Today’s post is a Q&A with Bryan Sillaman (Hughes Hubbard & Reed). Sillaman is a member of the firm’s Anti-Corruption and Internal Investigations Practice Group and is currently working in the firm’s Paris office. Prior to joining Hughes Hubbard, Sillaman was an attorney in the SEC Enforcement Division where he conducted several Foreign Corrupt Practices Act investigations.
Q: What brought you to Paris and what is it like being an FCPA lawyer in Paris?
Hughes Hubbard has had an office in Paris for nearly 50 years, and has a long history representing French companies. I was fortunate enough to be asked to come to Paris to assist one of our French clients with a global anti-corruption review. At the time, it was unclear how long I would stay, but that was nearly four and a half years ago. It has been fascinating and instructive to see how the FCPA and U.S. enforcement environment is perceived within Europe, and to also witness the development of other significant international anti-corruption initiatives, such as the passage of the U.K. Bribery Act, which got the attention of a lot of European companies. The industry of compliance appears to be steadily growing in France, with one of the French universities creating a Masters in Law in Business Ethics (Master Droit & Ethique des Affairs). While part of this seems to be in response to increased enforcement of European companies by the U.S., I also believe that the political climate in Europe generally, and France specifically, is becoming less tolerant of corruption – particularly at the governmental level – which has helped fuel the industry.
Q: How are European clients different from U.S. clients, perhaps in terms of voluntary disclosure, cooperation with enforcement agencies, etc.?
One thing to keep in mind when working with European companies is that, at least in certain countries, it was legal and in fact tax deductible to pay bribes until just over a decade ago. In this sense, anti-corruption compliance is a newer issue for many companies, although it is one that is gaining increased focus and attention, particularly within multinational corporations. It should also be remembered that for the first approximately twenty years of the FCPA’s existence, it was relatively rarely enforced. Thus, while perhaps some European countries are lagging the U.S. in bringing their own enforcement proceedings, there does appear to be an increased focus on the issue within the corporate community.
For better or worse, European conceptions of topics such as voluntary disclosure, cooperation, and remediation have been largely shaped to date by U.S. enforcement jurisprudence and posture. Therefore, in advising European companies on such issues, counsel naturally have differing philosophical viewpoints on the potential benefits and pitfalls of voluntary disclosure or cooperation. Anecdotally, however, I think that the concept of voluntary disclosing issues to the government (and potentially being prosecuted in return) strikes many European companies as contrary to sound logic. European clients also find fascinating the broad jurisdictional view taken by U.S. (and now U.K) regulators, as well as what until recent history is a new concept: that of the independent corporate monitor.
There are also more nuanced issues that can have a profound impact on how to conduct a compliance review with European companies that may, at first blush, seem unusual to U.S. counsel. For example, one of the initial differences that will likely become apparent is how European companies approach data privacy rights of employees and the handling or movement of potentially sensitive information. Europe in general, and certain countries like France in particular, have much stronger personal privacy data rights than those we may be familiar with in the United States, and these rights extend into an individual’s workplace. Counsel who are not wary of these issues and take them in consideration in structuring and conducting a review can face their own legal trouble. In addition to bestowing legal rights on individuals, these data privacy concerns must also be taken into account culturally, in the sense that counsel should be prepared for greater resistance to activities such as the collection of emails and electronic data that may be necessary, but nonetheless intrusive, steps towards conducting an effective review.
Q: You have travelled extensively as part of your FCPA practice (Angola, Brazil, China, Indonesia, Malaysia, the Middle East, Nigeria, Thailand and Venezuela). From these travels and experiences, what do you believe are the major root causes of FCPA violations?
Corruption is most certainly a two-way street. When it comes to bribe payers, unfortunately many cases seem to boil down to greed and a myopic focus on winning at all costs that is ever-too-present in many industries. For sure there are frequently claims that “everyone else is doing it,” but as we all learned when we were young, that doesn’t make it right. In terms of bribe recipients, while I will not claim to have researched the issue as much as others have in this field, anecdotally one of the major themes in countries we often visit is the absence of a fair and livable wage for government functionaries. In these cases, officials may feel as though there is no alternative but to seek payments from companies and their employees (who they may see living at a much higher standard) in order to earn a sufficient living. With larger-scale corruption, I think the same mentality exists, but in a more perverse way – officials placed in charge of vast amounts of resources see companies and others making significant amounts of money off of those resources and see no alternative but to seek what they come to view as their rightful piece of the pie.
Q: What do you know or realize now as it relates to the FCPA and FCPA compliance that you did not know or realize while at the SEC working on FCPA cases?
Perhaps it was more a function that I was at the SEC very early in my career, but I did not realize until traveling extensively assisting clients in this area the importance that companies place on practical guidance when it comes to anti-corruption compliance. It is one thing to recite to a client the FCPA’s statutory language, but quite another to provide helpful guidance on ways in which companies can operate in a legal and compliant way in very difficult locations and business environments. I and my colleagues operate from the premise that most people want to do the right thing, they just need the training and guidance to do so. I think this thirst for practical guidance is one of the reasons that DOJ/SEC Resource Guide to the U.S. Foreign Corrupt Practices Act has been well received within this community, and I applaud both agencies for the significant efforts that went into making it approachable and practical. Certainly, there remain very difficult questions, some of which do not have a clear answer. For example, when and to what extent is it appropriate to take personnel action against an employee? There may not be a black-and-white answer to this question, and in Europe, where labor laws tend to heavily favor employees, implementing appropriate employee sanctions can be quite difficult. Having been fortunate enough to have helped companies navigate through some of these issues, I acknowledge that I lacked a full appreciation earlier in my career for the time and energy that companies and their compliance personnel devote to implementing, in a practical way, the anti-corruption legal standards and guidance that govern their activity.