I look at many things through a Foreign Corrupt Practices Act lens. It’s an occupational hazard I guess.
So when looking at this year’s “Most Ethical Companies” list published by Ethisphere, I looked for FCPA violators or companies currently under FCPA scrutiny – and like prior year’s – there were quite a few.
For starters, the “Most Ethical Companies” list has become diluted. This year, Ethisphere recognized 136 companies. By comparison, when Ethisphere first released its list in 2007 there were 92 companies. But who knows, perhaps companies have become ethical.
The following 2024 “Most Ethical Companies” honorees have resolved FCPA enforcement actions: ADM, Allianz, Lilly, HP, IBM, Johnson Controls, Juniper, Linde, Pfizer, Rockwell Automation, Goodyear.
The following 2024 “Most Ethical Companies” honoree is currently under FCPA scrutiny: Leidos.
That a list of the “Most Ethical Companies” contains so many FCPA violators or companies currently under FCPA scrutiny is interesting (even if some of the FCPA enforcement actions occurred several years ago).
In the minds of some, companies that have resolved Foreign Corrupt Practices Act enforcement actions are bad or unethical companies.
It is a tempting position to take.
After all, the FCPA is about bribery and corruption.
However, it is a wrong position to take in many (but certainly not all) instances.
It surprises most people to learn that a company with pre-existing FCPA compliance policies and procedures – and a company otherwise making good faith efforts to comply with the FCPA – can still face legal liability when a non-executive employee or agent nevertheless acts contrary to the company’s pre-existing FCPA compliance and procedures.
And rightfully so.
Yet because of respondeat superior principles or the government’s seeming strict liability approach to enforcing the FCPA’s books and records and internal controls provisions, the company is exposed to FCPA liability. Such pre-existing policies and procedures may be relevant to charging decisions or the type of resolution vehicle under DOJ / SEC non-binding policy or guidance as well as the ultimate fine amount under the advisory Sentencing Guidelines, but not relevant to liability as a matter of law.
But perhaps it should be.
Ethisphere describes its methodology as follows:
“The World’s Most Ethical Companies assessment is grounded in Ethisphere’s proprietary Ethics Quotient®, an extensive questionnaire that requires companies to provide over 240 different proof points on their culture of ethics; environmental, social, and governance (ESG) practices; ethics and compliance program; diversity, equity, & inclusion efforts; and initiatives that support a strong value chain. That data undergoes further qualitative analysis by our panel of experts who spend thousands of hours vetting and evaluating each year’s group of applicants. This process serves as an operating framework to capture and codify truly best-in-class practices from organizations across industries and from around the world.”
