Compliance Man Chooses the Target with Tim Khasanov-Batirov.

Episode 2: Communications Services

Welcome to Episode 2 of Compliance Man Chooses the Target with Tim Khasanov-Batirov series of podcasts. My goal is to highlight matters that should be on agenda of practitioners that deploy compliance programs in industries or countries of active FCPA enforcement. In next three minutes, I will target three specific matters that you might like to address in the course of implementation of your compliance program. Today we will focus on communications services.

Target #1: Permissions & Permits.
Should a telecom company start operations at a high-risk market in many cases it will face necessity to obtain various permissions. It may start from issuance a governmental decree on preferential tax/investment regime for your company to obtaining work permits to expats. Considering the fact that emerging markets traditionally pose high FCPA risk you probably might decide to look attentively on ALL processes related to issuance of the governmental permits in these jurisdictions.

Target #2: Under Developed Judicial System.
No matter whether you need to get customs clearance for imported base stations, get conformity certificates for the equipment or build new office you depend on local agencies. One of the biggest problem is that judicial system in majority of emerging markets often are not developed so investors are becoming hostages so to say of the corrupted local bureaucrats. Chances to win a court case again state bodies for non-issuance a permit or suddenly increased corporate tax could be limited due to many circumstances and might vary from country to country. Very likely that you will spend a lot for money to pay your lawyers with low chances to win a court case. My recommendation would be to avoid court cases against state authorities but to use a scenario-based approach for key business processes that has governmental element as part of the proactive rather than reactive response risk-management.

Target #3: Participation in Business Associations.
Participation in activities of business associations is a standard practice for businesses, which operate in the Western markets. Such communities have a voice and power to advocate interests of their members. The situation might be different if you go to many emerging nations. You may want to find out which association or chamber of commerce has a reputation at any particular market for development of compliance practices. Consequently, if you choose a right one the chances to jointly advocate anticorruption initiatives, defend members or lobby antibribery laws are much higher. In many countries ethics movement is leaded by companies from the communications services industry often after FCPA cases. As a bonus for active participation in promotion business ethics as part of the bigger community, your company might get a strong reputation of a transparent organization, which has no tolerance to corruption in the eyes of the governmental officials and the society. The latter fact might significantly mitigate the corruption pressure on your business.

Join me for the next episode of Compliance Man Chooses the Target with Tim Khasanov-Batirov.

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