A recent LinkedInpost by Kirk Burapachaisri reminded me of the corruption risks associated with doing business in Southeast Asia. A $10M 💰 fine against John Deere for bribery in its Thailand 🇹🇭 subsidiary was mentioned in the comments there (link below).
It underscores the critical importance of strong anti-corruption safeguards also in subsidiaries and remote locations.
Southeast Asian countries vary significantly in their rankings on the 2023 Corruption Perceptions Index (CPI). Singapore, for instance, ranks high with a score of 83, reflecting low corruption, while Myanmar ranks lowest at 20. Countries like Malaysia (50), Vietnam (41), Thailand (35), Indonesia (34), and the Philippines (34) fall in between, signaling elevated risks that need to be managed effectively.
Here’s how to protect your company:
1. Strengthen Compliance Across Borders: Ensure your Southeast Asian operations follow the same rigorous standards as HQ.
2. Set a Strong Tone from Leadership: Leadership must lead by example, demonstrating zero tolerance for unethical behavior.
3. Conduct Local Audits: Regularly monitor subsidiaries, especially in regions prone to corruption risks. Focus especially on procurement and sales teams.
4. Build a Culture of Transparency: Train local teams to identify and report misconduct without fear of retaliation.
Ignoring these safeguards can lead to hefty fines, legal exposure (also for executive at HQ), and damage to both reputation and shareholder value.
Safeguard Your Southeast Asian Subsidiary from Corruption Risks
Corruption risks in Southeast Asia require robust anti-corruption safeguards. Countries like Singapore have low corruption, while others like Thailand and Indonesia face elevated risks. Companies should strengthen compliance, set a strong leadership tone, audit local operations, and promote transparency to protect against legal and financial consequences.
