Business Continuity Planning: Fraud and Corruption Dangers of a Natural Disaster

In the wake of the spate of disasters over the past two years, one area of disaster preparedness that has received much-needed attention is what to do to keep your business going, even in extreme circumstances. In essence, the modern business has moved past the point of a disaster recovery plan and into the realm of business continuity plans, as well as post-disaster planning. Today’s preparedness plans take into account more than recovery — they also focus on preparedness, operational continuity and future-thinking. The best preparedness and response plans help businesses transition from non-disaster mode to disaster mode smoothly and safely.

Few think of the legal ramifications that such circumstances can create, especially in the areas of bribery, corruption and fraud. Planning for such eventualities beforehand goes a long way toward protecting your company from any lawsuits that might arise from actions taken by your company in the wake of a disaster.

With more and more governments looking into possible legal foul play, mainly bribery and fraud, by companies in the wake of natural disasters, it is in a company’s best interest to develop a sound disaster plan (pre- and post-disaster). The Chinese government enacted the Foreign Bribery Law on May 1, 2011, which punishes any company engaging in unethical activities performed on its soil, and goes one step further by applying the law to Chinese citizens and legal entities that were organized under Chinese law worldwide.

The U.S. also has its own laws against corrupt activities by companies on their soil, in addition to Mexico, and the UK, whose Anti-Bribery Act is more comprehensive than any law of its kind currently in effect. So, as you can see it pays to make sure whatever plans your company has in place to deal with situations created in the case of a natural disaster take into account the myriad of different laws that might be in effect in whatever area you are operating.

“Officials at all levels of a government may look to foreign companies for a handout following a major disaster,” according to Carlos F. Gonzalez, a Miami-based trial and appellate lawyer. “Or, these officials may simply see a disaster as an opportunity to extract additional benefits from companies in the region. In the most extreme cases, the message may be sent that continued operations in the affected area will depend on the payment of a bribe. While offering humanitarian assistance may not necessarily be illegal, it is critical for companies to understand the difference between help that is legal and assistance that crosses the line into bribery.”

For more information about being prepared and knowledgeable about corruption during natural disasters, visit: