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FCPA … the “Law Version” of Baseball

October is a month for baseball – the playoffs are under way and the World Series is right around the corner. Baseball aficionados are found of their statistics, and with good reason, there are a ton of baseball statistics to digest.

Well, the FCPA is quickly becoming the “law version” of baseball when it comes to statistics. Every few weeks it seems (see here for a prior post) FCPA aficionados have new statistics to digest.

The latest FCPA statistics come courtesy of Fulbright & Jaworski’s 6th Annual Litigation Trends Survey (see here for download).

According to a survey of over 400 corporate counsel in the U.S. and the U.K.:

(1) “the percentage of companies that has engaged outside counsel in the past 12 months to assist with a corruption or bribery investigation (i.e., FCPA and U.K. equivalent) has nearly doubled …” (see p. 37) and;

(2) “the incidence of due diligence for bribery or corruption relating to mergers, acquisitions or other transactions in foreign countries has more than doubled …” (p. 38).

These statistics should come as no surprise to followers of this blog who well know that FCPA compliance is a hot topic given the current aggressive enforcement climate.

Yet, the Fulbright survey (much like the prior Deloitte survey – see here) also shows that very few companies address FCPA risks on a pro-active basis. For instance, even though Fulbright’s survey found that the incidence of FCPA/bribery due diligence in M&A transactions has doubled, the number of companies engaging in such due diligence remains below 20%.

As to the “big picture” issue of whether perceived levels of corruption in a foreign country result in a company doing less business in that country, the survey shows that “only about half as many respondents as last year say their companies, at some point in the past, have decided against doing business in a country due to the perceived degree of local corruption.” (see p. 38). The one exception appears to be in the manufacturing sector “where 39% have made that decision v. 27% last year.”

FCPA Training – “The First Few Minutes”

The A&E Network has a show, “The First 48,” that I watch on occasion (see here). The show follows real-life homicide detectives from around the country during the “first 48 hours” of an investigation as they race against time to find the suspect.

Why is the “first 48 hours” so important? Because the chance of solving the case is apparently reduced by approximately 50% if the detectives do not get a lead in the “first 48 hours.”

So what in the world does this have to do with FCPA training?

Just as the “first 48 hours” are critical to the success of a homicide investigation, the “first few minutes” are critical to the success of FCPA training.

During those critical “first few minutes” one needs to properly set the tone and engage participants on their level.

If one starts off an FCPA training session like this … “today I will be talking about a U.S. law that makes it a crime to bribe foreign government officials to get business” – you just lost a good portion of your audience and, regardless of what you say during the rest of the training sesssion, your training session will not be as successful as it could have been.

Crime? Steve in the second row of the audience has a clean record and wouldn’t hurt a fly. He coaches his son’s soccer team and worships on the weekend. Joe is thinking to himself, “I have never committed a crime and I don’t intend to – what does this FCPA training session have to do with me?”

Government? Melissa is in the first row of the audience. Her job function is internal audit and finance. She has absolutely no contact or communication with government officials and is thinking to herself “does this company even do business with foreign governments – what does this FCPA training session have to do with me?”

Business? Francisco, the logistics manager from outside the U.S., has been flown in for the FCPA training session. He is thinking “business – I’m not a sales and marketing guy, I just make sure our product gets into and out of the country and I occasionally help secure various licenses and permits for the company – what does this FCPA training session have to do with me?”

For reasons described in other postings on this blog, FCPA training is indeed relevant to the Steve, Melissa and Francisco’s in a company.

To avoid having participants’ minds wander during the “first few minutes” of FCPA training, it may be more effective to start off the training session along these lines.

“Today, I will be talking about a U.S. law that applies to all of you – regardless of whether you are in the sales and marketing department, the executive office suite, the finance and audit department, or the logistics department. This law can cover a wide range of payments the company makes, or could make, either directly or indirectly, in doing business or seeking business in foreign markets. Your understanding of this law and how it may relate to your specific job function will best ensure that the company remains compliant with this law and is able to achieve its business objectives.”

HP To Channel Partners – You MUST Complete FCPA Training

Engaging a foreign agent, representative, distributor or channel partner (collectively “channel partners”) can greatly assist a company in increasing foreign sales. After all, these individuals or entities “know the landscape.”

As readers of this blog well know, engaging a foreign channel partner can also be risky business under the FCPA.

In a previous post, I talked about certain minimum elements of an effective FCPA compliance program as typically set forth in DOJ non-prosecution or deferred prosecution agreements (see here).

One of those elements is the “promulgation of a compliance code, standards and procedures designed to reduce the prospect of violations of the FCPA” which “should apply to all directors, officers, and employees and, where necessary and approopriate, outside parties acting on behalf [of a company] in a foreign jurisdiction, including agents, consultants, representatives, distributors, teaming partners, and joint venture partners.”

HP has apparently determined that it is necessary and appropriate for its global network of approximately 155,000 channel partners to complete HP’s regulatory compliance training program or risk losing their partner status (see here).

A HP spokesperson confirmed that “HP is, in fact, working to have all of its global channel partners undergo training regarding government legal and regulatory compliance [including the FCPA] as part of establishing or renewing their Business Development Agreement” with HP.

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