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Friday Roundup

Transparency, hilarious, fact-checking, little sense, just saying, and for the reading and listening stack. It’s all here in the Friday roundup.

Transparency

The Project on Government Oversight (POGO) recently this document [1] titled “Baker’s Dozen: 13 Policy Areas That Require Congressional Action” noting that a “lack of transparency around enforcement of the FCPA leaves lingering questions about its utility.” POGO then proposes:

Improve transparency of Foreign Corrupt Practices Act enforcement 

Congress should establish a centralized public repository of information about open and pending investigations and cases, to make the United States’ efforts to combat international bribery more effective. Additionally, when a company reports possible FCPA violations to the Department of Justice and/or the Securities and Exchange Commission (SEC) and either agency decides against bringing an enforcement action, Congress should require the public disclosure of the facts that the company reported and the reasons enforcement action was not taken. Either the Justice Department or the SEC should also be required to report statistics regarding instances when the United States government seeks help from, or provides help to, other countries in foreign bribery cases.

Regarding disclosure of voluntary disclosure information, that’s a great idea and I’ve been saying this since 2010! (See here [2] for a prior post including embedded links).

Hilarious

There are some things in the FCPA space that are so hilarious you just can’t make them up.

Such as Michael Volkov warning of the “Dangers of Benchmarking [3]” and writing:

“As the Bible reminds us, “Beware of false prophets,” or in the compliance context, “Beware of false [measurements].” Compliance professionals have an obsession with benchmarking their compliance programs.  Why are compliance officers so obsessed with such comparisons?”

At the same time, Volkov is a “strategic partner” of Navex Global (see here [4]) an entity which frequently pushes benchmarking reports (see here [5]).

In fact, as the below visual demonstrates, yesterday I received an e-mail from Volkov inviting me to participate in Navex’s benchmarking survey and reminding me that if I participate I would “get access to this valuable benchmark data to create a more effective compliance program.”

Fact Checking

On a recent episode on MSNBC’s Hardball, commentator Malcolm Nance stated:

“right after Donald Trump won the election, one of the first things that he said he wanted to do was eliminate the foreign corrupt practices act which would eliminate bribery around the world.”

Oh really? And the factual support for this statement is what?

This Economist article [6] states:

“Over the past decade, American legal and regulatory authorities have subjected scores of large foreign companies to extraterritorial actions. Paying large fines, which can exceed $1bn, has often been the only way finally to settle such accusations of serious misconduct—typically, corruption or breaching sanctions—outside America. As a result, many bosses and executives are quietly paranoid about the long arm of American sheriffs.”

As it relates to the FCPA’s anti-bribery provisions, the FCPA is not extraterritorial as to foreign actors. The jurisdictional nexus for foreign issuers is “use of the mails or any means or instrumentality of interstate commerce corruptly in furtherance” of a bribery scheme. The jurisdictional nexus for foreign non-issuers is “while in the territory of the United States, corruptly to make use of the mails or any means or instrumentality of interstate commerce or to do any other act in furtherance” of a bribery scheme.

In short, it is false to suggest that the FCPA’s anti-bribery provisions are extraterritorial as to foreign actors.

[7]

Little Sense

This post [8] on the FCPA Blog titled “Should Some Parts of a Compliance Program Be Kept Secret?” makes little sense. It states:

“Most big companies publish their ethics and compliance programs online. Anyone can read them and know what goals the company has set and how it hopes to achieve them. That sounds like the right approach. Totally transparent. Accountable. And fair to everyone. But does full disclosure about compliance programs always make sense? Internal controls, for example, share some DNA with corporate security systems. The controls must be there, according to the FCPA and securities laws, so that management knows where all the company’s assets are, who’s handling them, and for what purpose. That’s a way to stop the company assets from being used to pay bribes. But from a corporate security perspective, the internal controls are there to stop people from stealing from the company, or using the assets to commit fraud or other crimes. Internal controls, then, are something like the security system around a bank vault. Most vaults are protected by a combination of visible and invisible security. You can see a guard standing nearby, and security cameras jut down from the ceiling. There’s a big lock on the vault’s thick door and a touch pad beside it. But there might also be invisable features — hidden cameras, invisible motion detectors, weight sensors, perimeter doors that shut and lock automatically, silent alarms, and so on. The secret parts are there as another line of defense against the crooks. In Israel, the defense forces say they destroy all the attack tunnels they discover. But some speculate that the IDF keeps some tunnels open. Why? To find out who might use them and for what purpose. Does that same concept work inside corporations? Should some aspects of the internal controls be kept secret, as a way to catch bad actors in the act?”

I welcome anyone to share an example of a company’s SPECIFIC, MICRO-level internal controls being disclosed in the public domain.

Just Saying

I’ve seen much mention in recent days on social media regarding this article [9] which states:

“Russia’s Justice Ministry has proposed exempting officials in “exceptional circumstances” from anti-corruption regulations in new draft legislation, following a plan set by Russian President Vladimir Putin last year.

[…]

The amendments drafted by the Justice Ministry seek to exempt officials from legal accountability when violating anti-corruption rules is unavoidable.”

The FCPA specifically states:

“With respect to matters concerning the national security of the United States, no duty or liability … shall be imposed upon any person acting in cooperation with the head of any Federal department or agency responsible for such matters if such act in cooperation with such head of a department or agency was done upon the specific, written directive of the head of such department or agency pursuant to Presidential authority to issue such directives.”

Just saying.

*****

According to this article [10]:

“In the poll of 1,000 government employees, half of the respondents say that they use their personal devices to access email, and 49 percent say they use them to download work documents. Of employees at agencies with rules against the use of personal devices, 40 percent say that those restrictions “have little to no impact on their behavior.”

Remember the following sentence from the November 2017 DOJ FCPA Corporate Enforcement Policy for determining whether a business organization has timely and appropriately remediated:

“Appropriate retention of business records, and prohibiting the improper destruction or deletion of business records, including prohibiting employees from using software that generates but does not appropriately retain business records or communications.”

Just saying.

For the Reading and Listening Stack

Not a perfect parallel of course, but this article [11] regarding Southwest Airlines paying $3,150 for a furloughed government safety inspector to go back to work briefly to sign off on putting three new jets into service has got me thinking of the term “routine government action” in the FCPA’s facilitating payments exception.

The most recent edition of the always informative FCPA Update from Debevoise & Plimpton is here [12].

See here [13] for a podcast with Alexandra Wrage discussion gifts and facilitating payments.

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