ACCA Strategic Professional · Strategic Business Leader · Audit and compliance
Halden Group, a multinational, is subject to anti-bribery legislation with extraterritorial reach. An overseas agent has been paying small facilitation payments to local officials to speed up customs clearance, and local managers say this is normal practice. The internal audit function is asked to assess compliance risk. Which conclusion is most appropriate?
Halden may be liable under its home-country anti-bribery law for payments made by its agent abroad, whatever local custom says. It should prohibit facilitation payments and tighten due diligence and monitoring of agents. Small size or proper recording does not remove the legal exposure.
- AHalden may still be exposed to liability under the home-country law, so it should prohibit such payments and strengthen controls over agentsCorrect
- BLocal custom overrides home-country law, so no action is needed
- COnly the agent is liable, so Halden has no compliance exposure
- DThe risk is acceptable as long as payments are small and recorded
Explanation
Extraterritorial anti-bribery laws can hold the company liable for acts of agents abroad, regardless of local custom or the size of payments. The appropriate response is a clear policy, due diligence and monitoring of agents. Recording small payments does not make them lawful.
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