Benefits of an Effective Compliance and Ethics Program (2023)

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April 15, 2016

Benefits of an Effective Compliance and Ethics Program

Bangkok Post, Corporate Counsellor Column

Companies and the people that run them are subject to an increasing array of local and international regulations. Running afoul of these regulations can lead to corporate scandals that hurt a firm’s reputation and cause lasting damage. A compliance and ethics program can help ensure that an organization operates within the law and stays true to its own ethical principles that are important to the company’s business and identity. And just as significantly, a compliance program can demonstrate to a company’s employees and the community that the organization is committed to doing business the right way. For these reasons, companies doing business in Thailand can greatly benefit from having an effective compliance and ethics program.

Since compliance departments do not generate revenue, it can be tempting to dismiss compliance as a back-office drain on costs. This would be short-sighted. A compliance breach has the potential to do significant damage, or in worst case scenarios, even destroy a company (as famously happened to Enron Corporation). Reputations that may have taken decades to cultivate can be destroyed with a single headline (the Volkswagen emissions scandal being an example). Recovering from these failures costs organizations time and money. And in many cases, the long-term damage is far more costly than the resources necessary to fund and operate an effective compliance program.

One common compliance area is anti-corruption. The U.S. government is actively pursuing companies and individuals for violations of the Foreign Corrupt Practices Act (FCPA). The FCPA, among other things, penalizes the bribing of non-U.S. government officials. The United States is not the only country pursuing anti-corruption cases. The United Kingdom has its own prohibition on bribing foreign officials, and similar legislation is also being considered in other countries. Organizations that are subject to the FCPA and the U.K. Bribery Act and operate without an effective compliance program do so at their peril.

Thailand also has its own stringent anti-corruption laws. Under last year’s amendments to the Organic Act on Counter-Corruption (OACC), a company can be held criminally liable for the corrupt activities of its employees, agents, consultants, and other people associated with the company. Importantly, the OACC also contains a provision stating that a company’s criminal liability can depend on whether it failed to implement “proper internal measures” to prevent the bribe. While the law does not state what internal measures would be acceptable to limit or exclude liability, it is presumed that a robust compliance program would reduce the likelihood of liability.

Other common compliance areas include antitrust, money laundering, environmental considerations, labor, human rights, and computer crime–related issues. Indeed, a central component in any compliance program is to address the right risks. For example, an apparel company with an extensive supply chain may face risks associated with labor rights abuses, while a bank will be more focused on money laundering.

The first step for any compliance program is for the company to actually want it. No compliance program can effectively function without the full and sincere commitment of the organization’s leadership. Engagement by the board of directors and senior management will set the tone for the rest of the organization. In short, if the leaders do not care about compliance, neither will the employees.

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The second step is for the organization to prepare a written set of policies and procedures, including a code of conduct. These internal rules should apply to every member of the organization, from the cleaners to the CEO. Discriminatory application of the company code will render the most well-written code ineffective. An effective code will also apply to the organization’s partners, such as vendors, suppliers, and contractors. The code should be easy to read and understand. It should also be specifically tailored to the organization, its industry, and its corporate identity.

After the code of conduct is prepared, it should be communicated effectively to the organization. The best way to achieve this is by training. The training should establish that the company’s standards are not just theoretical—they should be integrated into daily work. Just having the code is not good enough. It has to be followed for it to work.

Training should not be viewed as a single exercise. It should be regularly provided so it never becomes stale. Additionally, everyone in the organization should be required to attend the training, including senior management. With this in mind, the training should be tailored for different employees. The risks confronting a sales manager will be different from those encountered by a CEO.

In conclusion, regulatory and reputational risks are a part of doing business. How an organization handles those risks can mean the difference between success and failure. In some cases, it can even mean the difference between prison and freedom. Compliance programs help an organization prevent the problem from occurring in the first place. And just as important, they can enable a company to instill an ethical culture within the organization. The positive effects of having honest employees go far beyond compliance.

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February 13, 2023

Thailand Reissues Regulation on Gifts to State Officials

Thailand’s Office of the Prime Minister has issued a new regulation titled Giving or Receiving Gifts of State Officials B.E. 2565 (2022). This regulation, which took effect on January 13, 2023, repeals the previous 2001 version and updates certain provisions to be in sync with Thailand’s primary anticorruption law, the Organic Act on Anti-Corruption B.E. 2561 (2018). The regulation prohibits state officials’ family members from receiving gifts from people who are dealing with the officials’ respective agencies. It also prohibits state officials from giving gifts to their supervisors and their supervisors’ family members. An exception, carried over from the previous version of the regulation, is provided for gifts on limited “customary occasions” valued at THB 3,000 or less. There are some notable revisions in the definitions of the new regulation. The term “gift” is now clearly defined to include “training” or “seminars.” In addition, the term “family members” now includes spouses living together “as husband and wife,” even if not legally married. For example, the common-law spouse of an officer considering a license application is not allowed to receive a gift from or attend an overseas seminar organized by the applicant. The regulation also provides: Guidelines for state officials to self-report in case of violation by a family member; Instructions on how to deal with the gifts received in violation; and Disciplinary actions for violation. Importantly, the regulation continues to prohibit the receipt of gifts by state officials’ family members but does not expressly criminalize the giving of gifts by private parties. However, all who deal with government officials should take note of the updated regulation to avoid creating a situation that might violate the rules.

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November 3, 2022

Myanmar Requires Border-Trade Importers to Pay via Bank Transaction

On October 31, 2022, the Department of Trade in Myanmar’s Ministry of Commerce announced that payments for importation at the border are to be made via bank transaction. This announcement comes into force with Import/Export Newsletter No. 10/2022, dated October 31, 2022, issued by the Department of Trade, with the purpose of implementing a systematic payment system for import and export at the border, in accordance with a suggestion made by the Financial Action Task Force (FATF), an international financial watchdog. (This follows the recent news that the FATF has blacklisted Myanmar.) This requirement means that only bank transactions will be accepted for import payments in the border trade. Initially, this system will be applied to trade at the Myanmar-Thailand border only. The new requirement to pay for imports only via bank transaction states that export earnings and other types of foreign currency earnings (including salary and income remitted by Myanmar workers overseas) will be allowed to be used for imports. Importers are required to make the payments for import goods—using these earnings—via their banks. That is, Importers operating in the border trade must have foreign currency earnings received through official banking channels and must make import payments abroad through official banking channels using those earnings. In contrast to previous practices, they are unable to use other sources of income and are not able to make other payment arrangements that do not involve bank transactions. The procedures for importation at the Myanmar-Thailand border are as follows: Companies applying to the Department of Trade for an import license must produce credit advice and original bank statements that prove the receipt of export earnings or other earnings into their bank account. The Department of Trade will scrutinize the reported export earnings or other earnings, and approve the import license for an

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April 8, 2022

Thailand Encourages Foreign Investors to Report Unfair Treatment

As Thailand has paid more and closer attention to anticorruption issues, a number of measures have been introduced and implemented over the years, including the establishment of the Complaint Center for Foreign Investors (CCFI) in 2015. The CCFI was set up by the Office of Public Sector Anti-Corruption Commission (PACC) to promote transparency and integrity in the Thai public sector and enhance the confidence of foreign investors conducting business in Thailand. Though the CCFI has been in operation for many years, many foreign investors conducting business in Thailand have either remained unaware of it or have been reluctant to use it because of concerns that acting against Thai public officials could cause problems for their businesses or in their personal lives. However, recently the PACC has made a renewed push to promote the CCFI as a suitable channel for foreign investors to lodge complaints when they face unfair services or treatment, or face requests for benefits from Thai public officials. Lodging a Complaint with the CCFI The CCFI was established to administer the PACC’s responsibilities under Section 58/2 of the Executive Measures in Anti-Corruption Act B.E. 2551 (2008), which authorizes the PACC to notify the superior of any state agency appearing to have regulations or procedures that fail to comply with the Licensing Facilitation Act; are deemed by the PACC to cause a nuisance or damages to a public service clientele; or cause severe detriment to a government service. Practically, this means that when investors have a complaint that fits the scope described in the law, they can contact the CCFI, which will take action by getting the relevant agency or government authority to examine the issue. In cases concerning agency regulations and procedures, this will be the head of the relevant agency, but if the circumstances indicate malpractice

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April 1, 2022

Thailand Legal Basics

Thailand Legal Basics, a valuable primer for foreign investors, explores all aspects of living and doing business in Thailand. Written by specialists at Tilleke & Gibbins in Bangkok, it is the only comprehensive English-language guide to the Thai legal system with a focus on the concerns of foreign business and investment.

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