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International business

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The Importance Of Transparency When Conducting International Business


| By Barry Thomas |
The importance of ensuring transparent and ethical interactions when conducting international business is becoming increasingly topical and front-of-mind. The risk of bribery and corruption is a fundamental concern for global businesses, especially with the threat of international law enforcement, business closures, criminal convictions and the consequences from a reputation and financial perspective. Corruption and bribery can happen within any organisation and it would be risky to think that it will not happen to you. We only need to evaluate the current investigation the American international retail chain Walmart is undergoing to see that no business, however influential, is completely protected. Walmart has been investigated for potential violations to the Foreign Corrupt Practices Act (FCPA) across international markets including Mexico, China, India and Brazil. According to The New York Times, WalMart had found credible evidence that its Mexican subsidiary had paid bribes in its effort to build more stores, a violation of the corrupt practices act, and that an internal investigation had been suppressed by executives at the companys Arkansas headquarters. The consequences of such an investigation can not only be hugely financially damaging, with reports suggesting the supermarket chain has spent US$99 million dollars on the investigation, but it also tarnishes the organisations international reputation, alters customer perceptions, and lowers staff morale.

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International business

It is imperative to conduct research and background checks on the market you are looking to engage to identify any risks. Familiarise yourself with local customs and ways of working and learn about the countrys business and political history.
According to Corruption International, in a globalised world corruption can easily travel across borders. Indeed, corruption can come in many forms and we are seeing global organisations implementing strategies to safeguard their corporate reputation to ensure their business operates ethically and with integrity, regardless of location. To counteract bribery and corruption when conducting international business, there are some basic considerations you should factor into your anti-bribery strategy and supporting policies. Conduct Your Research First and foremost, it is imperative to conduct research and background checks on the market you are looking to engage to identify any risks. Familiarise yourself with local customs and ways of working and learn about the countrys business and political history. There are online tools available to assess a regions global corruption ranking and to make comparisons with other markets. According to the corruption measurement tool hosted on the Transparency International website, Australias control of corruption is ranked at 96 per cent, compared to Chinas control of corruption which is ranked at 33 per cent. This control of corruption ranking reflects perceptions to which public power is exercised for private gain. Such tools are extremely useful, but nothing is more helpful than on the ground interactive research and obtaining word-of-mouth feedback and honest recommendations. You will need to balance this research with not making assumptions based on the countrys historic reputation for countering bribery and corruption. Markets that are renowned for corrupt business interactions may in fact compensate for it by enforcing stricter penalties. Familiarise Yourself With International Laws And Anti-Corruption Acts In business today, what is happening elsewhere impacts on what we are doing in Australia. For example, we have seen the enormous impact European activity has had on the decisions and ways that businesses are managed across the world. To counter bribery and corruption, many governments have implemented anti-bribery legislation and it is your responsibility to be aware of local and international laws before you set out. In Australia for example, you need to refer to the Australian Criminal Code and in the UK it is the Bribery Act. The Foreign Corrupt Practices Act is a United States federal law that applies to any person who has a degree of connection to America and engages in foreign corrupt practices. Not adhering to the Act can result in severe penalties as we have recently seen with Ralph Lauren paying an $882,000 penalty to resolve allegations that it violated the Foreign Corrupt Practices Act by bribing government officials in Argentina to obtain improper customs clearance of merchandise. Build A Robust Policy Implementing a global corporate policy will ensure that all markets and business stakeholders are aligned with company procedures and a code of conduct. A robust policy will document the companys vision and zero tolerance approach to bribery and corruption and will ensure there is no room for misinterpreting how employees, contractors and distributors should conduct themselves. Ideally, a corporate code of conduct should filter from the senior management team to all employees and include a foreword from the head of the organisation. The document should explicitly refer to transparent interactions and also stipulate that the business will cooperate with any external audits and investigations. This global set of ethics should be easily accessible and updated regularly as international laws change and requirements alter. Engage Your Employees It is important not to assume that adhering to a code of ethics is intuitive for all employees within your organisation. There is no point developing

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a policy or corporate guidelines unless every employee is engaged and understands the potential risks of non-compliance. A training program to support the policy will ensure that all employees and stakeholders, no matter where they are located, are aligned with the companys zero tolerance approach to corrupt business interactions. The training could be incorporated into the standard employee induction process and you may benefit from engaging an external agency to conduct across-the-business training each year as a valuable reminder. It is also worthwhile ensuring training is incorporated within the organisations internal communications strategy. Choose Your Partners Wisely It is your responsibility to conduct background checks to ensure that all company employees, contractors, distributors and suppliers, including lawyers and lobbyists, are reputable. It is helpful to personally meet your distributors before engaging them to help identify potential issues. Trust Your Instincts An international business will often encounter greater levels of scrutiny than local organisations so it is important to be extra vigilant about combating corruption and bribery. Trust your instincts. Nothing is worth risking your corporate and personal reputation, and livelihood, so always be prepared to walk away if you have doubts. It may sound obvious, but it is imperative to be genuine and truthful. For example, if you

omit information that people consider to be important, they may question your credibility. The same applies for interactions with others if you sense that key information has been omitted, then it may be best to walk away. Engage and utilise local resources that are available to you. It is helpful to speak with likeminded businesses and also seek advice from local embassies and consulates should you need support. Speak Out At an individual business level, employees should be encouraged to report corruption should they encounter it. Work towards developing a corporate culture that supports feedback through regular face-to-face meetings, company collateral and an open door policy. However one business alone cannot combat widespread bribery and corruption. It can only be overcome if businesses work together to tackle the issue. Bribery and corruption can

have a detrimental effect on a regions economy and engaging in corrupt practices also creates an unfavourable business environment by encouraging unfair advantage and anticompetitive practices. Transparency International states that a business environment free of corruption allows companies to compete fairly, reduces risk and creates a more stable investment environment. It is hard not to agree that clean business really is good business.

Barry Thomas is the Vice President and APAC Managing Director of Cook Australia. Barry has more than two decades of international leadership and expertise in the pharmaceutical and medical device industries and he currently spearheads the worlds fastest growing region for Cook Medical. His current position sees him working to expand the opportunities for people in Asia to access Cook Medicals advanced and minimally invasive medical devices.

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