Responsible lobbying during COVID-19: How to manage corporate political engagement

This post originally appeared on the FCPA Blog.

Knowing when to be flexible and when to stand your ground is a skill we continuously juggle. Nowhere is this more apt than in the current fight against Covid-19, as governments and companies adapt their ways to work together in a responsible way to save our society and economy. In an age where public trust is a company’s most valuable yet vulnerable asset, firms that sacrifice integrity for short-term financial gain will find that restoring trust can be costly, if not irrecoverable.

In April, media reported that UK officials had cancelled orders for two million Covid-19 antibody tests and will attempt to recover the costs from the Chinese companies that produced them after it emerged the tests didn’t work well enough to be used. Setting aside the role of the UK government in this deal, the reputations of these companies have now been severely damaged, and questions will rightly be asked over the way they conducted themselves.

In times of crisis, the need for a flexible operating environment where government and companies are in increasing dialogue to make swift decisions can open the door to improper conduct through disproportionate, opportunistic, and opaque corporate political engagement. When we do not enforce the key principles of effective corruption risk management in corporate political engagement, we facilitate an unchecked process that enables personal agendas rather than benefits wider society.

So, what are the key corruption risks surrounding corporate political engagement during the Covid-19 pandemic, and how can we manage them effectively?

Boards should set the tone for responsible lobbying and oversee activities. Senior management should ensure the integrity of lobbying is maintained by reminding colleagues of their obligation to act responsibly and transparently. Boards must maintain the continuity of their lobbying approach across the company and report publicly and comprehensively on the lobbying that the company engages in.

Review your controls to manage insider information. Involved individuals should be subject to enhanced monitoring, restricted from trading during discussions, and submit statements from their brokers.  U.S. Republican Senator Richard Burr has already faced demands to resign after it was reported that he sold millions of dollars worth of stock in late January and mid-February just before the market dropped in the wake of the pandemic.

Managing conflicts of interest. Conflicts of interest, if undeclared, can lead to improper or corrupt behavior. Key decision-makers should be reminded to declare any potential conflict of interest or recuse themselves whenever there is a potential or perceived conflict of interest if it cannot be resolved. The company should publicly report details of serving, and recently retired politicians contracted to work at the company. To further reduce the risks of undeclared conflict of interest, companies that are engaging with the government in stimulus packages should also disclose their ownership structure to allow external stakeholders to see who is ultimately benefiting from government decisions.

Be transparent about your corporate political engagement. Critically, companies need to be transparent about their corporate political engagement. Companies should publicly disclose details of the aims and significant topics of its public policy development and lobbying, and the activities it carries out.

Once the impact of the pandemic is over, society will not only remember what companies did to save lives and the economy but how they did it. Companies that are found to have engaged government inappropriately and neglected the public interest will be reminded by their stakeholders that restoring trust, as history shows, can be long and costly without any guarantees.

For more information and guidance on managing corporate political engagement, please refer to our resources:

Wise Counsel or Dark Arts? Principles and guidance for responsible corporate political engagement

Corporate Political Engagement Index 2018

Open Business