A new survey released by the Baker McKenzie law firm revealed that almost half of companies in China and Hong Kong have made investments in various firms that are touted to be facing compliance issues. Despite this recent development, some observers have noted that these companies from China and Hong Kong are much more cautious that their counterpart in the United States, as well as other parts of the world.
Based on the data gathered by the Baker McKenzie law firm, about 48 percent of companies based in China and Hong Kong have responded that they knew that the firms they are dealing with are facing various compliance issues. Despite this, the companies still push through with their purchases and investments.
The same survey revealed that 68 percent of companies in the United States who responded to the survey said that they knew about the outstanding compliance issues with the firms that they are dealing with, nevertheless they still made purchases and investments. The average among companies around the world who responded to the survey is at 60 percent.
More than 1,300 business leaders were interviewed for the survey. These companies were scattered all over the world and included those in China, Canada, Germany, Brazil, Spain, Hong Kong, the United States, and the United Kingdom. All of the companies that participated in the survey have a reported global turnover of $1.3 billion or more.
Baker McKenzie Asia-Pacific Region Head for Compliance and Investigation Group Mini vandePol said, "Failing to adequately assess compliance liabilities exposes the business to additional risk, but it also removes potential leverage for negotiating on the price of terms of a deal."
The survey also showed some interesting results. Overall, 43 percent of the companies that were surveyed said that when planning large scale deals their compliance functions are always included or involved. For China and Hong Kong-based companies, 48 percent of the firms said they included compliance as part of deal planning.
The recent survey was released just days after a Golddman Sachs chief executive David Solon was forced to issue an apology to Malaysia. The apology has something to do with the role of Tim Leissner, a former Goldman Sachs partner, in the 1Malaysia Development Berhad scandal.
The Malaysian government filed several criminal charges against a number of Goldman Sachs subsidiaries, Leissner, and another former bank employee. They face accusations of misappropriating $2.7 billion and bribery. Leisnner plead guilty on the charges and later recounted that it part of Goldman Sachs' culture to not inform the firm's compliance and legal departments.
