Policy Debate: Perspectives on Global Device Industry Ethics &

Compliance Initiatives

Moderator: Brian Sheridan Vice President, , Corporate Legal Affairs,

General Counsel – The Sorin Group

2013 International Medical Device Industry Compliance Conference

Perspectives on Global MedTech Industry

Ethics & Compliance Initiatives

International MedTech

Compliance Conference

15-17 May 2013

Warsaw, Poland

Mr. Chiawen Kiew, Legal Expert,

OECD Anti-Corruption Division

The OECD Anti-Bribery Convention

3

• History of the OECD Anti-

Bribery Convention – U.S. Foreign Corrupt Practices Act (1977)

– Came into force 15 February 1999

• 40 States Parties (34 OECD

countries + 6 non-OECD

countries)

• The Working Group on Bribery – 2/3 world exports (2011)

– Non-OECD countries: Argentina, Brazil, Bulgaria, Colombia, Russia, South Africa

– Emerging economies: Argentina, Brazil, Chile, Colombia, Israel, South Africa, Russia, Turkey

– G20: 15 out of 19 (20th is the EU)

Regulatory Landscape of WGB

• Legislation criminalising bribery of foreign public

officials in all 40 member countries (e.g., UK Bribery

Act)

– Russia and Colombia recently enacted

• Prohibition on tax deductions for bribes paid

• Establishment of effective corporate liability

• Enforcement of foreign bribery (as of 2011)

– 210 individuals and 90 entities for foreign bribery

– Approximately 300 investigations in 26 States Parties

Pressure from int’l organisations, member countries, and civil society organisations to

increase enforcement.

What About Emerging Markets?

• China – Foreign bribery offence in force as of May 2011

• India – Introduced in Parliament in 2011; expected to be enacted 2013

• Malaysia – Section 22 of MACC Act as of 2010

– Prosecuted foreign company for domestic corruption

• Indonesia – Draft foreign bribery legislation ; expected to be passed in 2014

(tentatively)

– KPK actively investigating domestic bribery by transnational actors

Growing Role for Corporate Compliance

• UK Bribery Act (Defense)

– Section 7: “Adequate procedures to prevent persons associated with it from committing bribery”

• Australia Criminal Code (Element)

– Liable if “corporate culture” encouraged, tolerated or led to the offence, or if it did not create a compliant “corporate culture”.

• Canada Criminal Code (Element)

– Section 22.2: “With the intent at least in part to benefit the organisation, one of its senior officers”: […] 3. Knowing that a representative of the organisation is or is about to be a party to the offence, does not take all reasonable measures to stop them from being a party to the offence.

• U.S. Sentencing Guidelines (Mitigation)

– “Effective Compliance and Ethics Program”

Accounting and Internal Controls

• Over 60 individuals and 100 companies sanctioned for other offences related to foreign bribery

• Charges usually based on:

– Ineffective corporate governance response

– Failure in internal audit controls

– Lack of implementation of paper policies

– Inadequate communications from top management

International Standards for Compliance

• 2009 Recommendation, Annex II (“Good Practice Guidance”) is the only international guidance issued to the private sector that has been endorsed by the major exporting countries.

• Sets out the basic requirements for a compliance programme:

– Visible corporate policy prohibiting foreign bribery

– Risk-based due diligence

– Oversight and detection of foreign bribery issues

– Communication from senior management

– Channels of reporting and whistleblower protection

Potential Areas for Improvement

• Awareness among SMEs

• Whistleblower protection

• Ensuring compliant third-parties and supply chain

– Monitoring and auditing

– Training of third parties

• Awareness among internal and external auditors and accountants

• Weakness in anti-foreign bribery policies

– Definition of foreign public official

– Gifts and hospitality expenses

"Drinking the Kool-Aid" is a metaphor commonly used to refer to a person or group holding an unquestioned belief, argument, or philosophy without critical exeamination

1900s 2001 2003 2005 2007 2009

First AdvaMed

Code (1993)

Transparency International

Business Principles for Countering

Bribery

AdvaMed Code revised Kuala

Lumpur Principles

2002 2004 2006 2008 2010 2011 2013

2012 2000

First Eucomed Code (1998)

Eucomed Code revised Eucomed

Conference Vetting System

Joint AdvaMed/Eucomed

Distributor Guidance

Distributor training tools and DD tool

First International MedTech

Compliance Conference

AdvaMed Code revised

Eucomed Code revised

US Sunshine Act

Eucomed enforcement rules

(Independent Compliance Panel)

AdvaMed mission statement

includes “Global”

1977 1998

1997 1999

2001 2010 2012 2011-2012

Foreign Corrupt Practices Act

(FCPA)

OECD Anti-Bribery Convention UK Bribery Act

Breast Implant Scandal in France

Italian D.L. 231/2001 mirrors

OECD FCPA Guidance

French “Sunshine” Act