The FCPA Doesn’t Answer Many Of The Questions Compliance Professionals Have
Naturally, and understandably, those tasked with Foreign Corrupt Practices Act compliance within a business organization want clear answers to many questions.
However, the FCPA rarely provides clear answers and this is particularly true with the internal controls provisions.
The provisions are not rule-based, but principle-based in the sense that the key statutory language is that issuers shall “devise and maintain a system of internal accounting controls sufficient to provide reasonable assurances” certain financial objectives are met. The FCPA then defines “reasonable assurances” to mean “such level of detail and degree of assurance as would satisfy prudent officials in the conduct of their own affairs.”
Goldman – What Should Happen When Compliance Is Decent (And Often Good), But Not Great?
The recent Foreign Corrupt Practices Act enforcement action against Goldman Sachs was the largest in FCPA history in terms of actual settlement amount ($1.66 billion).
Yes, the conduct at issue involved large bribe payments (according to the DOJ approximately $1.6 billion). Yes, the conduct at issue resulted in (according to the DOJ) Goldman obtaining “in excess of $600 million in fees and revenue across its divisions, and increased Goldman’s stature in SE Asia.” Yes, the conduct of the culpable Goldman employees criminally charged (Tim Leissner and Roger Ng) was egregious.
Viewed through the strict lens of respondeant superior, perhaps the record-setting FCPA enforcement action was justified. In this regard, the Goldman press release nicely stated in plain English: “We all share in the benefits when our colleagues perform well for our clients. The opposite must be true as well. When a colleague knowingly violates a firm policy, or much worse, the law, we – as a firm – have to accept responsibility and recognize the broader failure that individual behavior represents for our firm.”
However, based on the DOJ’s (and SEC’s) allegations, the Goldman enforcement action was much different than certain other top ten FCPA enforcement actions.
Friday Roundup
Checking in on an appeal, sentence reduced, and for the reading stack. It’s all here in the Friday roundup.
Checking In On An Appeal
This recent post highlighted the DOJ’s appeal in the Lawrence Hoskins matter.
Recently Hoskins filed a brief in response and is also cross-appealing certain issues.
As to the DOJ’s appeal challenging the trial court’s decision to acquit Hoskins of all FCPA charges on the grounds that the trial evidence utterly failed to prove he acted as an agent of a domestic concern, the brief states in summary fashion:
Survey Says …
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”).
Holy Schnucks That’s Bad
A component of Foreign Corrupt Practices Act compliance is for a business organization to communicate its unique risks and its specific policies and procedures throughout its organization in a way that resonates with the intended audience.
In short, effective communication is a key factor in minimizing risk under the FCPA and related laws.
Yet, as highlighted by this business conduct policy of supermarket chain Schnucks, business organizations can fall short in this regard.