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… Because FCPA Enforcement Actions Often Involve “Normal” Activity


This recent FCPA Blog post asks: “why do ‘normal’ employees violate the FCPA?”

Sure, there will always be Foreign Corrupt Practices Act violators like Richard Bistrong (an FCPA Blog contributor and a “training partner” of the FCPA Blog’s owner) who – in the words of the Africa Sting jury foreman – “freely admitted on the stand more illegal acts than the entire group of defendants was accused of, yet was able to plead to only one count of conspiracy to violate the FCPA.” Bistrong himself has stated: “When I am asked, ‘what could have stopped you? My response is quite simple: nothing.”

There is little compliance programs can do as to these sorts of actors. Nevertheless, let me raise my hand and offer a partial answer to the question posed by the FCPA Blog: “normal” employees may violate the FCPA because FCPA enforcement actions often involve “normal” activity.

In many respects, this post addresses the same issue as this recent post titled “It all depends what the “b” word means.” Using those same examples: golfing and drinking are “normal” activities; taking someone to a sporting event is “normal”; making a charitable donation is “normal” and indeed praise-worthy; offering internships and jobs is “normal.”

Yet, as FCPA enforcement actions have demonstrated “normal” people engaged in or planning these “normal” activities have been the focus of numerous FCPA enforcement actions because even though the underlying activity is “normal” (and indeed legal and socially acceptable in most cases) if the underlying activity is directed to a certain type of individual (an alleged “foreign official”) and in the context of certain situations, the FCPA enforcement agencies may deem it actionable under the FCPA.

For instance, take a look at this clip from my training course offered through Emtrain (an innovative compliance training company). The employees depicted in this video are planning an upcoming customer conference – a very “normal” activity – and there is nothing in the video to suggest that the employees have an evil motive or purpose in planning the conference. Rather, they are excited about the job they have been asked to do and simply want to put on the best customer conference they can.

Yet, as knowledgeable readers will recognize this precise scenario has been the focus of several corporate FCPA enforcement actions. In short, employees know what they know and don’t know what they don’t know. If employees do not know how the FCPA is often enforced and how “normal” activities – if directed to a particular type of individual – can result in FCPA scrutiny and enforcement, well you can’t fault these “normal” employees for not recognizing what is sometimes counter-intuitive. It’s on the company.

For instance, in the Bruker enforcement action (one of many FCPA enforcement in recent years focused on travel, entertainment and hospitality issues) the company was faulted for, among other things, relying “mainly on its China-based managers to ensure that employees understood the potential FCPA implications of doing business with SOEs.”

One can’t necessarily fault the Chinese employees of Bruker for not understanding the broad interpretation of “foreign official” and the common enforcement theory that deems individuals associated with alleged SOEs to be “foreign officials” on par with Presidents and Prime Ministers.  Indeed, this concept is curious to many foreign national employees of multinational businesses, yet it is the organization’s responsibility to ensure that its entire employee and agent base understands this concept because it presents a high degree of risk in certain countries including China.

I will never forget while in private practice being involved in certain of the early travel and entertainment enforcement actions. While conducting the underlying internal investigation, employees were asked whether they had any controls governing customer travel. Several of the witnesses explained that yes they did and explained how the company would not pay for pornographic movies purchased in connection with hotel stays.

However, what escaped these well-meaning employees (who after all had some controls in place concerning customer travel) is that the underlying trips themselves were the problematic issue because the traveling delegation included SOE employees. In the minds of these “normal” employees however, there was nothing wrong with spending corporate money to show customers and potential customers a good time and similar to the Bruker enforcement action referenced above, they were clueless as to the expansive interpretation of the “foreign official” element.

In short, in answering the question of why “normal” employees may violate the FCPA, the answer is often because FCPA enforcement actions often involve “normal” activity.

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