The perils of corruption was a big talking point at GAIM Ops Cayman, a conference covering the hedge funds sector, which is taking place at the Ritz Carlton on Grand Cayman this week.
Delegates were reminded that there have been many stories in the past about unfortunate US professionals getting into big trouble when travelling to do business in places such as Eastern Europe, Latin America and China, where government officials are routinely prosecuted for bribery and corruption.
But the US appears at number 19 on Transparency International’s Corruption Index and four out of seven previous governors of Illinois have either been in prison or are still in there.
The hedge fund industry needs to understand that corruption exists everywhere and it is important in terms of understanding your investments and portfolio companies, according to chief compliance officers presenting at GAIM Ops Cayman.
There is a big difference between corruption in the US, where people are basically just breaking the law, and in other countries where it is more a way of life, so there is need for extra caution.
“It’s essential to understand what your firm is doing,” one panellist said. “There is no other way to cover the False Claims Act and compliance issues.”
Especially important when travelling to China and perhaps going out for a business dinner, is to understand who is going to pick up the tab, as well as being sure which members of the party are government employees, as many corporations there are 51 percent state owned,
The range of international rules and regulations on bribery includes the US Foreign Corrupt Practices Law and the UK Bribery Act, as well as international anti-corruption treaties and local anti-corruption laws. Awareness needs to be sharpened whenever anything of value is being given, such as travel, golf memberships, theatre tickets or even summer internship positions and it’s important to be cognisant of how regulators will perceive this.
Compliance professionals presenting said the best defence is to have a plan in place, to trust your employees and to document everything.
Hedge Funds, GAIM Ops Cayman, Ritz Carlton, Cayman Islands