Corporate Europe must improve compliance

European companies are adapting too slowly to the regulatory environment, potentially giving an advantage to US corporations. The tough enforcement climate that European companies now face is nothing new in the US. It has been 30 years since its Foreign Corrupt Practices Act made the payment of foreign bribes illegal (compared with less than nine for Europe). The so-called “long arm” of US law and years of coping with hostile legal and political environments has driven US corporations to build compliance programmes that are stronger and more far-reaching than their European counterparts.

The problems facing Siemens, the German industrial group, exemplify the cost and distraction that bog down a company suspected of wrongdoing. More than $2bn (€1.3bn, £1bn) of suspicious transactions in more than 60 countries have been identified. On the legal front alone, more than €240m has been paid in fines and penalties, with a further €474m spent on advisers. Siemens has been barred from being a supplier to the Italian, Nigerian and Norwegian governments. Top executives have resigned or been fired and several Siemens managers and consultants have been arrested or put under criminal investigation. The Siemens-Nokia joint venture was put on hold. Siemens’ share price has suffered. We can expect other negative consequences long after investigations end.

See full Article (paid subscription required).