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Thursday
Nov172016

Survey: Compliance professionals grapple with Brexit, Trump, and a hazy horizon

Fears of an economic slowdown and the future of Europe are the main issues keeping global compliance professionals awake at night. Those are the findings of research that we conducted across the industry in late October. 

Fifty-three percent of respondents to our Compliance Horizon survey cited the threat of a recession as the biggest risk facing their business in the year ahead.

Brexit was their number two concern. More than half (55 percent) are still unsure about what leaving Europe will mean for their business, but believe that a change in regulations (or new regulations) is the most likely outcome.

Unsurprisingly, the U.S. election also featured highly in compliance professionals’ responses. More than a quarter (27 percent) see it as one of the biggest threats facing their business in 2017, with a far greater number concerned about the implications a Trump victory might have on the profession.

When asked for their views on the two Presidential frontrunners at the time, a staggering 80.5 percent identified Donald Trump as the candidate who posed the greatest threat to compliance. 

Many respondents gave reasons for their views -- some of which are not repeatable -- but common themes were his express intention to deregulate and a lack of understanding of both international trading relationships and the rule of law.

In 2012, Trump described the FCPA as a horrible piece of legislation. He has also declared that Dodd-Frank should be repealed along with green policies such as the Clean Power Plan. 

But today we’re no longer talking about the candidate who might make it into power, but the new President-elect of The United States. What this means in reality few of us know for sure. We have little insight into his actual policies other than a fundamental shift away from free trade, and of course he wants to build a wall (or fence), as well as protect U.S. jobs. 

How Trump intends to enforce his policies remains to be seen. Protectionism usually dictates regulation, which of course he is opposed to. Similarly, the lack of trade agreements -- whether NAFTA, TPP or TTIP -- necessitates enforceable rules. 

Perhaps if the rest of the world were stable, concerns over the election of Trump as leader of the largest economy on the planet -- and self-appointed global architect of compliance -- may not matter so much, but the world is far from stable.

China is resurgent, traditional alliances, for example the U.S. and the Philippines, are under threat.

In the East, India and Pakistan are once again engaged in hostilities.

Meanwhile in Europe, German Chancellor Angela Merkel is on the back foot for the first time in her leadership.

President Hollande’s credibility is badly damaged in France, and in the UK we have an entirely new government which is struggling to create a unified identity and a non-functioning political opposition.

In the meantime, Putin, who has his own budgetary concerns to worry about, has an 85 percent approval rating and is intent on restoring Russian greatness at a time when Trump is questioning the fundamental principal of the NATO alliance.  

And then there is Brexit. 

The current reality is a very hazy horizon -- a vacuum of political leadership, policy, economic and political certainty. Nature abhors a vacuum -- and it makes life pretty difficult for compliance professionals too.

*     *     *

The Compliance Horizon is based on an online survey of 157 compliance professionals conducted by The Risk Advisory Group in October 2016. Respondents are from a broad cross-section of businesses in terms of size and sector and from all continents.  The report is available to download here.

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Bill Waite is a contributing editor of the FCPA Blog. He’s one of the founders of The Risk Advisory Group, established in 1997 with the objective of building Europe’s leading independent risk management consultancy. He serves as the group’s CEO and general counsel. He formerly practiced as a criminal barrister before joining the UK Serious Fraud Office in 1991 as a prosecutor. He can be contacted here.

Reader Comments (1)

Good article Bill.

Although Donald Trump stands for reducing regulation in order to grease the skids for business, the harsh realities of potential impact of taking down the foundational regulatory wall altogether should sink in along with what should be sound congressional opposition to anything outlandish such as repeal or reducing enforcement of FCPA.

President Elect Trump has already backed down on some of his original pronouncements in order to be able to develop rapport and work across the aisle. 2012, was 4 years ago and Trump is known for being a bit hasty with comments like this that are designed for a shock effect and attention, which in respect to other issues proved to work. I am not saying that Trump’s presidency won't be a ‘disaster’, a term he obviously covets, for regulatory trade, but I would not panic just yet.

I can see more attention paid to Dodd-Frank given its impact on banking. An attack on FCPA I would hope would be met with stark congressional opposition for the obvious reasons which includes its purpose which is to protect global markets, citizens and industries from pirates who take advantage of a corrupt system. Plus the corporate price for FCPA compliance is not nearly as high and process not nearly as cumbersome as SOX or Dodd-Frank.

Because ISO 37001 offers certification which acts as universal reliance that companies are taking the necessary steps to prevent bribery in their firms, let’s hope that companies lean toward solutions as opposed to repeal of FCPA. The good news is that the global community is starting to get it and UK Bribery and ISO 37001 will result in multi-national firms looking for ISO 37001 certification as a requirement to conducting business. In other words businesses policing each other will enable the continuance of good governance, even if the US does move in the direction of reducing US enforcement.

At worst the blog may one day require a name change to “UK Bribery”.
November 17, 2016 | Unregistered CommenterMark Speck
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