Hogan Lovells, a leading global law firm has released a report on Navigating bribery and corruption risk in Mergers and Acquisition. According to a new report, more than half (54 per cent ) of multinationals say their pre- and post-merger and acquisition (M&A) due diligence were not thorough enough, despite, 64 per cent believing M&A presents some of the biggest anti-bribery and corruption risks. Meanwhile almost three-quarters (72%) are failing to bring in their anti-bribery and corruption compliance team in good time during M&A discussions.
Crispin Rapinet, Global Head of Investigations, White Collar and Fraud at Hogan Lovells said, “Too few companies do enough to counter bribery and corruption in M&A and private equity investments. Instead they busy themselves with due diligence on tax, antitrust, legal, financial, intellectual property, and other asset or industry-specific areas.
None of which makes a difference if the company you’re after is corrupt.”
Steering the Course: Navigating bribery and corruption risk in M&A is the third in a series of reports combining insights from lawyers at the firm’s global Investigations, White Collar and Fraud practice with the results of interviews with 604 chief compliance officers, heads of legal, and equivalent, in the UK, U.S., Asia, France and Germany.
Respondents work in many of the world’s largest multinational companies (turnover of at least U.S. $350 million), in four sectors – energy, minerals and resources; life sciences and healthcare; transport (including automotive and aviation); and technology, media and telecommunications.
Crispin Rapinet said, “Compared with 10 years ago, when the U.S. Department of Justice was the only real anti-bribery enforcer, today regulatory focus has stepped up.
Regulators are talking to each other and sharing information. Authorities in China, Brazil, Germany, Italy, Spain, the UK, and elsewhere, are focusing hard on enforcing their anti-bribery legislation, with others jumping on the bandwagon all the time’’.
There’s also far more awareness of these issues in the media, with investigative journalists encouraging whistleblowers to divulge information. In short, you’re much more likely to get caught. If you do, as a company you risk fines and criminal prosecution, while your executives risk jail sentences. Due diligence, helping you understand the target company’s culture, assess its value and identify risks, is a first step toward mitigating corruption and steering clear of liability.
Hogan Lovell has produced its own benchmarking model, “The ABC of AB&C” (anti-bribery and corruption), to help companies comply with anti-bribery and corruption legislation around the world.