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Corruption is pervasive in several countries of Central Asia, where a majority of respondents say they are either asked or are expected to pay bribes to receive public services...

If your company’s business is carried out in one of the post-Soviet Central Asian countries like Kazakhstan, Kyrgyzstan, Uzbekistan, Tajikistan, or Turkmenistan, then

Making your corporate ethics policies understood and routinely referred to by employees at your local offices in Kazakhstan, Kyrgyzstan, Uzbekistan, Tajikistan, and Turkmenistan is a huge challenge. Solving this challenge means getting rid of foreign corruption exposure

Sarsenov Corporate Governance Advisory
Compliance in Kazakhstan, Kyrgyzstan, Uzbekistan
Corporate Governance & Compliance Services
Prevent Compliance Surprises in Your Kazakhstani and Central Asian Offices
June 16, 2017

Prevent Compliance Surprises in Your Kazakhstani and Central Asian Offices

In the EBRD–World Bank’s 2009 survey of 11,000 firms on Trends in Corruption and Regulatory Burden in Central Asia and other transition economies, it was said: “Often the administrative requirements of complying with regulations are unnecessarily excessive, and can encourage bribe seeking by public officials and bribe offers by firms. The survey contains numerous questions pertaining to regulation and its compliance burdens on firms.”

According to EBRD’s 2010 Anti-Corruption Report, corruption is pervasive in several countries ofCentral Asia, where a majority of respondents say they are either asked or are expected to pay bribes to receive public services. The 2010 Transition Report documented the importance of corruption as an obstacle to doing business in the region. In most of its countries, corruption ranks among the top three obstacles to the business of a representative firm.

Lesson From Pfizer’s Recent Case

Pfizer H.C.P. Corporation, an indirect wholly owned subsidiary of Pfizer Inc., has agreed to pay a $15 million penalty to resolve an investigation of Foreign Corrupt Practices Act (FCPA) violations. In August 7, 2012, the Securities and Exchange Commission charged Pfizer Inc. with violating the Foreign Corrupt Practices Act (FCPA) when its subsidiaries bribed doctors and other health care professionals employed by foreign governments in order to win business.

Employees and agents of Pfizer’s subsidiaries in Kazakhstan, Russia, and some other countries made improper payments to foreign officials to obtain regulatory and formulary approvals, sales, and increased prescriptions for the company’s pharmaceutical products. They tried to conceal the bribery by improperly recording the transactions in accounting records as legitimate expenses for promotional activities, such as marketing, training, travel and entertainment, clinical trials, freight, conferences, and advertising. Preventing such disaster might have cost a fraction of all penalties.

Second Layer Check for Most Risky Compliance Zones

In Central Asian countries likeKazakhstan,Tajikistan, andUzbekistan, corruption and extensive internal frauds might undermine your Compliance efforts badly without your due attention to the aspect. Without properly understanding the situation on the ground and without securing second opinion from experts familiar with the country situation, you would never see what is actually going on in your regional office.

Our experience of working with local managers and compliance and risk officers proves that in 80% of times your local compliance officer, or your local manager might be unable to timely recognize and catch the real danger in a critical moment. There are many explanations for that. But in short, the reason is about losing the effectiveness of your compliance officer or other regional manager who is responsible for ethics.

Being responsible for ethics in such countries is like a sifting a thick liquid by using a fine filter. We would say that in a “dirty” environment, it’s better to have additional filters to provide you an additional layer of control or additional checks. Such an additional, fresh filter is a trusted and qualified advisor that can periodically take a fresh and independent look at the local system’s proper work and evaluate and/or ensure its effectiveness.

The advisor should be very familiar with the compliance and ethics environment both in the region of your local office and in your main country. The cost of such disaster prevention is a fraction of what might be paid out as fines and penalties, not to say anything about other possible damages from overlooking the most critical things in the regional offices.

How We Can Help You

We at SCGA advise the compliance offices of multinational corporations concerning their compliance solutions, their codes and policies adaptation, their risks identification, and their evaluation of regional ethics programs while providing special trainings to your local experts in their local languages. Many other compliance solutions are available as well, mostly all related to neutralizing your company’s FCPA (or UK Bribery Act), preventing money laundering, and neutralizing exposure to other risks in countries like Kazakhstan, Uzbekistan, Kyrgyzstan, Turkmenistan, and some other post-Soviet countries. We have a broad network of over 60 qualified representatives and local compliance, legal, and business experts on the ground. We are able to provide complex opinions on a variety of compliance risk issues.

We have helped many of our clients to identify and mitigate major compliance risks in post-Soviet Central Asian countries. To see what we can do for you, please check our Compliance Support in Central Asia.

To stay updated on compliance risks in Central Asia and about possible ways of mitigating your risks, you may subscribe to our free alert service—Important Compliance Updates from Central Asia—which will regularly provide you valuable insights about compliance developments in Central Asia you should know about.

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Phone: +1 800.207.5579

Email: cga@sarsenov-advisory.com

About Sarsenov

Sarsenov’s Corporate Governance Advisory (SCGA)

SCGA is a consulting firm specialized in post-Soviet countries of Central Asia, such asKazakhstan,Kyrgyzstan,Turkmenistan,Tajikistan, andUzbekistan. We have 15 years of experience working in those transition economies ofCentral Asia. Our expertise embraces the following fields:

  • - Corporate Governance
  • - Compliance / Legal Risk Management
  • - Local Business Environment
  • - Financial Services and Investment Regulations

We have helped many corporations and financial institutions inCentral Asiato find solutions for their governance, compliance, and ethics problems, and we advise them on many complicated local investment and financial regulation issues as well.

Phone: +1 800.207.5579

Email: cga@sarsenov-advisory.com