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How Not To Communicate FCPA Compliance Expectations


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 below by a real company’s FCPA compliance policy, business organizations can fall short in this regard.

A real company’s Code of Business Conduct and Ethics contains the following:

“Prohibit bribes, kickbacks, or other forms of corrupt, illegal, or improper payments to government officials for the purpose of obtaining or retaining business.”

There is so much that is wrong with these 23 words!

First, it uses the “b” word (as well as corrupt, illegal, and improper) 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 “bribery,” “corrupt,” “illegal” or “improper.” 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 “corrupt” “illegal” and “improper.”

Second, the above language does not even effectively convey what type of individual that is. Rather, it uses the term “government official” – a term not even found in the FCPA. Does the above language adequately capture (and thus communicate) the broad range of individuals the enforcement agencies consider “foreign officials” (the actual statutory term) such as employees of state-owned or state controlled enterprises or physicians or others associated with foreign healthcare systems? Clearly not!

Third, the above language from the real company’s Code of Business Conduct and Ethics 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 the real company’s Code of Business Conduct and Ethics raises FCPA risk and thus represents an epic fail.

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