The U.S. Foreign Corruption Practices Act (“FCPA”) and U.K. Anti-Bribery Act are causing some concern for those corporations operating in international environments. And it’s going to be worse in the coming years.
It almost always comes down to the basics. One of those basics is examining the purpose of corporate compliance programs.
Is the purpose to respond to advice of corporate attorney and create an affirmative defense?
Or is the purpose to create a corporate culture of integrity in the face of challenges arising in any environment?
Most corporate executives are clear about the importance of keeping the corporation out of trouble. Legal trouble is expensive and often results in unsatisfying solutions. This is particularly true of legal problems involving corruption allegations.
Working at the interface of corporate intentions and the real world in far away lands, one can see the conflicted thinking about corruption. Foreign officials will create obstacles that seem to be impossible to resolve with out some sort of . . . financial encouragement.
I spend a great deal of my time working abroad. Despite the increase in corruption prosecutions, I see a few commonly repeated problems with even the most experienced companies:
- A surprising number of companies do not have clear policies that guide behavior when operating abroad – nothing.
- Many companies have weak documentation programs in those areas where risk of corrupt activities is highest.
- Many companies have very weak training programs, relying on software solutions as a way to develop a corporate ethics commitment with people that may never meet someone from the home office. Even when these training programs are annual requirements, they can come across as more important for HR compliance than as an important commitment to bring people into the culture of an organization.
- Many companies fail to push policy and training to the front lines where employees and third party contractors sometimes don’t share the language
,or culture of the home office at all.
These issues appear to be common to corporations large and small, experienced and inexperienced, and even companies contracted to the U.S. Government that specialize in international work.
Because of these issues, it is a target rich environment for DOJ, SEC and the U.K. Serious Fraud Office.
Corporate executives and shareholders never want to be defendants in corruption cases. However, it is possible to begin thinking beyondnking beyond the minimalist affirmative defenses, and “red flags” to create a corporate culture that stays focused on corporate purpose while committed to keeping the company out of legal trouble.