Overview

The private equity sector has been shocked by some of the allegations made during the "pay to play" scandals in the US, and the whole industry will suffer the longer term effects of the ensuing crackdown for many years come. But private equity funds, as "active" owners of international businesses, can also be a deep pocketed, high profile target for prosecutors looking for someone to bring to book in the wake of a corruption investigation involving a portfolio company. Furthermore, the 2009 Report on Progress on the UNPRI showed that 46% of asset owners and 36.2% of investment managers who had signed up to the Principles cited bribery and corruption as "Environmental, Social and Governance" issues" which they addressed when engaging with service providers. It makes good business sense, therefore, for managers to understand the legal issues in every country in which the fund does business, and to take active steps to ensure that responsible business practices are adopted throughout the portfolio.

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