U4 Anti-Corruption Resource Centre

This Anti-Corruption Helpdesk brief was produced in response to a query from a U4 Partner Agency. The U4 Helpdesk is operated by Transparency International in collaboration with the U4 Anti-Corruption Resource Centre based at the Chr. Michelsen Institute.

Query

Please provide an overview of legal provisions or mechanisms that incentivise compliance and compliance programmes and/or disincentivise corruption in the private sector. If possible, please provide an overview of different types of incentives, their respective functioning mechanisms and experiences of them in terms of their effectiveness.

Summary

Compliance programmes remain crucial to corporate liability and are a key feature of global measures to counter corruption. Penalty mitigation, reputational benefits and whistle-blower awards are a few mechanisms that may be used to incentivise compliance at the interface of enforcement agencies and business as well as within companies. Legal incentives for compliance thus may be used as a tool to drive cultural change in the private sector.

Contents

  1. Background
  2. Categories of legal incentives for compliance
  3. Overview of existing legal frameworks for incentivising compliance
  4. Approaches in compliance incentives/disincentives
  5. Further reading
  6. References

Main points

  • Ensuring corporate compliance with the law is one method of meeting the requirements of corporate liability.
  • Disincentives in the form of fines, compensation for damages and harm to reputation remain the major motivations to apply compliance programmes to the private sector.
  • At the enforcement agency and business interface, legal defences or mitigation of punishment are the main forms of incentives for corporate compliance.
  • The use of incentives in compliance procedures within businesses is also mentioned in a variety of legal standards (for example in cases of prosecution and settlement agreements).
  • Whistleblower protection, within and outside business milieus, helps in the proper functioning of compliance programmes.

Authors

Kaunain Rahman (Transparency International), tihelpdesk@transparency.org

Reviewers

Guillaume Nicaise (U4), guillaume.nicaise@cmi.no

Gillian Dell and Irem Roentgen (Transparency International), tihelpdesk@transparency.org



Date

01/12/2020

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