In the minds of some, companies that have resolved Foreign Corrupt Practices Act enforcement actions or are or have been under under FCPA scrutiny are bad or unethical companies.
It is a tempting position to take. After all, the FCPA is about bribery and corruption.
However, it is a wrong position to take in many (but certainly not all) instances.
It surprises most people to learn that a company with pre-existing FCPA compliance policies and procedures – and a company otherwise making good faith efforts to comply with the FCPA – can still face legal liability when a non-executive employee or agent nevertheless acts contrary to the company’s pre-existing FCPA compliance and procedures.
And rightfully so. Yet because of respondeat superior principles, the company is exposed to FCPA liability. Such pre-existing policies and procedures are relevant to charging decisions under the DOJ’s Principles of Prosecution and other DOJ / SEC non-binding policy or guidance as well as to the ultimate fine amount under the advisory Sentencing Guidelines, but not relevant to liability as a matter of law.
Ethisphere recently announced its 2020 “World’s Most Ethical Companies” (see here). The 132 companies are “recognized for setting the global standards of business integrity and corporate citizenship.”
Like prior years, companies that have resolved FCPA enforcement actions and/or have been or are under FCPA scrutiny are well represented on this list. Those companies, based on information in the public domain are the following: 3M, ADM, Allianz, CBRE, John Deere, Lilly, Fluor, Hertz, Honeywell, HP, IBM, Johnson Controls, Microsoft, NextEra Energy, Rockwell Automation, and Schnitzer Steel.
To be clear, this is certainly no dig on these companies or Ethisphere’s formula.
Rather, it is a useful reminder that legal liability under the FCPA (and other U.S. laws) can occur very easily because of respondeat superior (generally speaking a uniquely American legal doctrine in its current form).
See previous posts here, here and here regarding Ethisphere’s “World’s Most Ethical Companies List,” this post for how such companies have been well-represented on Fortune’s “Most Admired Companies” list and this post for how such companies are well-represented on Fortune’s “Changing the World” list.