According to John W. Brooks, senior international counsel at Luce Forward, a full-service law firm, if a company conducts business overseas, the chances of the FCPA catching up to an illicit payment is almost guaranteed.
In Brooks’ three part series, Getting caught with your FCPA pants down – What to do when the phone rings, he presents two scenarios that can help companies test and prepare a plan incase the DoJ decides to call.
Brooks writes that if a company’s ombudsman is notified that a violation has taken place and there’s no rigid corporate compliance program in place, the following should be taken into consideration:
Self-assessment: It is important to study the various sides of the issue. Start by asking what happened and who else knows? Has, or should, the alleged violation (AV) be raised with your board? What type of ‘reputational damage’ can be incurred? What are the odds of an unhappy employee or whistleblower turning the company in? Keeping those questions in mind and having a strategic plan in place can mitigate future FCPA risks.
External examination: In the second scenario, what if the government tracks you down and discovers your violation? ‘If you have a qualifying’ compliance program up and running, you may be able to hold down the penalties,’ says Brooks. ‘If you don’t, you may as well just go quietly.’
If that’s the case the lawyer advises that a company should measure how robust and effective its program is. ‘Did a senior officer of your company have secret knowledge of the violation? If the UK Bribery Act is involved, do you believe your program meets the UK standard of ‘Adequate Procedures?’
Flexibility: Sharing similar views is Thomas Fox, attorney and author of the FCPA Compliance and Ethics Blog, who claims that a superior business model must be adaptable so it can sustain its effectiveness over time. Additionally, a good compliance policy/program should be able to adapt despite the ever-changing regulatory landscape.
International compliance: ‘The key to this component is an annual assessment of your company’s FCPA compliance program to determine if there are any areas which may need to be modified,’ Fox explains. ‘A couple of clear examples of this are facilitation payments and UK subsidiaries or company employees subject to the UK Bribery Act.’ He further mentions that many companies tend to ban facilitation payments in the compliance policy and requires the same from those involved in business with them.
According to Fox, in the event a company is in fact subject to the UK Bribery Act, it needs to keep in mind the different treatment given to facilitation – treated more strictly in the UK – and private commercial transaction which are more clearly defined in the US statute. ‘Companies need to be aware of both developments and enhance their compliance program to meet these evolving standards,’ Fox says.
Whistleblowers: Brooks notes that whistleblowers come in two categories: the bounty hunter and the ‘shake-down artist,’ that the latter being motivated by self-interest. For this matter, the response to the two types of whistleblowers should be approached differently.
