RFP News

Investment Professionals Unprepared For Bribery Act Provisions

Published on 04 Jul 2012

Kinetic Partners has identified a lack of anti-bribery and corruption (ABC) due diligence amongst top investment professionals. At a recent event only two out of 80 financial services firms  had undertaken ABC due diligence in an M&A transaction. With the potential for exceptional penalties from regulators in both the UK and the US coupled with the obvious commercial impact that uncovering illegal activity at a takeover target after the transaction, this ranks as a serious concern.

This news comes against a backdrop of increased scrutiny as part of the UK Bribery Act that builds on the provisions of the US Foreign Corrupt Practices Act with greater investigation of third parties involved in the transaction, the receiving of bribes, private bribery and facilitation payments. Delegates at the event heard from Monique Melis of Kinetic Partners and Andrew Oldland QC of Michelmores about the importance of taking steps to assess regulatory risk and the areas that target companies and vendors have not identified. For example:

- Insufficient oversight by senior management across group entities
- No challenge to decision making process
- Key man risk and succession planning not in place for key individuals
- Inadequate skills and expertise outside head office

The audience were briefed about high-profile cases, including Walmart’s Mexico subsidiary, eLandia’ operations in Honduras and Lockheed Martin’s proposed takeover of Titan. In these cases activities in high risk countries and a lack of management oversight resulted in significant fines, whilst in the Titan case, a failed takeover subsequently destroyed significant shareholder value.

Kinetic Partners has become the a global leader in advising firms about regulatory compliance, notably in its offices in London, New York and, since the beginning of 2012, Hong Kong where access to the Chinese market is fraught with potential issues. Launched in 2005, Kinetic Partners has grown rapidly, and has a team of 140 across its eight offices in London, Dublin, Grand Cayman, New York, Geneva, Hong Kong, Luxembourg and the Channel Islands.  Kinetic Partners services over 1,300 clients, and has attained a reputation as the leading provider of professional services in its chosen market sectors.

Julian Korek, a Founding Member of Kinetic Partners, commented: “There is a surprising lack of focus on ABC due diligence amongst investment professionals. It is clear that regulators and lawmakers on both sides of the Atlantic are expecting significant levels of investigation to be undertaken by firms themselves. It has never been truer that ignorance is not an excuse.”

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Product type:	Compliance and Regulations

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