Getting to grips with the “new normal” need not be guesswork or the pursuit of a clairvoyant. Although much remains uncertain, understanding how anti-bribery and corruption (AB&C) issues will develop in 2021 need not be. We have surveyed our AB&C lawyers across the Asia-Pacific region, and include here their forecasts on what the next 12 months will bring.
More profiteering, employment action, and fraud
In many South East Asian jurisdictions, lawyers observe a “Wild West vibe” to compliance and ethical business practices. For example, since the advent of COVID-19, there has been a large increase in individuals and entities with questionable credentials acting as brokers of personal protective equipment – a sizeable proportion of which is finding its way into foreign markets.
Businesses have also sought to use government-declared force majeure events to terminate employees and reduce costs. Some of these actions will inevitably come under scrutiny in the months to come, emphasizing the importance of ethical termination and thorough due diligence today.
Further, with a lack of international travel and the increased domestication of contract negotiation and implementation, the risk of fraud seeping its way into businesses has increased in many Asia-Pacific countries.
Heightened government risk and review
Interactions with public officials will be a source of increased risk – especially in jurisdictions where official misconduct was already common. Lawyers in Indonesia notice several companies giving grants to the government, sometimes via third parties, ostensibly to help it contain the spread of COVID-19. The difficulty, however, is that these transactions could provide cover for bribery, corruption, or other forms of improperly influencing officials.
At the same time, regulators will continue to take action to enforce laws. Asia-focused practitioners in the United States highlighted that the Department of Justice and Securities and Exchange Commission released a new edition of their guidance on the Foreign Corrupt Practices Act in July 2020. The guidance hints at more “long arm jurisdiction” on the part of these authorities when dealing with suspected or actual breaches of the all-important AB&C law.
Moreover, as lawyers in our Singapore and Vietnam offices point out, governments have had to hastily draft – and just as hastily update or replace – laws, regulations, and guidance on how to conduct business during the pandemic. Coming to terms with “uneven enforcement” and “gray zones” will remain a challenge while local, regional, and international situations evolve.
All those surveyed expressed concerns about the dismantling of corporate governance mechanisms. Our teams in Australia and Vietnam witness a “weakening of internal controls in businesses due to staff cutbacks or remote working”, resulting in new opportunities for fraud.
The adoption of new technologies has been at the heart of most businesses’ responses, but that is not to say the process has been easy – or successful. Lawyers based in Singapore, Washington D.C., and other commercial hubs, who regularly address clients’ AB&C issues from afar, have remarked that “pivoting to compliance programs that are implemented, monitored, and evaluated remotely” can be challenging. Another issue that was identified by our Asia-Pacific lawyers is that the implementation of these programs for joint-venture partners, third parties and/or agents has become increasingly difficult in a COVID-19 world.
We are unlikely to see any quick fixes anytime soon. Software that tracks employee behavior and other personal data may seem attractive at first, but it brings “[cyber]security and privacy risks”, not to mention changes in workplace cultures. These competing concerns have led practitioners to advocate a mixed approach, involving both a refresh of old-fashioned internal controls and the gradual implementation of new technologies.
Crisis and crises
Most of the lawyers we surveyed predicted that “crisis response and management services” are likely to experience the most growth over the coming year compared to other AB&C offerings (investigations, and regulatory and compliance advisory services garnered the second and third most votes, respectively). This result reflects the complexity of the current crisis, or, more accurately, crises.
Far from being “just” a public health issue, the pandemic has triggered massive political, economic, and social disruption that will affect companies differently depending on their context. In this regard, our Singapore team alone has in just over six months assisted clients on matters ranging from government-imposed closures of operations to the departure of key legal and compliance personnel, and from the management of employees affected personally by COVID-19 to heightened regulatory inquiry.
Seeing through the fog
The fallout from COVID-19 has been, and will continue to be, messy. One of the most difficult aspects of the pandemic – indeed, any sort of crisis – is the fog of uncertainty that surrounds what happens next. We hope that the predictions above will give you a sense of the direction in which events in South East Asia are travelling, and help you make the right decisions as we move through 2021.
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