Asian companies are increasingly exposed to regulatory scrutiny and litigation as they expand beyond their home bases, according to Lloyd’s of London. The venerable insurance market said that the US, UK and Europe have all increased regulatory enforcement since the 2008 financial crisis.
The UK Bribery Act and several global treaties and statutes have been introduced to tackle bribery around the world, Lloyd’s added. In the US, actions under the Foreign Corrupt Practices Act (FCPA) nearly doubled between 2009 and 2010, with nearly half of all FCPA enforcement actions by the US Department of Justice (DoJ) and Securities and Exchange Commission (SEC) involve corruption in Asia, especially China.
The FCPA was enacted in 1977, but in recent years enforcement has intensified. In 2004, the SEC and the DoJ brought a combined five FCPA enforcement actions. By 2008, the total had risen to 33 and to 66 in 2010.
The UK law places the obligation squarely on companies that conduct any business in or touching on the UK to ensure their anti-bribery procedures are suitably robust and effective. Regulators have been also looking at foreign subsidiaries and joint ventures of US and European companies, Lloyd’s said.
“In general, we are seeing a trend where there are increasingly more claims being brought against directors and officers of Asian companies than was previously the case,” commented Gary Chua, financial and professional liability practice leader for Southeast Asia, at insurance broking and risk advisory group Marsh.
“I would put it down to competition for foreign investment and foreign capital that continues to flow into this part of the world. In that process, the whole notion of legal liability and corporate responsibility to various stakeholders has now been increased, compared to before.”
“Asian directors are now being exposed to the model of higher accountability for directors and joint venture partners usually associated with mature markets. Obviously regulatory driven investigation has always been there but we’re also seeing claims being filed by employees against directors of companies in some parts of Southeast Asia.”
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