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.
Under the heading “Government Payments” the policy states in pertinent part:
“No Schnucks teammate or vendor may make or offer to make direct or indirect payments—either money or items of value—to officials of any government, at any level, to persuade that person to favor the Company. Any payments made to government must be for a legitimate business purpose and must be made to the official office or agency of government and not to any employee of any government office agency in their private capacity. It is Schnucks’ policy to strictly comply with all applicable anti-corruption laws, including, but not limited to, the Foreign Corrupt Practice Act (“FCPA”). The FCPA is a U.S. Federal Statute that generally makes it illegal for any officer, director, employee, agent, or stockholder acting on behalf of a United States based company, to corruptly offer to pay, promise to pay, or authorize the payment directly or indirectly, of “anything of value” (money, goods, services, etc.) to a foreign official for the purpose of obtaining or retaining business. In short, United States companies, their employees and their business partners and representatives may not attempt to bribe foreign government officials for the benefit of the Company. Therefore, no Schnucks teammate or vendor may play any part in any action designed to make such illegal offers or payments to foreign government officials. This includes helping to provide money or facilitating payments made by other teammates, partners, or agents operating on behalf of the Company overseas.”
Holy Schnucks – that’s bad.
First, is use of the “b” word (bribe) – as well as illegal and corruptly – as if they have a common accepted definition. However, as highlighted in this post titled “it all depends on what the “b” word means,” FCPA enforcement actions are frequently based on conduct such as “golf in the morning and beer-drinking in the evening” (see here), tickets to sporting events (see here for example), charitable donations (see here for example), internship and jobs (see here for example) and other such things. The underlying activity is not necessarily a “bribe,” “illegal,” or “corrupt.” In fact, the underlying activity is normal in many cases. It’s just when these things are value are offered or provided to a certain type of individual that the U.S. government uses the “b” word and concepts such as “illegal” and “corrupt.”
Second, the above language does not even effectively convey what type of individual that is. Rather, it uses the term “government” six times. Does the above language adequately capture (and thus communicate) the broad range of individuals the enforcement agencies consider “foreign officials” such as employees of state-owned or state controlled enterprises or others the enforcement agencies consider “foreign officials.” Clearly not.
Third, the above language conveys the impression that FCPA enforcement is all about things of value being offered or provided to certain types of individuals “for the purpose of obtaining or retaining business.” Sure that is the statutory standard, but the above language does not adequately convey the reality of FCPA enforcement that many enforcement actions have nothing to do with obtaining or retaining business per se, but rather points of contact with alleged “foreign officials” in connection with licenses, permits, certifications, inspections and other foreign bureaucratic requirements.
The goal of written policies and procedures should be to adequately convey the FCPA (and related enforcement landscape) so that risk can be managed and minimized.
Yet, the above language from a real company’s business conduct policy arguably raises FCPA risk.
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