Recently, Qualcomm released its Corporate Responsibility Report (see here and here).
In 2016 the company resolved a Foreign Corrupt Practices Act (see here) based on alleged improper hiring and other practices in China.
Reading the Corporate Responsibility Report of a company that (relatively) recently resolved an FCPA enforcement action was interesting.
The report states in pertinent part:
“Compliance with global anti-corruption laws continues to be a top priority for the Company. To this end, our Global Foreign Corrupt Practices Act (FCPA) and Anti-Corruption Policy procedures and training content are reviewed and assessed by a third-party expert every two years to ensure the content is relevant, leverages current best practices and reflects the needs of our business. In 2021, we refreshed the look and feel of the Policy and company-wide online Policy training and certification. The Policy content has been streamlined by 60% to focus on the key concepts and risks that are most relevant for our business and to make it more understandable for our employees. The online Policy training course is more interactive to increase employee attention and engagement. Further, we published the Policy on our external Company website to increase transparency around our global approach to anti-corruption compliance.
With the majority of employees continuing to work remotely, 2021 brought a challenge for our Ethics and Compliance team: how to raise the visibility of ethical conduct in our ongoing virtual environment. One approach was to broaden the reach of our current “Lead the Way” program, a recognition initiative to celebrate those employees that exemplify The Qualcomm Way, and who take personal responsibility to lead with honesty and integrity in all they do. Through improved virtual collaboration, peer recognition and multiple engagement campaigns throughout the year, program members were better equipped to proactively advocate for the program with peers and regularly interact with one another and with the Ethics and Compliance team.
In fact, following our annual Compliance Week event in November 2020, nominations for new program members increased 260% compared to two years ago. We require our employees and temporary workers to complete a policy training and certification process every 12-24 months covering our Code of Business Conduct and our Global Foreign Corrupt Practices Act (FCPA) and Anti-Corruption Policy and program. In addition, 69 instructor-led training sessions on Qualcomm’s Global FCPA and Anti-Corruption Compliance program were offered and attended by 3,603 employees in externally facing business functions (Sales, Business Development, Marketing, Government Affairs, Ventures and Procurement) and assurance partners (Legal, Finance, Accounting, HR and Internal Audit) in 2021.”
Elsewhere, Qualcomm states that “99% of Qualcomm employees, temporary workers and interns completed the 2020 Code of Business Conduct Training and Certification requirement, which is assigned to all employees and temporary workers, and to all new employees upon hire.”
99% success in most facets of life is fantastic and a cause for celebration. A student that achieves 99% success on an exam is at the top of the class, a baseball pitcher that throws 99% strikes is destined for the Hall of Fame. More broadly, a team that wins 99% of its games is likely to capture the championship.
But a business organization that trains 99% of its employees, still means that 1% of its employees have not been trained.
And you can guess what will happen if an employee in that 1% category turns out to be the employee who engages in improper conduct. The SEC is likely to allege that the company had deficient internal controls because not all employees were trained.
For instance in the Bristol-Myers Squibb FCPA enforcement action the SEC dinged the company because, although the company “rolled out mandatory anti-bribery training” for employees in a specific country, not enough employees in that specific country actually completed the training.
In the release accompanying its Corporate Responsibility Report, Qualcomm states:
“We believe ethical conduct is a culture imperative and strive to follow the letter and the spirit of The Qualcomm Way: Our Code of Business Conduct, understanding it in the context of our core Company values: Purposeful Innovation, Passionate Execution, Unquestioned Integrity and Collaborative Community. And we see positive results: based on our internal ethics investigation trends, less than 1% of our approximately 45,000 employees are involved in misconduct reports annually.”
99% of employees not being involved in misconduct reports on an annual basis is most certainly a “positive result.”
But then again, is it?
After all, 450 employees (1% of 45,000) are apparently involved in misconduct reports annually.
All it takes is one of those employees to expose Qualcomm to legal liability (criminal or civil) in the FCPA context or otherwise and indeed several FCPA enforcement actions have been based on such scenarios.
In short, kudos to Qualcomm for its apparent 99% success.
But watch out for the 1% – as this is often the lens through which the DOJ and/or SEC will view the company in an enforcement action.
One other interesting tidbit from Qualcomm’s “Global Foreign Corrupt Practices Act (FCPA) and Anti-Corruption Policy.” According to the policy, “Qualcomm’s FCPA website [no doubt internal] contains a list of known government-owned or controlled companies.”