Category: Compliance

Actionable Intelligence On The Risk Of Bribery Internationally

Today’s post is from Alexandra Wrage (President of TRACE International).

*****

Compliance officers and in-house counsel for multi-national companies are well aware of the risks and consequences of bribery schemes. What to do about it is the challenging part. Companies have long relied on Transparency International’s authoritative country-by country corruption risk ratings to prioritize their limited resources. But knowing what specific steps are necessary to mitigate your risks is not something that can be gleaned from an overall country risk rating.  Because two countries with the same overall risk rating can present very different types of corruption risk, the ratings alone don’t provide actionable intelligence. A compliance officer needs to know how corruption in a particular country will confront their business. Last week, another tool in the compliance and risk assessment arsenal was launched to meet this need: the TRACE Matrix.

We at TRACE have long heard the laments from compliance officers and general counsel that they need the actionable information that would come from more granular country risk ratings.  One general counsel noted after looking at other indices, “once you get past the first 30 – 40 countries, all those lower countries start to look the same. If you are comparing Angola to Romania, the ranking isn’t useful, but if you are able to give guidance as to what types of corruption you might see, that would be extremely helpful.”

Enforcement officials have also recognized the limitations of country level risk ratings. “Multinational companies need additional tools beyond those currently available to more effectively measure country risk.”  Charles Duross, Partner at Morrison & Foerster LLP and the former deputy chief in the fraud section in the criminal division of the U.S. Department of Justice.

And so, working in collaboration with RAND Corporation, TRACE set out to develop an actionable business bribery index for the compliance community.  This project involved more than a year of research and benchmarking.  We asked companies what features they would like to see in a business bribery index and asked them to identify information that would assist their assessment of business bribery risk.   As part of our research, we also conducted interviews with regulators and enforcement officials to understand their views of country risk assessments.

The resulting TRACE Matrix provides not only a country level risk-rating but also four different domain risk ratings and nine different sub-domains of risk.  Although the TRACE Matrix can be used to rank countries by their composite scores, it is also possible to view the results for specific risk factors included in the composite score to identify what drives the overall score. This allows firms to identify not only where a country falls in terms of overall business bribery risk, but also to use the domain and subdomain scores to tailor compliance practices further.   For example, if the business is one that has to have many interactions across many government offices, then a country with a high risk in this domain would be of particular concern.

In the 1990s, Transparency International gave the world the Corruption Perception Index (CPI). TI gets great credit for raising awareness of this issue and putting countries on notice that levels of corruption were being monitored.  The CPI is a valuable instrument for addressing overall levels of perceived corruption in a particular country.  It combines numerous surveys about perceived levels of corruption across government functions:  judiciary, health, education, etc. These country level ratings are informative, but they also obscure important and actionable differences among countries with similar ratings. The business community’s needs are more specific.

The World Bank’s Worldwide Governance Indicators also aggregates corruption-related data, but as the Governance and Social Development Resource Centre states, “the main use of the indicators by international organization [sic] and donors is to incentivize developing nations to improve their governance and to improve the allocation of aid.”   Another valuable tool, this alone does not meet the needs of the business community.

Companies that use existing indices to measure threats associated with business corruption risk developing either overly aggressive or inadequate compliance and due diligence procedures. They need more nuanced data to tailor their compliance processes appropriately.

So, after hearing from the business community for years that a tailored tool to gauge levels of commercial bribery was needed we set out to explore just what should be measured.   Most respondents cited “touches” with the government as the most important indicator for commercial bribery.   In a great assessment of ports in Nigeria, the Maritime Anti-Corruption Network (MACN) determined that 142 signatures were needed to clear cargo in the port of Lagos.  That’s a powerful indicator of the likelihood of a bribe demand.

At the same time, as one participant noted, the compliance community needs “something that is more targeted, more precise than the CPI, [but] the more complicated it gets, the less likely people will be to use it.”

And so, leveraging our own experience and tapping our stakeholders all over the world, we identified four domains relevant to companies

(1)   business interactions with government,

(2)   anti-bribery laws and enforcement,

(3)   government transparency and civil service, and

(4)   capacity for civil society oversight.

RAND further refined this by including nine sub-domains. For example, when it came to business interactions with government, the Matrix addresses the nature of contact with local governments, expectations of paying bribes and regulatory burdens. Likewise, in examining capacity for civil society oversight, the Matrix addresses the quality and freedom of media, as well as human capital and social development.

Ultimately, by offering a clear, actionable snapshot of the risk of commercial bribery in a country, the TRACE Matrix should help multinational companies make better decisions about foreign investments, bolster compliance and reduce the likelihood of violating anti-bribery laws.  No approach is perfect and we expect a lot of debate about the weighting of the data and about scores or rankings that people find surprising. But we hope it will provide a practical and effective tool to help assess bribery risk and thereby enable in-house counsel and compliance professionals to allocate their limited resources with more confidence.

Alexandra Wrage is the president of TRACE International, a nonprofit antibribery compliance organization offering practical tools and services to multinational companies, including the TRACE Matrix. 

A Compliance Professional Speaks

Today’s post is from a compliance professional who wishes to remain anonymous.

*****

When you’re the Chief Compliance Officer (“CCO”) of a company that ends up in the middle of one of “those” all-encompassing FCPA investigations (as if there’s any other kind), people often want to know . . . what is it like?  How does it feel to be at ground zero of pure FCPA adrenaline?   This is my answer,  based on my repeated experiences.  I wish I could say it just happened once.  This is also based on my discussions with other CCOs.

It’s a rollercoaster with few ups and a lot of downs.

There’s that moment at the beginning when you know something is wrong.  Usually you know it’s not going to be trivial.  So you dig a bit more. Or have someone else dig a bit more.  Somewhere along the line, it strikes you.  This is going to be big.  Very big.  We can just call that the “oh crap” moment.  Every CCO I know has had at least one.

You feel a rush.  An excitement.  It’s what you’ve trained for, and read about.  And now it’s happening.  But there is invariably, immediately, a sense of dread.  Depending on the size of the issue and the seniority of the people involved, that sense of dread can range from a knot in the stomach to downright nausea.  Will the C-suite management understand it?  (Do you even have the ear of the C-suite management?) Will they do the “right thing”?

You know exactly what should happen next.  You should get on the phone with your favorite skilled, independent investigations counsel.  But before you can do that, you have to be a salesman.  You need to convince someone (sometimes the CEO, sometimes the General Counsel, sometimes a non-executive director) that this is something.  Or at the very least, it’s not nothing.  With any luck, you can make them see sense.  Most of the time, they’ve never been through this.  The education process can be slow and tedious.

You know who the right counsel are . .  . but not so fast.  You don’t have the budget.  Many times, you don’t even have the ability to hire outside counsel  without the approval of your General Counsel.  Do you have the GC’s backing?  Do they see compliance as a help or as a nuisance?  Do they believe you when you say this needs independent investigation?  Or do they think you’re just being alarmist?  What if the GC (or someone else) wants to investigate themselves?  Or hire the go-to corporate counsel?  Or hire their buddy, the jovial law school classmate of the GC who has never actually done an investigation but, really, how hard can it be?  You have to explain – calmly, rationally and often repeatedly – why that just isn’t the right thing to do.

In the meantime, a clock may be ticking. The company may be facing a quarterly SEC filing or the signing of a deal contract or the receipt of monies on the deal.  All of these have implications.  All of your powers of (gentle) persuasion are brought to bear.

And your reward for all of this?  If you’re lucky, they listen to you. The right outside counsel walks in the door and the matter rests in their capable hands. It’s a leap of faith to put something this sensitive in the hands of outside counsel.  Or, more specifically, outside counsel’s judgment of when enough is enough.   These issues always reach higher than you think.

More often than not, the legal group squeezes you out.  Compliance, after all, is not generally part of legal.  You may be kept in the loop, or you may be completely excluded.  If you’re very lucky, you are kept abreast of what is happening and people seek out your guidance and opinion.  But honestly?  Don’t hold your breath.  Particularly if this all results in a report to a regulator, you’ll definitely be pushed to the side.  Privilege is held in a tight circle that doesn’t generally include you.  So just go back to your office and keep the compliance program moving along.

What if you’re not lucky?  What if you can’t get anyone to understand? What if the issue is too subtle, or involves too senior a salesperson (they bring in the revenue, after all) or too important a client?  Not many can just stake out the moral (and legal) high ground and resign.  Sometimes the situation is that bad, or you have regulatory obligations, and you’re forced into that decision.  I know a brave few who have actually done that.  Put yourself in their shoes.  Think what it would mean for yourself and your family to walk away from a steady (and often healthy) paycheck.  What a price to pay for your convictions.

It’s far more common that you hold your tongue and bide your time. You find a way to rationalize the situation.  You compromise.  Being a CCO is, above all else, about compromise.  Does that surprise or appall lawyers in private practice or working for the government?  It shouldn’t.  Good CCOs are always “commercial” (whatever that is supposed to mean). As a CCO,  you’re being “business friendly.”  Or, to be less cynical, you’re doing your job.  You’re there to balance the company’s interests with the legal requirements.

But mostly you hope and pray that you’ve done the right thing.  And that a regulator never second guesses your actions.  That seems to be happening more and more.  I know too many CCOs  who are being subpoenaed to give testimony and defend their actions in front of regulators.  Sometimes as witnesses, but sometimes (rarely) as suspects.  So much for regulators seeing CCOs as the guys in the white hats.

Even if the  (right) lawyers do come in and they investigate, you hope that you didn’t raise a false alarm.  Then you hope none of your friends in the business were involved (CCOs always have friends in the business).   And when it turns out you were exactly right, and it really was worse than what you thought, it’s a hollow victory.  People lose their jobs.  People that you know and sometimes people that you like and who weren’t malicious or evil.  They were just doing their jobs and got caught up in the tide.  Sometimes they are sued or brought up on criminal charges.  The rest of the company is left in a state of shock.  You may have been trained to spot a FCPA issue when it arises, but there’s very little training on how to deal with the human element.  It is far and away the worst part of the job.

In The Words Of Loretta Lynch

President Obama nominated Loretta Lynch (U.S. Attorney, Eastern District of New York) to be the next Attorney General.

This post highlights Lynch’s responses to various Foreign Corrupt Practices Act or FCPA related questions originally posed in this September/October 2013 Q&A with the Society of Corporate Compliance and Ethics’ magazine Compliance & Ethics Professional and posted on the DOJ’s website.

In the Q&A, Lynch speaks generally about corruption and compliance and specifically about Morgan Stanley’s so-called “declination” and the FCPA enforcement action against Ralph Lauren.  For additional information on Morgan Stanley’s so-called “declination” (see here and here) and for additional information on the Ralph Lauren enforcement action (see here, here and here).

Q: What did you learn about compliance programs, good and bad, in your [prior private] practice?

A: The most important thing I learned about compliance programs is also the most basic thing—the tone at the top truly sets the
parameters for whether one has an effective or ineffective compliance program. And by effective, I don’t mean a program in a company where there is never any wrongdoing, because that company does not exist. If there is one message I’d like to leave with corporate America, it is that the government actually does understand that things can and will go wrong, even where there is a strong compliance program. Every company develops issues. It’s how you deal with them that defines your corporate culture and informs me if you are serious about fixing the problem and preventing it from recurring going forward.

Q: One of the things that strikes me about your career in the U.S. Attorney’s Office is that fighting corruption has been an ongoing focus. And, it’s notable to point out that we’re not just talking about the Foreign Corrupt Practices Act (FCPA), but also corruption here in the U.S. Are there common threads that you see among government corruption cases everywhere?

A: Corruption, whether here in Brooklyn or on the other side of the globe, has real and far-reaching consequences. The common
thread is that someone in power loses their connection to the constituency they are supposed to serve, whether citizens or shareholders. When government officials engage in self-dealing, when they abdicate their responsibility, when they succumb to greed, the average citizen pays for it dearly and on many levels. Constituents everywhere end up spending more for services—infrastructure, healthcare, education—and sometimes have to go without these vital services, when government officials line their own pockets with public funds. Law-abiding companies here in the U.S. and abroad are placed at a competitive disadvantage when business is won or lost based on bribes, not the quality of a company’s products and services.

And because corruption involves, at its heart, the breaking of a trust relationship, its ramifications often go far beyond the financial. Corruption infects society as a whole, increasing the level of cynicism and distrust that constituents have about their elected officials and government processes. In this way, corruption also impacts those government officials who are truly trying to do the right thing. They get tarred with the same brush. We all deserve honest and effective representation, and my office is committed to investigating and prosecuting those who trade on the trust we place in them to enrich themselves, who let greed get in the way of helping the people that they represent.

Q: The Morgan Stanley FCPA case was a very high-profile declination by main Justice and your U.S. Attorney’s Office. They don’t come that often, and it’s very rare to see compliance efforts cited so widely as the reason why. Can you give a brief description of the case for those who are not familiar with it?

A: Absolutely. In April of 2012, my office and the Department of Justice’s (DOJ) fraud section prosecuted Garth Peterson, the former Managing Director in charge of the Morgan Stanley’s real estate group in Shanghai, China. Peterson had engaged in a conspiracy to sell an ownership interest in a Shanghai building owned by Morgan Stanley to a local government official who had provided assistance to Peterson in securing business for Morgan Stanley in China. During the conspiracy, Peterson repeatedly and falsely told Morgan Stanley that the corporation buying the ownership interest in the building was owned by the Shanghai government when, in fact, it was owned by Peterson and the local government official, among others. By lying and providing false information to Morgan Stanley, Peterson was circumventing the company’s internal controls, which were created and intended to prevent FCPA violations. Peterson was charged with one count of conspiring to circumvent Morgan Stanley’s internal controls, and after pleading guilty, he was ultimately was sentenced to a period of incarceration. We declined to take any action against Morgan Stanley in that case.

Q: Again, what’s notable is that it was the first major FCPA case I can recall in which there was a public declination, and just as importantly, the compliance program was cited so publicly as a major part of the reason why. In fact, it’s hard to remember many cases of any type in which the compliance program’s effectiveness was cited so publicly, which suggests to me that even people without FCPA risks should take note. What made this case so different?

A: You’re right. This was an unusual case. Morgan Stanley self-reported Peterson’s conduct, and cooperated fully and extensively
with the government’s investigation. But that’s not what made the case different. What set Morgan Stanley apart was that, after considering all the available facts and circumstances, the government concluded that Morgan Stanley was a company that had done all that it could. It had a compliance program specifically tailored to its business risks, with commitment to compliance from the very top of the company, that itself did not tolerate wrongdoing. The bank acted to fire Peterson before any of the facts became
public. We concluded that Peterson was the quintessential “rogue employee” who schemed to affirmatively sidestep compliance because he knew his behavior would  not be countenanced. Every company says its bad actors are “rogues,” and that they do not promote corruption, but at Morgan Stanley we could see it. There was a stark contrast between the bank’s corporate culture and Peterson’s actions.

This presented a fundamentally different situation from companies that say they don’t tolerate wrongdoing, yet push employees to meet goals and quotas overseas with little to no guidance on the risks and consequences. It was fundamentally different from companies who distance themselves from their agents and consultants overseas, and then argue that they have to “go along” to avoid being disadvantaged in overseas markets. And it was fundamentally different from companies that say “That’s not who we are,” yet have nothing on record that informs me otherwise.

What we saw was that Morgan Stanley conducted extensive due diligence with respect to the sale that Peterson orchestrated.
We saw that Peterson had circumvented a compliance program that was an active component of the company’s business—Peterson himself was trained on FCPA compliance seven times and reminded about FCPA compliance at least 35 times. Compliance
at Morgan Stanley was also proactive, with the bank routinely adjusting and updating its compliance program to address new
issues and problems as they arose. It was not simply a program that was put in place 10 years ago, set apart from the business, and
left unchanged over time, without regard to changes in the company’s business or the increasing complexity of transactions. When we looked at Morgan Stanley, we also saw a bank that invested resources, that had internal controls in place to ensure accountability, that regularly monitored transactions, and that randomly audited employees, transactions, and business units.

This case stands out because it also touched on a common complaint in the FCPA world, and that is the supposed lack of transparency regarding the government’s consideration of a company’s compliance efforts in making charging decisions. The lengthy description of Morgan Stanley’s compliance program in the Peterson charging document was a deliberate response to that criticism. The Peterson case was even cited for that purpose in the FCPA Resource Guide prepared by DOJ and the Securities and Exchange Commission (SEC) in November 2012.

Q: What should compliance professionals take away as key learning from that case?

A: There are actually two “takeaways” in this case. The first is that the government will aggressively pursue those who engage in criminal conduct involving corporate corruption. The second is that companies that employ robust and effective compliance programs are not only better able to detect and identify potential compliance issues that may negatively affect the company’s business and reputation, but also those unusual instances where an employee is intent on circumventing a company’s internal controls. An added benefit for a company that employs a robust compliance program is that the company will be in a better position to address concerns raised by regulators or the government, if the company’s conduct ever comes under scrutiny. Morgan Stanley was able to demonstrate that Peterson truly was a “rogue,” that he had betrayed them, and he had rejected their culture of compliance.

Q: More recently we had the declination in the Ralph Lauren case. In that case, Ralph Lauren discovered questionable payments by a third party working on their behalf in Argentina. You were the US attorney on that case as well. What were some of the factors that led to the decision not to prosecute?

A: Actually we did not decline prosecution in that case. Rather, we entered into a non-prosecution agreement with Ralph Lauren. The agreement is for a two-year term and requires the implementation of various corporate reforms. Ralph Lauren also paid an $882,000 penalty to the DOJ and disgorged $700,000 in ill-gotten gains and interest to the SEC. There were several reasons for that outcome. Ralph Lauren discovered criminal conduct involving violations of the FCPA while it was in the midst of trying to improve its internal controls and compliance worldwide. Our investigation revealed that, over the course of five years, the manager of Ralph Lauren’s subsidiary in Argentina had made roughly $580,000 in corrupt payments to customs officials for unwarranted benefits, like obtaining entry for its products into the country without the necessary paperwork or without any inspection at all. The bribes were funneled through a customs broker who, at the manager’s direction, created fictitious invoices that were paid by Ralph Lauren in order to cover up the scheme.

Several factors compelled our decision to enter into a non-prosecution agreement with Ralph Lauren. First, there was the detection
of the wrongdoing by the corporation itself, as part of an effort to improve global compliance standards. Following the discovery of the corruption, the company also undertook an exceedingly thorough internal investigation of the misconduct and cooperated fully with our investigation. They made foreign witnesses available for government interviews; they provided real-time translation
of foreign documents.

It was also very significant that Ralph Lauren implemented a host of extensive, remedial measures, including the termination of employees engaged in the wrongdoing, and improvements in internal controls and compliance programs. Finally, we took into account that they swiftly and voluntarily disclosed the conduct to the government and the SEC. The company first self-reported the misconduct to the government within two weeks of discovering it. They basically did everything that a company that finds itself in that unfortunate situation can possibly do.

Q: This was the first time the SEC publicly stated it would not proceed. What got their attention and led to the decision?

A: I cannot speak for the SEC, but we do typically have parallel investigations of FCPA violations, and I believe that they were swayed by the same factors that we were. Although Ralph Lauren did not have an anti-corruption program and did not provide any anticorruption training or oversight during the five-year span of the conspiracy, all of the government agencies investigating the case were impressed with their resulting commitment to compliance in this area globally, as well as their self-disclosure and full cooperation.

Q: Finally, are we seeing the start of a new era in which compliance programs are going to be looked at more closely by prosecutors? And, just as importantly, will good programs earn organizations public credit for their efforts?

A: Absolutely. Compliance is the lens through which we view your company. A robust compliance program demonstrates to us that the company “gets it.” Making your compliance program a top priority is an investment a company can’t afford not to make. To put it more bluntly, by the time you have a problem that has drawn the government’s attention, under our principles and guidelines that govern corporate prosecutions, the existence of a robust compliance program can save you, as in the Morgan Stanley case.

A Comprehensive FCPA Resource

The question was recently asked: “will there ever be a classic treatise on the FCPA?”

According to Webster’s, a treatise is a book, article, etc., that discusses a subject carefully and thoroughly.

With that definition in mind, I invite you to consider my new book “The Foreign Corrupt Practices Act in a New Era.”  Inside you will find:

• A thorough telling of the story of the FCPA told largely through original voices of actual participants who shaped the pioneering law;
• Foundational knowledge (such as DOJ and SEC policy and resolution vehicles and the realities of the global marketplace) that best enhance understanding and comprehension of specific FCPA topics;
• A comprehensive analysis of the FCPA’s anti-bribery provisions and for each element, exception or affirmative defense discussion of all legal sources of authority (including all relevant substantive FCPA judicial decisions) as well as non-legal sources of information (including discussion of over 70 FCPA enforcement actions);
• Discussion of other legal issues also relevant to FCPA enforcement;
• A comprehensive analysis of the FCPA’s books and records and internal controls provisions including legal authority as well as non-legal sources of information;
• Analysis of the typical origins of FCPA scrutiny and enforcement;
• Discussion of FCPA settlement amounts, how they are calculated, and analysis of legal and policy issues relevant to settlement amounts;
• Discussion of FCPA sentencing issues, how sentences are calculated, and an analysis of legal and policy issues relevant to sentencing decisions;
• An extended discussion and analysis of an often overlooked topics, “FCPA Ripples,” and how settlement amounts in an actual FCPA enforcement action are often only a relatively minor component of the overall financial consequences that can result from FCPA scrutiny or enforcement;
• An exploration of practical and provocative reasons for the general increase in FCPA enforcement during this new era including a discussion of FCPA Inc. and the business of bribery;
• Identification and discussion of FCPA compliance best practices and benchmarking metrics; and
• An in-depth discussion and analysis of FCPA reform designed to ensure that the FCPA is best achieving the original goals of the law and that FCPA enforcement is transparent and consistent with rule of law principles.

Whether the above topics highlighted and explored in “The FCPA in a New Era” make it a classic treatise, well, I invite you to come to your own conclusion.  At the very least, you will have to agree that the cover of the book is more inviting than a typical treatise.

While I am certainly not going to ascribe labels to my own work, I am pleased to share what others have said about “The FCPA In a New Era.”

Michael Mukasey, former U.S. Attorney General

“Professor Koehler has brought to this volume the clear-eyed perspective that has made his FCPA Professor website the most authoritative source for those seeking to understand and apply the FCPA. This is a uniquely useful book, laying out systematically the history and rationale of the FCPA, as well as its evolution into a structure governed as much by lore as by law. It will be valuable both to those who counsel international corporations, whether in connection with immediate crises or long-term strategies; and to those who contemplate what the FCPA has become, and how it can be improved.”

Professor Daniel Chow, The Ohio State University Moritz College of Law

“This is the single most comprehensive academic treatment of the Foreign Corrupt Practices available. Professor Koehler’s book will become the authoritative standard for the field. The book not only treats the history of the FCPA, but analyzes the statute’s elements in detail, discusses current cases, and makes proposals for reforms where the current law is deficient. The book is written in a clear, accessible style and I will use it often as a resource for my own scholarly work.”

 Richard Alderman, former Director of the UK Serious Fraud Office

“An excellent and thought-provoking book by a great expert. Backed up by rigorous analysis of cases, Professor Koehler constantly challenges those involved in anti-corruption work by asking the question ‘why?’ He puts forward many constructive and well-argued suggestions for improvements that need to be considered. I have learned a lot from Professor Koehler over the years and I can thoroughly recommend this book.”

Thomas Fox, FCPA Compliance and Ethics Blog and FCPA Practitioner

“The Foreign Corrupt Practices Act in a New Era” should become one of the standard texts for any FCPA compliance practitioner, law student studying the FCPA or anyone else interested in anti-bribery and anti-corruption. It should be on your FCPA library bookshelf.”

Barry Vitou, thebriberyact.com and Compliance Practitioner

“If you only read one book on the US FCPA, read this one. […] Mike Koehler’s new book is probably the best book we’ve read about the FCPA. […] For those wanting a pair of ‘FCPA goggles’ no book is, in our opinion, better.”

To order a hard copy of the book, see here and here; to order an e-copy of the book, see here and here.

For media coverage of the book including Q&A’s, see here from Corporate Counsel, here from Global Investigations Review, and here from Corporate Counsel Weekly.

*****

Looking for even more information and analysis of the FCPA and FCPA enforcement?

I invite you to all also consider the following year in review articles.  Granted the below articles are not found between two covers, but you will find approximately 500 pages of FCPA statistics, trends and analysis over time.

For 2013, see here.

For 2012, see here.

For 2011, see here.

For 2010, see here.

For 2009, see here.

Friday Roundup

Scrutiny updates, the story of the FCPA, keep it simple, and for the reading stack. It’s all here in the Friday roundup.

Scrutiny Updates

Goodyear

Goodyear Tire & Rubber Co. has been under FCPA scrutiny for approximately three years concerning conduct in Kenya and Angola. Earlier this week the company disclosed:

“In June 2011, an anonymous source reported, through our confidential ethics hotline, that our majority-owned joint venture in Kenya may have made certain improper payments. In July 2011, an employee of our subsidiary in Angola reported that similar improper payments may have been made in Angola. Outside counsel and forensic accountants were retained to investigate the alleged improper payments in Kenya and Angola, including our compliance in those countries with the U.S. Foreign Corrupt Practices Act. We do not believe that the amount of the payments in question in Kenya and Angola, or any revenue or operating income related to those payments, are material to our business, results of operations, financial condition or liquidity.

As a result of our review of these matters, we have implemented, and are continuing to implement, appropriate remedial measures and have voluntarily disclosed the results of our initial investigation to the U.S. Department of Justice and the Securities and Exchange Commission, and are cooperating with those agencies in their review of these matters. As a result of ongoing discussions with the government, we have recorded a charge of $16 million in connection with these matters in the third quarter of 2014. While we currently estimate that the most likely amount of the loss associated with these matters is approximately $16 million, the actual amount of the loss could vary, and the timing of any resolution and payment cannot yet be determined.”

“The Story of the FCPA“

Assistant Attorney General Leslie Caldwell’s recent speech (see here for the prior post) has generated follow-up discussion at the FCPA Blog (here and here), including as to the motivation of Congress in passing the law.

Read the “story” of the FCPA for yourself.  This article weaves together information and events scattered in the FCPA’s voluminous legislative record to tell the FCPA’s story through original voices of actual participants who shaped the law.

Keep it Simple

Over at thebriberyact.com, this post begins:

“Three years ago Bribery Inc. went mad.  Every law firm, accounting firm and uncle Tom Cobley and all got into the anti bribery business. Many detailed anti-bribery policies were sold, placed on corporate intranets and training given. Three years on and many are reviewing their policies and looking back at how they’ve been operating for the last three years.  This is a sensible thing to do. Many anti-bribery policies are extensive. […] We could go on.  And many policies do. And this is where they go wrong. Because the longer they are the less likely it is anyone will read them or even know where to find them.”

Referencing comments made by U.K. Serious Fraud Office Director David Green, the post states:

“The SFO Director said that he doesn’t really like long anti-bribery policies.  Broadly speaking he is concerned that they probably won’t be read or understood by employees. The obvious consequence of the anti-bribery policy not being read is that it is unlikely to be followed. His observation and the concern which underpins it resonates with us.”

It resonates with me as well.  (See this previous post titled “Compliance Fatigue?”).

That is why my global anti-bribery online training course (created in conjunction with Emtrain) keeps things simple. To see how the course engages employees in a business organization and inspires them to spot risk (see this video). To see how the course trains gatekeepers in a business organization to minimize risk (see this video).

Reading Stack

Thomas Fox (FCPA Compliance and Ethics Blog) is out with a new book titled “Doing Compliance: Design, Create, and Implement an Effective Anti-Corruption Compliance Program.”  (See here for more information).

The latest FCPA Update from Debevoise & Plimpton is here.

Dorsey & Whitney’s Anti-Corruption Digest (Oct. 2014) is here.

Sidley & Austin’s Anti-Corruption Quarterly is here.

*****

A good weekend to all.