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Commonwealth Greater Birmingham


Commonwealth Chamber of Commerce Contact: Jamila Davis T: 0845 6036650


Exporters must be legal eagles


In part two of this feature on the pitfalls of exporting, compliance specialist Colin Welland (pictured), chief executive of Stratford-based GWCI, looks at US compliance laws.


The US laws are almost as robust as the UK’s. Since the entire free world’s banking system must remain compliant with the US, any suggestion of a transgression under US law will likely collapse your business because no financial institution will work with you. Size will not protect you either – the US is


bigger than any bank and the banks are all bigger than you. US anti-corruption law has evolved over a longer period, with the result that its structure is more elaborate. It includes the Racketeer Influenced and


Corrupt Organizations Act, the Hobbs Act, the Travel Act, the Money Laundering Control Act, the Sarbanes-Oxley Act and the most widely enforced anti-corruption legislation in the world: the Foreign Corrupt Practices Act. As with the UK law, its reach is extra-


jurisdictional. You do not need to trade in the US to be caught by it. On top of all that, the US Securities and Exchange Commission provides monetary rewards for witnesses who help secure convictions. So you trawl international sanctions lists,


criminal watchlists, introduce anti-corruption policies, whistle-blowing procedures and the like. You send them to all your staff, with your signature at the bottom. However, your reputation can still be destroyed


by false allegations made against your suppliers. Adverse media reportage costs a journalist little in many countries and sells copy. The truth of whatever the subject matter is may be irrelevant. So is it enough to search for your supplier


through their local media channels and investigate their social media output, in


whatever language they use, and all the references to them in social media by others? I’d say not. I’d recommend ensuring they have auditable policies to prevent modern slavery,


protect privacy, protect the environment and prioritise health and safety issues in their own workplaces. Just imagine contracting with a foreign supplier and them subsequently being outed as exploiting child labour. It doesn’t bear thinking about. People would


say that you should have known, even if there was no way of finding out. But if you can show that you had specifically requested evidence that such conditions did not apply, you will suddenly appear as the beneficial face of capitalism.


‘Any suggestion of a transgression under US law will likely collapse your business because no financial institution will work with you’


We’ve been asked to investigate companies


which appeared to pass every metric above and many more but when we researched their corporate registration details, we found that they didn’t legally exist. Therefore, any money our client paid to them


must have been a fraudulent transaction. In another case, we found nothing whatsoever wrong with an Australian company but its CEO was closely associated with a senior politician who was mired in scandal. After careful consideration, our client decided


not to proceed with that particular contract, and shortly afterwards both men were facing questions from the police. It is not just your clients, your partners and


your suppliers. You will need to investigate corporate owners and their associated businesses too. Due diligence is vigilance far and wide. You could employ a compliance specialist to


help with this. In the case of GWCI, we will carry out a detailed investigation into your chosen subject person and subject company, and also include a special report on the country which the transaction will occur in. Usually this is the subject company’s seat of


registration. Sometimes it is elsewhere. We refer to a range of internationally respected institutions, such as the World Bank and Transparency International, which rate jurisdictions according to, respectively, the ease of doing business there or the general incidence of corrupt practices. We also provide an overview of various issues


which might trip up a foreign investor, such as the risk of conflict, the political and legislative context or the attitude to climate change. You could perform all these checks yourself, if


you have the time, the expertise and the experience. Otherwise contact an expert in this field – it’s just too important a subject to ignore.


Commonwealth Chamber Patron


April 2020 CHAMBERLINK 43


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