HONG
KONG/WASHINGTON - As anti-corruption
cops from US law enforcement agencies train their sights on Asia, the booming
corporate intelligence business is not far behind.
Two
specialist firms have opened Hong Kong offices this month, transferring top
executives from London and Washington. Industry experts say more will follow,
as demand grows for people with the skills to guide companies through doing
business in Asia amid a rapid rise in the number of corruption prosecutions.
The
work itself is not new - investigations firm Control Risks has been in the
region since the 1980s - but the uptick in demand for it is.
"Undoubtedly
the biggest driving factor is the increase in anti-corruption legislation and
the heavy penalties that are imposed if those rules are breached," said
Rebecca Palser, who moved from London to head Risk Advisory's Hong Kong office,
which opened this month.
Robert
Boyd, who heads the Southeast Asia practice for Control Risks, said work at his
firm, which helps clients deal with fraud, extortion and security threats, had
"outpaced even the stellar GDP growth and foreign direct investments
numbers"in Asia.
Services
offered by the growing number of investigative or intelligence firms in Asia
include role-play training sessions on how to respond when asked for a bribe,
and consultancy on how to negotiate with a kidnapper. They also help clients
carry out background checks on people and companies.
Investigative
outfit Nardello & Co, founded by former US federal prosecutor Daniel
Nardello, also opened its first Asian office in Hong Kong in March.
Nardello's
outfit, whose clients include FTSE 100 and Fortune 100 companies, said the
greater efforts US authorities are making to enforce anti-bribery law the
Foreign Corrupt Practices Act (FCPA), are bringing clients to its door.
SUSPICIOUS
ACTIVITY
Since
2002, the United States has brought 46 FCPA enforcement actions related to
corruption in China, second only to those involving Nigeria.
As part
of their defence against FCPA actions and those under similar British and
European regulations, companies hire investigative firms to work with lawyers
on internal probes when they find evidence of suspicious activity, or when they
want to vet a potential supplier or takeover target.
"(Asia)
is ... a culture that is not unfamiliar with corruption and being corrupted, at
least in terms of how the West defines it," said Nardello, whose firm also
helps defend executives charged with FCPA offences.
There
are plenty of recent cases where a Western firm's conduct in Asia has brought
the lawman knocking.
Wynn
Resorts and its largest shareholder, Kazuo Okada, have exchanged accusations of
bribery involving casinos in Macau and the Philippines, triggering
investigations on both sides of the globe.
Prosecutors
are also currently examining whether Avon Products paid bribes to win the
first-ever license given by China to a Western company to sell products
door-to-door.
The sums
of money in question don't have to be massive.
In a
recent presentation about the risks companies face under the FCPA, Gibson Dunn
identified traditional celebratory packets - red envelopes stuffed with cash-
and less obviously, mooncakes, as potential "things of value" that
could put recipients in trouble.
In
China, such gifts are expected to be given in both corporate and personal life
- meaning companies have a fine line to tread between staying on the right side
of their business partners, and the right side of the law.
Allan
Matheson, managing director at Blue Umbrella, a Hong Kong firm that provides
due diligence reports on companies and individuals across Asia, said many of
its clients have shifted attention from other markets to spend more time and
resources managing risk in the region.
"We
think the next big wave of growth will be in helping the increasing number of
Asian companies implement measures to enhance corporate governance and
transparency as they expand overseas," he said.
Reuters
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