Charitable giving: Recognize the warning signs and mitigate the risks
Monday, February 29, 2016 at 8:08AM
Keith Korenchuk, Samuel Witten and Arthur Luk in Charitable Contributions, Due Diligence, Intermediaries, Travel and Entertainment, UK Bribery Act

Many individuals, non-profits, and corporations actively support charitable causes around the world. The need to support worthwhile charitable projects in many developing markets is particularly acute due to local needs, the lack of government funding, and the lack of an adequately developed infrastructure.

Anti-corruption issues may arise in connection with philanthropic contributions, in situations, for example, where foreign officials specify a charity for donations or may have a direct or indirect interest in a particular donation.

In our e-book on navigating corruption challenges in emerging markets, we devote a chapter to developing anti-corruption controls in connection with philanthropic activities.

In order to mitigate risks related to charitable donations, philanthropic giving must be undertaken under a well-structured and supervised set of policies and internal controls.

Warning signs include:

We also discuss the importance of establishing clear guidance on charitable giving. Risks can be mitigated if the proposed contribution is:

We also recommend that donors put into place not only clear policies on charitable contributions but also controls that should be tailored to the local level of corruption risk, the nature of the company’s intended contribution, the nature of the company’s business, and the size and complexity of its business. We suggest a series of controls that in our experience mitigate risks.

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In the next post, we'll talk about ensuring appropriate compliance controls are in place and effective.

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Our e-book, Anti-Corruption Compliance in Emerging Markets: A Resource Guide, is available here (pdf).

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Keith Korenchuk is a partner in Arnold & Porter’s Washington, DC office. He counsels and advises global companies on regulatory and compliance matters worldwide, with a focus on compliance program effectiveness, compliance program implementation, operations and evaluation, and related regulatory counseling and advice.

Samuel Witten is counsel in Arnold & Porter’s Washington, DC office. He helps companies develop and implement FCPA compliance programs. He also represents clients in arbitrations at the International Center for Settlement of Investment Disputes. He joined Arnold & Porter in 2010 after serving for 22 years in legal and policy positions at the U.S. Department of State.

Arthur Luk is a partner in Arnold & Porter’s Washington, DC office. He represents corporations, directors, officers, and executives, and "Big 4" accounting firms and individual auditors in investigations conducted by the DOJ SEC, and Public Company Accounting Oversight Board, and in securities class actions and shareholder derivative suits.

Article originally appeared on The FCPA Blog (http://www.fcpablog.com/).
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