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The Human Factor of the Novel Coronavirus (COVID-19) and Corruption

COVID-19

The Human Factor of the Novel Coronavirus (COVID-19) and Corruption

With the explosive spread of Coronavirus (COVID-19) hospitals, healthcare providers and all citizens are finding a shortage of goods and services and employees are under increased pressure to preserve and excel in their current roles.

Unfortunately, in this time of crisis corruption is thriving and some aim to profit from others’ misfortune and push companies to the brink to maintain profits.

Around the world, countries are reporting shortages in both medicines and medical supplies due to COVID-19. All of these factors put additional strain on already fragile procurement processes and increases the risk that suppliers, knowing that government and individuals have little choice but to pay, demand higher prices.

In these challenging times having open and transparent contracting processes in place helps mitigate these risks. With nowhere to hide, corrupt actors are unable to practice price gouging and must charge governments and individuals reasonable prices.

The stockpiling of supplies such as masks, gloves, and hand sanitizers are also contributing to shortages in medical supplies. In attempts to profit from public panic, some traders have been inflating prices for ordinary consumers.

After pressure from the Department of Justice, Amazon has implemented an effort to remove tens of thousands of deals from merchants that it said attempted to price-gouge customers. The world’s largest online retailer has faced scrutiny over the health-related offers on its platform, and earlier this week, Italy launched a probe into surging prices around the internet for sanitizing gels and hygiene masks. At the same time, Italy battles the biggest outbreak in Europe.

There are lessons to be learned in health-sector Corruption elsewhere from prior epidemics such as Ebola and SARS where procurement and contracting wrongdoing led to deadly consequences. In prior epidemics, Corruption compromised containment efforts, when corrupt actors used petty bribes and other favors to avoid quarantines, roadblocks, and safe body collection procedures. Even ventilators and other medical oxygen-related equipment have been the subject of bribes and kickbacks, sometimes leading to the tragic deaths of patients. These examples demonstrate the worst case of what can happen without resilient anti-corruption policies.

In the first federal action against fraud involving the coronavirus outbreak, the DOJ obtained a temporary restraining order against a website selling a bogus vaccine.

The DOJ said Sunday, March 21st, that operators of the website “coronavirusmedicalkit.com” were engaging in an alleged wire fraud scheme to profit from the confusion and fear surrounding COVID-19.

The website claimed to offer customers access to the World Health Organization (WHO) vaccine kits in exchange for a shipping charge of $4.95. There are currently no legitimate COVID-19 vaccines, and the WHO is not distributing any such vaccine.

Besides compliance issues with third party business practices with goods and services, companies are experiencing enormous business pressure. Many companies have salespeople who cannot travel due to precautions taken, canceled flights, or, worse, quarantines. They cannot visit customers or partners, leading to slower sales. Global supply chains are disrupted, with shortages of parts and products. Company events and conferences are being canceled, resulting in fewer opportunities to build relationships with customers and market products. Customer demand for company products may be falling, and companies may be declining to make revenue projections during this time of uncertainty about the spread and effects of the coronavirus.

These disruptions can increase the pressure on salespeople to meet their sales targets. Salespeople may feel additional pressure now, when sales may be sluggish, and again when business gets back to normal, and they want to make up for the time lost. That pressure can lead some people to make the wrong choices—to engage in bribery or other misconduct—to generate business. Besides, the heightened emphasis on business priorities due to the losses from the coronavirus can push anti-corruption compliance further down on the priority list.

If/when the DOJ and SEC discover bribery or Corruption, they assuredly will not be accepting a “coronavirus defense” from companies. Compliance officers should be aware of situations like the coronavirus that could raise corruption risks and try to guard against them. Compliance officers should refer explicitly to the disruption caused by the coronavirus and emphasize that the company is committed to complying with anti-corruption laws. The communications must be to the employees who need to see them, such as salespeople who interact with customers, or “gatekeeper” functions like finance who review financial transactions.

Most importantly, senior executives and the board, if appropriate, need to make sure that the business pressures resulting from the coronavirus do not overshadow the company’s commitment to compliance and that values and ethics are maintained.

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For more information or questions, please contact Frank Orlowski at frank@ationadvisory.com or +1917-821-2147 and please visit our website at www.ationadvisory.com

Major Exporters Taking ‘Little Action’ on Bribery

Los Angeles, CA – Corruption in trade “is undermining global development as contracts don’t go to the best suppliers, prices are being inflated to cover bribe payments, environmental requirements are not being enforced and taxes are not being collected,” says Germany-based Transparency International (TI).

As a result, it said, “the convention’s fundamental goal of creating a corruption-free level playing field for global trade is still far from being achieved.”

According to the anti-corruption watchdog says 22 countries exerted “little or no” energy in enforcing international anti-bribery laws last year.

According to TI, those countries involved account for 27 percent of world exports and almost 90 per cent of total foreign direct investment outflows.

The non-governmental government (NGO) said only four OECD countries were actively enforcing the anti-bribery convention – Germany, Great Britain, Switzerland, and the U.S.

Among those with little or no enforcement, TI said, were Japan, the Netherlands, South Korea, Russia, Spain, Belgium, Mexico, Brazil, Ireland, Poland, Turkey, Denmark, Czech Republic, Luxembourg, Chile and Israel.

Others, including France, Sweden, South Africa and New Zealand, were chided for exerting only “limited” enforcement of the convention.

The binding, international Convention on Combating Bribery of Foreign Public Officials in International Business Transactions was enacted by the Paris-based Organization for Economic Cooperation and Development (OECD) in 1997.

Widely seen as an important instrument in the drive to curb global corruption, the treaty requires the 41 signatory countries to make foreign bribery a crime for which individuals and enterprises can be made responsible.

TI annually assesses compliance with an anti-bribery convention signed by 41 countries that prohibits bribes to win contracts, or dodge taxes and local laws.

The agency urged the world’s exporting countries to take a “tougher stance on bribery and provide adequate support, including staffing and funding for enforcement with rigorous OECD monitoring.”

11/03/2014

TRACE Expands into Ghana, Hungary and Turkey

Annapolis, MD – TRACE International, the global anti-bribery association, has expanded its worldwide presence with new partnerships announced in Ghana, Hungary, and Turkey.

The latest organizations to partner with TRACE are CommerceGhana, an organization committed to facilitating investment in Ghana; EuCham CEE, a private, non-governmental institution working to enhance the business environment for companies operating in Europe; and the Ethics and Reputation Society, or TEID, a nonprofit organization dedicated to building a robust and ethical business culture in Turkey.

In the past 12 months, TRACE’s global footprint has expanded significantly, with a new on-the-ground presence in Dubai, Manila and New Delhi and new partnerships established with American Chambers of Commerce in Zambia and Libya and the Makati Business Club in the Philippines.

TRACE International is a non-profit membership association that pools resources to provide practical and cost-effective anti-bribery compliance solutions for multinational companies and their commercial intermediaries.

Founded in 2001, the association is one of the world’s leading non-profit organizations dedicated to anti-bribery compliance with hundreds of corporate members and thousands of intermediary members around the world.

06/23/2014