I have no doubt that the individuals associated with the International Forum on Business Ethical Conduct for the Aerospace and Defense Industry (IFBEC) who drafted these recently released “model business courtesies and hospitality guidelines” did so in good faith with sincere efforts to reduce risk under the Foreign Corrupt Practices Act and related laws.
However, following its guidelines in certain instance will actually increase risk and herein lies the compliance challenge: one can follow so-called best practices and still be exposed to FCPA or related scrutiny. In other words, FCPA compliance is sometimes like a game of heads I win, tails you lose.
As explained by the IFBEC:
“These standards are designed to enable IFBEC members and their customers to agree on normal practices in sound business relationships that promote integrity in all business dealings. These guidelines are meant to complement individual company standards regarding ethics. The guidelines provide a general standard for the international aerospace and defence industry, with individual companies providing further clarification in their own documents.”
Like other forms of so-called best practices guidance, the IFBEC guidance is peppered with vague and ambiguous terms such as: “be reasonable,” “legitimate business purpose,” “social and business customs,” “be responsible,” and my favorite “use common sense, experience, and professionalism.”
Elsewhere the guidance states:
“This document acknowledges the significance of business courtesies and hospitality in creating a framework and a climate of trust during the business relationship. Indeed, common tokens of appreciation, whether given or received, are generally allowed in the business world and should be interpreted broadly, taking into account applicable cultural norms of both the host and the guest, as long as they:
are lawful and infrequent;
are not made with the objective of giving or obtaining a favor, or any undue advantage;
advance a legitimate business purpose, do not create a conflict of interest;
are made in a transparent way.
Business courtesies and hospitality, if compliant with applicable laws, can take the form of:
modest gifts,
meals and/or refreshments,
lodging,
invitations to business events,
travel costs,
entertainment such as an event, performance, or other activity.
But herein lies the compliance challenge: one can follow these so-called best practices and still be exposed to FCPA or related scrutiny as many of the above categories of “business courtesies” have been mentioned in FCPA enforcement actions.
For instance, enforcement actions have included allegations or findings concerning “golf in the morning and beer drinking in the evening,” sport tickets, flowers, cigarettes and karaoke bars, wine and other similar things of value.
