Demonstrating Adequate Procedures with ISO 37001 ABMS Certification and Training

As the international outcry on bribery and corruption practices continues to tighten its grip around rogue players in the private and public business sectors, global organisations continue to ramp up their efforts to develop effective frameworks to prevent, detect and report bribery and corruption. And by fortifying their anti-bribery management systems, such organisations are further helping their cause as such systems can play a pivotal role in establishing “adequate procedures” as a compliance defense in the event of a bribery accusation.

“Adequate procedures” is a term made popular through the UK Bribery Act of 2010, which poses the potential of a company avoiding liability for failing to prevent bribery if that organization can demonstrate sound and established policies and procedures that deter individuals (inside and outside of the organisation) from partaking in questionable or corrupt conduct. A key challenge, though, is that “adequate procedures” takes on different meanings, depending on what country or jurisdiction one may reside.  Further, most enforcement agencies and government authorities offer little guidance that pinpoints what exactly “adequate procedures” means when considered as a possible defense in a legal proceeding.

Consider two international legislative provisions that offer “adequate procedures” as a possible legal defense consideration along with the most recent National Anti-Corruption Plan of the Malaysian Government, and discover how a newly adopted international standard can offer multi-national organisations specific guidelines in developing a globally accepted anti-bribery management system that may support most “adequate procedures” defenses.

UK Bribery Act of 2010

Under the UK Bribery Act, an “adequate procedures” defense would be considered during an investigation into a corporate failure to prevent bribery.  The Act provides commercial organisations with a defense to liability when commercial organizations can prove and demonstrate that they had in place proper procedures designed to prevent persons associated with them from undertaking bribery related conduct.

Consequently, corporations that are otherwise liable for violating the corporate failure to prevent bribery provision can escape criminal liability from the provision if they can prove that they had in place “adequate procedures” to prevent the relevant illegal conduct from occurring.  This defense is unique in that it contends that corporations are acting in good faith and taking proper precautions throughout the organization in implementing adequate compliance procedures, and subsequently can avoid being held criminally accountable for the failure to prevent bribery.  This defense is significant in that there is no such defense under the FCPA (see below) or most other foreign anti-bribery laws.

FCPA (U.S. Dept. of Justice)

While corporate compliance procedures are not considered in the liability phase of the FCPA, they are taken into account during the sentencing phase by the U.S. DOJ relevant to the FCPA.  The United States Sentencing Commission outlines through its Federal Sentencing Guideline Manual six factors — four aggravating and two mitigating — that a sentencing court must consider in determining the appropriate penalty on organizations convicted under the FCPA.  The existence of an effective compliance program is one of the two mitigating factors.  Subsequently, an organization convicted of FCPA violations can use the existence of an effective compliance program to potentially reduce a penalty against it.

Malaysian National Anti-Corruption Plan 2019-2023

Under Section 17A (3) of the Malaysian Anti-Corruption Commission act, if the commercial organisation is found liable under the corporate liability provisions, a person who is the director, controller, officer or partner of the organization, or a person who is concerned with the organization’s management affairs at the time of commission of an offense, is deemed to have committed that offense unless such person can prove that the corrupt act was committed without his consent or connivance and that he exercised due diligence to prevent that commission of the offense as he ought to have exercised with regard to the nature of his function in that capacity and the circumstances.

Hence, there is a need for the company to put in place “adequate procedures” as a defense in case there is proven corruption by the associated individual.  The Malaysian Anti-Corruption Commission MACC has issued guidelines which constitute “adequate procedures.” In the National Anti-Corruption Plan, Tun Dr. Mahathir bin Mohamad, Prime Minister of Malaysia on 29th January 2019 developed initiative number 2.1.3 which seeks “To introduce Anti-Bribery Management System (ABMS)MS ISO 37001 certification in all Government agencies”  within two years (Jan 2019-Dec 2020). The guidelines further state in initiative 6.2.4 “To propose Anti-Bribery Management System (ABMS) MSISO 37001 certification as a requirement for State-Owned Enterprises (SOEs), Company Limited By Guarantee (CLBG) and the private sector to bid for Government contracts”.

In complying with these guidelines and to prove “adequate procedures”, public and private sector organizations should implement the ISO 37001 certification process which would provide proper assurance that the organization has succeeded in establishing, implementing, maintaining, reviewing and improving its Anti-Bribery Management System.

Demonstrating “Adequate Procedures” through ISO 37001 Certification

ISO 37001 Anti-Bribery Management System is an internationally accepted standard that specifies the procedures by which an organization should implement in preventing bribery while detecting and reporting any bribery incident that occurs.

The standard requires organizations to implement these procedures on a reasonable and proportionate basis according to the type and size of the organization, and the nature and extent of bribery risks faced.  It applies to small, medium and large organizations in the public and private sector and can be implemented in any country.  Though it will not provide absolute assurance that bribery will completely cease, the standard can help establish that the organization has in place reasonable, proportionate and adequate anti-bribery procedures.

® Center of Excellence Limited is fully accredited as a Conformity Assessment Body (Certification Body) to assist your organization in attaining ISO 37001 certification through a thorough bribery risk assessment and audit covering the entire scope of the standard The audit methodology is evidence-based, meaning any issues raised will be confirmed through adequate evidence that the ABAC Certification team has discovered during the audit.

Auditing techniques take a risk-based approach to examining your organization’s Anti-Bribery Management System (ABMS), and the ABAC Certification team will increase the scale of the investigation if they determine that a specific process presents on a higher risk side.  Factors such as Impact, Negligence, Minor, Major, and Critical are taken into consideration during the audit.

A separate audit method is a process-based approach where the ABAC Certification examines the organization’s processes while considering the interaction between those processes.  Finally, there is a sampling-based audit approach where ABAC Certification incorporates an appropriate sampling plan utilizing samples from different ABMS processes to conclude and support the audit findings and results.

The audit is extremely thorough in its approach, which results in an accredited certification for the scope of the ISO 37001 Anti-Bribery Management System.  Because of the standard’s international acceptance and the thoroughness of the audit process, such certification can provide a valuable safeguard in demonstrating an “adequate procedures” compliance defense in cases posing a liability for a company’s failure to prevent bribery.

Indeed, from an FCPA perspective, certification may provide tangible evidence that a compliance program was in place at the time of the alleged bribery actions.  And from a UK Bribery Act perspective, the certification could provide the company with tangible prima facie evidence presented by an accredited certification body attesting to the establishment and effectiveness of the organization’s compliance program. Notably, per Section 17A of the Malaysian Anti-Corruption Commission act, the Prime Minister’s National Anti-Corruption Plan 2019-2023 has declared ISO 37001 certification a requirement for companies operating in Malaysia.

There is a strong likelihood that ISO 37001 Anti-Bribery Management System will continue to set the pace for a globally recognized “adequate procedures” standard for corporations embroiled in corruption litigation proceedings. But for now, the most powerful “insurance” tool that public and private sector organizations can use in their defense strategy is ISO 37001 ABMS certification.

ABAC Certification is an accredited conformity assessment body in issuing ISO 37001:2016 certification, and an independent component of CRI® Group’s Anti-Bribery Anti-Corruption Center of Excellence, which was created to educate, equip and support the world’s leading business organizations with the latest in best-practice processes and procedures, providing world-class anti-bribery and anti-corruption solutions to organizations seeking to validate or expand their existing compliance frameworks to maintain a competitive edge in the world marketplace.

Zafar Anjum, MSc, MS, LLM, CFE, CIS, MICA, Int. Dip.(Fin. Crime), CII, MIPI, MABI | CRI® Group & ABAC® CEO
t: +44 207 8681415 | m: +44 7588 454959 | e: zanjum@CRIGroup.com

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CRI® Group has safeguarded businesses from any risks, providing investigations (i.e. insurance fraud), employee background screening, investigative due diligence, business intelligence,  third-party risk management, forensic accounting, compliance and other professional investigative research services. In 2016, CRI® Group launched Anti-Bribery Anti-Corruption (ABAC®) Center of Excellence – an independent certification body established for ISO 37001:2016 Anti-Bribery Management Systems, ISO 37301 Compliance Management Systems and ISO 31000:2018 Risk Management, providing training and certification. ABAC® operates through its global network of certified ethics and compliance professionals, qualified auditors and other certified professionals. Contact ABAC® for more on ISO Certification and training.