On the Ropes: Enforcement Risk Roundtable—Anti-Corruption and International Risk Perspectives from Recent Developments in Sweden

In this edition of Ropes & Gray’s podcast series On the Ropes: Enforcement Risk Roundtable, global anti-corruption and international risk practice co-chair Amanda Raad and litigation and enforcement associate Zachary Bernstein are joined by Anna Romberg, EVP of Legal, Compliance & Governance at Getinge and co-founder of the Nordic Business Ethics Initiative, and Hayaat Ibrahim, Secretary General of the Swedish Anti-Corruption Institute, to discuss the current anti-corruption landscape in Sweden and related legal considerations for businesses and individuals operating in the country.

Transcript:

Zachary Bernstein: Welcome to our latest installment of On the Ropes: Enforcement Risk Roundtable, a Ropes & Gray podcast series focused on global anti-corruption and international risk. I'm Zachary Bernstein, a litigation and enforcement associate based in Boston, Massachusetts. I'm joined today by Amanda Raad, a co-chair of the firm's global anti-corruption and international risk practice, and our R&G Insights Lab, an innovative full-service legal consulting group and the industry's first-ever analytics and behavioral science offering. 

We are thrilled to have two guests with us today to discuss the current anti-corruption and local enforcement landscape in Sweden. Anna Romberg is the Executive Vice President of Legal, Compliance & Governance at Getinge, a leading medical technology company. She is also the co-founder of the Nordic Business Ethics initiative, a professional network stretching across Denmark, Finland, Norway and Sweden for the promotion of responsible corporate conduct, business integrity, and responsible leadership. Hayaat Ibrahim is the Secretary General of The Swedish Anti-Corruption Institute, a nearly century-old organization for the promotion of ethical decision making in the Swedish business community. Before that, Hayaat practiced for nearly five years at Vinge, Sweden's premier law firm. Thank you both so much for joining us today. To start, Amanda, could you give us a little bit of background on what we'll be discussing today? 

Amanda Raad: Thanks, Zach—I'm happy to dive in. Sweden is regularly considered among the most transparent and the least corrupt nations in the world. The government's transparency and accountability mechanisms have been highly regarded as the impartiality of its judges and judicial system also have been. The country's commitment to supporting the media combined with legal protections for freedom of speech has also enabled journalists and citizens to hold politicians and corporations alike accountable. But in the last several years, we've seen a marked increase in local enforcement efforts to combat corruption in the Swedish telecommunications and finance industries. And some of these enforcement activities have highlighted what may be blind spots in some of Sweden's legal anti-corruption framework and local expectations regarding what corporate compliance looks like. So, in our conversation today, we're going to try to unpack some of the challenges that might be facing Swedish businesses in the anti-corruption and international risk space, and also try to look at why local enforcement actions have started to increase in Sweden in recent years. 

Zachary Bernstein: Why don't we start by asking you both, Anna and Hayaat, for your high-level impressions on what this increase in enforcement activity represents? 

Anna Romberg: Thank you, first of all, Zachary and Amanda, for having me here. It's a great pleasure to be discussing these topics with you, so I'm really honored to be here, together with Hayaat. I would say that the enforcement activity is picking up—it’s a reactive approach still. I think the media has been pretty active in visualizing on ethical and, possibly, even illegal conduct by Swedish corporations, and then the regulator has been forced to act. I think, if we go back a couple of years to a company that's close to me, Telia (I worked at Telia for nine years), I think that was really a scandal that was spurred by investigative journalists, and then the regulator, more or less, was forced to get involved. I think, still, it's quite a reactive approach, but I'm super happy to hear Hayaat, your impressions on this, as well. 

Hayaat Ibrahim: Thank you, Anna. And thank you, also, for having me here today. As mentioned, we have, over the recent years, seen a slight increase—I would say "slight" when it comes to enforcement activity here in Sweden, to combat corruption in the corporate environment. Although we have seen the same cases have resulted in settlements and billion dollar penalties and fines in other jurisdictions, such as the U.S., we have not had the same results here in Sweden in terms of convictions or corporate fines. I think that it is a bit like Anna said—it's very much still a reactive approach to these issues here in Sweden. But at the same time, I think there was, and is still, a lot of disappointment when it comes to the outcomes of these enforcement activities that we've seen. But nevertheless, I think it has sparked a discussion in Sweden, an awareness around foreign bribery and corruption, and it's something that will be increasing, I think, in recent times. 

Anna Romberg: I think one really concrete example is Telia that ended up paying a billion dollars to the U.S. and the Dutch authorities. And then basically, if you look at it from a strictly legal Swedish perspective, nothing illegal happened. That's, of course, quite interesting then considering that the company has admitted to wrongdoing in other jurisdictions. I think that's when it becomes so dangerous to evaluate these kinds of acts in the light of whether somebody's convicted or not. Hayaat, you can please fill in, but I think the really short explanation is that the president's daughter in Uzbekistan that Telia paid $330 million U.S. dollars to, she was the daughter of a dictator. But in Sweden, according to the Swedish law that was enforced at that time, she was not a bribe-able person because she didn't hold a position in public office, so the whole case fell apart. In Sweden, you also have to convict individuals before you go to the company. And what's also interesting in the Telia enforcement is that there was money earmarked for Sweden if there would have been some convictions in Sweden, so I think the Swedish taxpayers could have gotten an amount of this big global settlement. But obviously, then that piece of the pie didn't go to Sweden—the Dutch and U.S. authorities got that instead. 

Hayaat Ibrahim: I totally agree with Anna—there was a huge disappointment. When it comes to just the trust in the Swedish enforcement activities and whether the Swedish legislation is effective—does it work? Is there something wrong with our legislation? Is this something we need to change? We do have two recent criminal provisions: The newest ones, which are negligent financing of bribery—which could have been applicable in this case, but it wasn't tried against this new provision—and also, the trading [of] influence. We don't even have any case law when it comes to these two provisions, and that is also something that many people have expressed disappointment with. We have these new provisions that they said were implemented due to the criticism by the international community, but yet, they haven't been used, and when will that happen? So, we're still waiting, and I think that we need to see enforcement and see these provisions, and have cases to understand what could and what should Swedish corporations expect. 

Anna Romberg: In Sweden, companies are expected to self-regulate and to behave, but then when there is a real situation, it's really unclear what kind of benefit you get from your ethics and compliance program. For example, in the U.S. context, it is pretty clear nowadays if you detect wrongdoing and you decide to self-report, you actually can get pretty clear benefit from that. I know some would argue that it's not that predictable all the time, but still, as a company, you can trust that if you have an ethics and compliance program that works, part of that is detecting misconduct, and there is real benefit to going in and revealing that to the authorities. But in a Swedish context, that's very unpredictable, and we are not really encouraged to self-report—there is not a concept of that. 

Hayaat Ibrahim: If we look at the Swedish legislation, if we look at the chapter regarding corporate fines, it says that if you made a voluntary disclosure, the corporate fine could be reduced, but that is not something we've seen or has been applied in an anti-bribery and corruption context. Also, if you can demonstrate that you have a compliance program in place and it is effective, or that you have taken action to mitigate the consequences, you can also receive a reduced fine. But this is something that is regulated, stipulated, but it's not something that has been communicated or that's been exercised, so that there is a clear precedence here that people can follow and also refer to. 

Zachary Bernstein: What kinds of things are you hearing professionals in the Swedish anti-corruption and compliance space talking about as particular things that need to be addressed? 

Hayaat Ibrahim: First and foremost, I think that there is a great awareness today when it comes to the understanding of bribery and corruption for quite some time. And still, I would say, in some rooms, the picture in Sweden is that we don't really have bribery and corruption. But what these cases have shown is that we have Swedish corporations that many have previously seen as at the forefront of these types of issues. They've had large compliance departments. They've been championing that we're an ethical company in many ways. So, I think that seeing the enforcement that they've been subject to has really sparked a conversation in terms of what are the risks of operating in high-risk jurisdictions as a Swedish company, because previously, I think, many Swedish companies were very comfortable—of course, looking at the little enforcement activity that we've seen previously. I think now, many people are becoming more aware of that there is also international enforcement, and this has really resulted in Swedish corporations actually taking effort and asking themselves questions like, "Where are we here? Do we have preventive measures in place? Are they effective? What are the risks, and is it something that we are in a good position to manage or not?" 

Amanda Raad: That's really interesting. Do you think that it's the slight increase that you mentioned in local enforcement, or do you think it's the international enforcement of Swedish companies that is really starting to drive some of the increased awareness that you're seeing, or some combination thereof? 

Hayaat Ibrahim: I would say it's the international enforcement. We had a recent increase in the Swedish corporate fine in 2020—it was an increase of 5,000%, but still very low. The highest fine that [a company] could be subject to is 500 million Swedish Kronors, which is very low compared to the billion dollar fines that we've seen internationally. So, still I would say that these are the fines that are driving the compliance work here in Sweden to a very large extent, actually. 

Anna Romberg: I would definitely agree with you, Hayaat, there. I think from a self-image perspective, thinking that in Sweden we are ethical, we are transparent, we have a high sense of integrity, we have a great culture, and then suddenly, we have these companies subject to billion dollar fines, and up in the top ten list of the FCPA enforcement actions and so on. I think what many wondered, "What's wrong with Nordic companies?" And then, we take the banks, as well. I think it's a serious discussion that we need to have. How can these things happen? Because locally, we do have transparent media and a sense of business integrity that we apply when we file our tax filings and so on, but then, when doing business abroad, things go terribly sour. So, how can that be? I think that's super important to understand, that culture and ethical business behavior is nothing that's common sense and that you can just export because people are good people. It's really the context that you have to understand and how difficult it is to do business in complex markets. And I think here as well, Hayaat, what you were saying on the disappointment in the local enforcement action also is because previously, the anti-corruption law, now it's been updated due to some learnings from the Telia case, but I think the law wasn't even fully bent towards being effective in terms of combating international corruption. Sweden is still being criticized by OECD, for example, that we are not doing enough in this regard, so I think it's good to have these discussions and really reflect critically upon how could these things happen and what should we really do to prevent it? It's not only a corporate effort, but it's also efforts needed from the regulatory side, as well. 

Amanda Raad: What's your sense on how companies are tackling these challenges? All of us that work in this space recognize how very difficult it is to manage global risk issues, just because it is, as you say, very tough to operate in challenging markets, and it's just so far-reaching. What are the discussions you're hearing, and what [are] the proactive steps that you're starting to see organizations take in how they try to tackle this? 

Hayaat Ibrahim: I think if you just rewind five years or so, in many Swedish board rooms, anti-bribery and corruption was not discussed, or money laundering at all, in fact. So I think now what we see with these recent scandals and the reporting around it, this is just something that is very top-of-mind now when it comes to several boards. They're looking at the compliance departments—they are growing rapidly in many large corporations. We see that resources are being dedicated to this. You can also look at the Swedish law firms, the commercial law firms, that have new departments that are specialized in bribery and corruption, and compliance and investigation. I think this reflects the approach, or at least the awareness, that some of these larger companies are demonstrating. However, if we look at the small and medium-sized companies here in Sweden, many of them are not really having this issue on top of their mind, although being active in high-risk markets. 

Anna Romberg: I think we should keep in mind that in Sweden there is not really any guidance on what effective compliance looks like, so we are all looking towards the DOJ guidance, international best practice and so on. So that's really what's setting the tone here, as well. 

Amanda Raad: Do you feel like there's an acceptance now that these risks actually apply, even though you're not seeing the local enforcement? You mentioned looking to the DOJ guidance, for example. Does it really feel to you like it's only the bigger companies that have managed to get this at the top of their priority list? 

Anna Romberg: No, I do think there is an awareness also in smaller and medium-sized companies because it also comes from, for example, financiers if you want to get a loan from banks. Creditors are putting more strict requirements asking companies for their compliance programs and so on. I think the big challenge is really how much work is required. I think we are getting to a place where boards, as Hayaat was saying, are understanding that you have to put money where your mouth is, you have to dedicate resources to this—and that is, of course, a challenge in smaller companies. Also, I think you have to be realistic that it's long-term work—that there is always a legacy in each and every company, as well, that you have done things in a certain way, and you have to unwind and you have to put new practices in place. It takes time, and that all builds the culture, so I think you need to be realistic, as well, in terms of not only dedicating resources, but then realizing that it will take time. And then, it will require some type of change, and change is usually quite uncomfortable, as well. So, you have to equip boards and management with, “If we take ethics and compliance seriously, it will be uncomfortable. We have to challenge ourselves. We have to challenge our deficiencies.” 

Hayaat Ibrahim: I agree with Anna that there is a will in many small- and medium-sized companies, but my understanding is that although there is a will, often they don't have the resources or are [not] willing to do the work. From our side at the Swedish Anti-Corruption Institute, this is a group that we have started prioritizing in a larger extent now to be able to support them with guidance materials or discussion materials or anything, really, that could help them take the steps in implementing, of course, proportional and risk-based preventive measures. 

Zachary Bernstein: What would you say are your top tips, or in your opinion, the most important things that companies trying to devise and hold on to effective compliance programs should be considering when undertaking that? 

Anna Romberg: I would say, just to keep continuing the work, and making sure that there is also monitoring in place, making sure that it's effective. I think DOJ has three brilliant questions: Is it well designed? Is it applied in good faith? Does it work? So, just to keep up that work. If you're a smaller company, definitely to try to leverage the resources that you have to put in place the basics of compliance. I hope it's not wishful thinking, but I do think the local enforcement will pick up and the regulation will improve. These scandals that we've seen in Sweden are so big on a global scale that I think it would be an embarrassment from a Swedish perspective if we wouldn't see local enforcement and local regulation really being part of the solution here—not only relying on the international regulators to intervene. 

Hayaat Ibrahim: From the enforcement perspective, I think that we will hopefully have a case law when it comes to these two new offenses. And also, I think for corporations operating in Sweden, something that they should keep in mind is also to understand the Swedish culture and the Swedish organizations. Sweden's a bit different when it comes to, for example, speaking up. Many people also don't want to engage in or interfere in other people's business—everybody keeps a bit to themselves. I think it's important to also understand this concept when implementing an adequate compliance program that works in practice. So, I think that is also important when it comes to the "speak up" culture, and ensuring that here in Sweden.  

Zachary Bernstein: Anna, Hayaat and Amanda, that was a great discussion. Thank you all for joining me today and sharing your insights. And thank you to our listeners. For more information on the topics we discussed as well as other helpful links and materials, please visit our R&G Insights Lab website at www.ropesgray.com/rginsightslab. If you have any feedback or suggestions for jurisdictions or specific topics you would like us to cover, please contact us at express@ropesgray.com or feel free to reach out to any of us directly. You can also subscribe to this series wherever you regularly listen to your podcasts, including on Apple and Spotify. Thanks again for listening.