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Incentives To Induce Action

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There is very little in common with COVID vaccination rates and FCPA compliance – except that the government encourages both.

Yet in one instance, the government provides meaningful incentives to induce action and in the other instance the government does not.

As to COVID vaccinations, states are offering the following incentives to encourage more people to get vaccinated: lotteries, scholarships, pre-paid grocery cards, fishing and hunting licenses, passes to state parks, even custom hunting rifles and shotguns. Several states are automatically entering people who have been vaccinated into lotteries that pay out $1 million or more.

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FCPA Flash Podcast – A Conversation With Matthew Galvin Regarding ABInBev’s BrewRight Compliance System

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The FCPA Flash podcast provides in an audio format the same fresh, candid, and informed commentary about the Foreign Corrupt Practices Act and related topics as readers have come to expect from written posts on FCPA Professor.

This FCPA Flash episode is a conversation with Matthew Galvin (Global Vice President, Ethics & Compliance at AB-InBev). During the podcast, Galvin talks about the company’s BrewRight compliance system including: the origins of BrewRight; what BrewRight is; and how it minimizes FCPA (and other) risk. Galvin also discusses whether companies that adopt similar compliance systems should be able to avail themselves of a “compliance defense.”

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Survey Says …

Survey Results

The OECD recently released this study titled “Corporate Anti-corruption Compliance Drivers, Mechanisms and Ideas for Change.” The study largely relies on results of a survey “to better understand the extent to which companies are currently motivated to take measures to prevent and detect bribery and other forms of corruption in their business dealings.”

The survey size was very small (only 130 survey respondents – largely individuals in a legal or compliance role in their companies – with the U.S. having the most respondents – with the largest number of respondents in the healthcare industry). As a result the survey was not representative as even the report recognized: “a company that does not have a compliance program probably would not have an interest in participating in a study of such program – thus it is important to remember that the percentage of respondents who indicated that their companies have such a program is not at all indicative of the percentage of overall companies in the world that have such programs.”

Even as to this survey group, as highlighted below several survey responses caught my eye and call into question whether “soft” enforcement of the FCPA (and related laws) has been successful (see here for the article “Has the FCPA Been Successful in Achieving Its Objectives”) or whether compliance can best be incentivized with a compliance defense (see here for the article “Revisiting an FCPA Compliance Defense”).

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Office Of Management And Budget Releases “Best Practices” For “Fairness In Administrative Enforcement And Adjudication”

OMB

In response to COVID-19, in May 2020 President Trump signed Executive Order 13924 titled “Regulatory Relief to Support Economic Recovery.”

Section 1 stated in pertinent part: “it is the policy of the United States to combat the economic consequences of COVID-19 with the same vigor and resourcefulness with which the fight against COVID-19 itself has been waged.” Among other things, Executive Departments and Agencies (such as the Securities and Exchange Commission) were directed to commit to “fairness in administrative enforcement and adjudication.”

The Executive Order authorized the Director of the Office of Management and Budget (OMB) to issue guidance implementing the order which the OMB recently did in this memo. The OMB’s list of “best practices” include the following that are relevant to the SEC’s enforcement of the FCPA.

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Wow – The SEC Acknowledges That Section 13(b)(6) Exists

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In 1988, the FCPA’s books and records and internal controls provisions were amended to include a de facto “good faith” compliance defense in certain situations involving issuers. (See 15 USC 78m(b)(6) – so-called Section 13(b)(6) of the ’34 Act). Since then, Section 13(b)(6) has seemed to be relevant to several Foreign Corrupt Practices Act enforcement actions, however the enforcement actions were silent on this important statutory provision.

The recent Eni enforcement action (see here and here for prior posts) is believed to be the first FCPA enforcement to meaningfully address Section 13(b)(6). In this regard, wow – the SEC actually acknowledged that Section 13(b)(6) exists after completely ignoring this relevant statutory provision in several prior relevant enforcement actions. But did the SEC get it right?

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