practices Act (FCPA)
and UK Bribery Act, MNCs should also pay
equal attention to local laws lest they run
afoul of regulators and expose themselves
to enforcement risks.
This development comes amid bribery
scandals that have shaken up the region,
including a 2013 case revolving around
GlaxoSmithKlines marketing and promotion
strategies in China and a 2014 case involving
Japan Transportation Consultants and the
kickbacks it paid to government officials in
Vietnam, Indonesia and Uzbekistan from
2009 to 2014. The two companies were
slapped with significant penalties GSK
was ordered to pay a record-breaking fine of
3 billion yuan (nearly US$490 million) and
faced public humiliation in the aftermath of
government investigations into their business
practices.
How are businesses affected by a tighter
compliance environment? I think the impact
is that most conscientious MNCs working in
Asia have built up robust compliance programmes that acknowledge this global effort
to stamp out corruption while also building
an internal culture of compliance that acknowledges that each company operating in
Asia can contribute to the effort beyond the
regulations put in, says Dan Shea, director
of compliance and litigation at Microsoft Asia
Pacific & Japan.
However, having a do not bribe policy
isnt enough to ensure compliance, as companies need to devise and implement pro-

MOST CONSCIENTIOUS
MNCS WORKING IN ASIA
HAVE BUILT UP ROBUST
COMPLIANCE PROGRAMS
THAT ACKNOWLEDGE
THIS GLOBAL EFFORT TO
STAMP OUT CORRUPTION
WHILE ALSO BUILDING
AN INTERNAL CULTURE
OF COMPLIANCE THAT
ACKNOWLEDGES
THAT EACH COMPANY
OPERATING IN ASIA CAN
CONTRIBUTE TO THE
EFFORT BEYOND THE
REGULATIONS PUT IN.
Dan Shea, Microsoft
cedures that support it, says Jarrod Baker,
senior managing director at FTI Consulting.
These procedures should be around items
including but not limited to, gifts and entertainment, facilitation payments, charitable
donations, training, use of third parties,
he adds.
HOTBED OF CORRUPTION?
Asia is home to some of the worlds most
and least corrupt countries, according to the
2014 edition of Transparency Internationals
annual Corruption Perception Index. Out of

the 175 countries and territories included in


the 2014 Index, which is aimed at assessing
perceived levels of public-sector corruption,
Singapore and Japan were among the cleanest countries, ranking 7th and 15th, respectively. Meanwhile, Cambodia and Myanmar
were tied at 156th place, which indicates that
they are viewed as very corrupt.
As such, it doesnt seem surprising that
Asia is in the crosshairs of U.S. regulators
intent on fighting international corruption.
Data from a 2015 survey by global law firm
Freshfields Bruckhaus Deringer reveal that
there are over 100 ongoing investigations
in the region under FCPA, which prohibits
individuals or companies from making illegal payments as well as giving anything of
value to public officials, parties or candidates
outside the U.S. to help in securing or retaining business. In comparison, Africa is facing
at least 44 FCPA-related probes, while the
European Union has only 19 investigations
under way.
Does this mean that some Asian jurisdictions more difficult than others? Not
necessarily, according to Shea. I think like
any region in the world, there are countries
that sit high on Transparency Internationals
Corruption Index in Asia that any MNC should
pay particular attention to when conducting
business there. You need to be diligent in all
countries but there are countries at top of
that list that have likely earned their ranking
because of historical, economic or political
instability, he says.
Baker adds: Ultimately, if the company
is subject to a law like the FCPA, that is the
compliance standard to which it must operate across the world. Local nuances should
be considered, but it is best to avoid making
local exceptions because where do you draw
the line? Whilst the message that this is not
the way we do business may take time and
effort to get across, there are recent highprofile corruption CONTINUE D O N PAG E 18

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IN-HOUSE FOCUS

ASIAN LEGAL BUSINESS


AUGUST 2015

Relevant anti-corruption laws/


regulations

Anti-corruption body/regulator

Hong Kong

India

Indonesia

Japan

Independent Commission Against


Corruption

Prevention of Bribery Ordinance,


Banking Ordinance, Companies
Ordinance, Theft Ordinance, Organised
and Serious Crimes Ordinance

Central Bureau of Investigation (AntiCorruption Division)

Prevention of Corruption Act 1988,


Lokpal and Lokayutas Act 2013,
Prevention of Money Laundering Act
2002

Public Prosecutor, Financial


Transaction Reports and Analysis
Centre, Commission of Corruption
Eradication

Anti-Corruption Law, Anti-Bribery Law,


KPK Law, Indonesian Criminal Code,
Anti-Money Laundering Law

No single body; National Police Agency


and Public Prosecutors Office work
with specialist units

Penal Code, Unfair Competition


Prevention Act, National Public Service
Ethics Act, National Public Service
Ethics Code

Malaysian Anti-Corruption Commission

Malaysian Anti-Corruption Commission


Act 2009, Penal Code, Anti-Money
Laundering and Anti-Terrorism
Financing and Proceeds of Unlawful
Activities Act 2001

Anti-Corruption Commission

Anti-Corruption Law, Penal Code, AntiMoney Laundering Law of 2014

Philippine National Polices Criminal


Investigation and Detection Group,
National Bureau of Investigations antigraft section

Revised Penal Code, Anti-Graft and


Corrupt Practices Act, Anti-Money
Laundering Act

Corrupt Practices Investigation Bureau

Prevention of Corruption Act, Penal


Code, Corruption, Drug Trafficking and
Other Serious Crimes (Confiscation of
Benefits) Act

Anti-Corruption and Civil Rights


Commission, Financial Intelligence Unit

Korean Criminal Code, Specific Crimes


Act, Anti-Corruption Act, Foreign
Bribery Act, Kim Young-Ran Law
(effective September 2016)

Investigation Task Force for


Criminal Profiteering Crimes, Public
Prosecutors Office, Ministry of Justices
Investigation Bureau and Agency
against Corruption

Anti-Corruption Statute, Criminal Code,


Money Laundering Control Act

National Anti-Corruption Commission,


Public Sector Anti-Corruption
Commission

Organic Act on Counter Corruption,


Penal Code of Thailand, Offences
Relating to Submission of Bids to State
Agencies Act

No single body; Ministry of Public


Security and Ministry of Defence work
with other agencies/groups

Law on Anti-Corruption, Penal Code,


Law on Anti-Money Laundering

Malaysia

Myanmar

Philippines

Singapore

South Korea

Taiwan

Thailand

Vietnam

Source: Asia Pacific Anti-Corruption Report (5th edition) by Herbert Smith Freehills

cases within
Asia that can help with such a message.

CO N T I N U E D F RO M PAGE 16

ALIGNMENT AND VIGILANCE


Having a clear anti-corruption policy thats
underpinned by solid, implementable procedures is all very well, but how should MNCs
handle the tricky balancing act of aligning

these programmes with the approach used by


the head office and adapting to the realities
of local markets?
Shea recommends a strategy that combines a macro view and a micro focus. A MNC
needs to have a strong, central compliance
programme that encompasses all the policies that apply to all employees throughout

the world. There are certain policies that will


always apply, without exception, everywhere
you operate e.g. no bribes or kickbacks.
From there, the local subsidiaries may adopt
further compliance policies or implement
additional training or controls that take into
account any additional local laws and regulations, he says.
Baker advises companies to be vigilant
about high-risk touch points for corruption
and avoid using a cookie-cutter approach to
pinpointing and evaluating corruption risks.
These are interactions within the companys
business operations where the potential exists for corruption to occur. For example, is
there a third party acting on the companys
behalf in obtaining a permit from a government authority? he asks.
As such, Baker points out that its never a
good idea to simply rely on a check list and
just tick off to-do boxes. Companies should
delve into their business operations to identify
where and how they are vulnerable to corruption. One way to do this, he suggests, is
to conduct interviews with key personnel in
critical roles, such as managers at the head
office, regional heads, legal teams and so
on, in order to understand the nature and
extent of various types of corruption risk, especially as those risks relate to the companys
specific business model, structure, strategy
and resources.
MNCs should also have a focused programme and rhythm of regional compliance
committees in each market, suggests Shea.
These regional committees should be composed of senior leaders from the companys
finance, legal, human resources and other
major departments, and their main task is
to review corruption risks and implement
controls and policies consistent with the
goals of the central compliance programme.
By consistent engagement, each regional
compliance committee can discuss and address risks, issues or regulations specific to
its country or region. The central compliance
programme should monitor the regional
compliance committee activity so that the
programme is running consistently and effectively, taking into account the variance of
challenges faced in a particular country or
region, he says.
As Asian countries continue to establish
their own regulations and enforcement regimes against corruption, MNCs need to stay
alert and consistently monitor these developments. I think the challenge is making the
appropriate investment in tracking changes
in local regulations and enforcement practices, adds Shea.

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