Posted by
Ed Marsh on Thu, Jul 05, 2012 @ 07:30 AM
FCPA enforcement, culture and....Sesame Street
"(
FCPA enforcement is) Insidious - It might be reasonable to assume that if you negotiate your deals cleanly for orders, licenses, approvals, etc., you'll be find. WRONG. In fact, the majority of FCPA investigations stem from customs-related violations" Excerpt
from article by
Ed Marsh in InternationalMan.com on 26 June
"Sesame Street + Pakistan = Corruption - Apologies to the beloved Cookie Monster, but lately C is for Corruption, and that's not good enough for me. Of the United States go9vernment for that matter...A whole new era in FCPA enforcement was inaugurated as a result of such reporting systems and the whistle blowing they encourage." Excerpt
from article by
@RichardLevick in Forbes on 25 June
"Free anti bribery Tools for Corporate Compliance Officers (ed. - that's you if you are an executive!) Companies (compliance programs) are expected, yeat upon year, to be more sophiticated and broader in reach - without raising costs to do so. And although there is a limit to how far travel, training, due diligence, and risk-assessment budgets can be stretched, tehre is some good news for corporate compliance officers: civil society and the philanthropic arems of some institutions have been working to develop compliance tools that are avilable to use at no cost." Excerpt
from article by Alexandra Wrage of @Trace_Inc from Law.com on 22 June
"State-Owned Enterprises: What's All the Hullabaloo? - Lawyers and the FCPA paparazzi can take something simple and make it complicated. Take the issue of state-owned enterprises." Excerpt
from article by
@MikeVolkov20 in his Crime and Compliance blog on 12 June
"China: 1.3 Billion Foreign Officals? - The current corporate stance is essentially 'everyone in China is a government official.' I believe that this stance - while popular and easy to message - is wrongheaded. It is simply not ture that there are 1.3 billioin foreign officals in China." Excerpt
from article by
@HowardMSklar in Forbes on 21 June
"Critical D&O Policy Provisions - Seemingly inconsequential differences in D&O policy language can have profound consequences on coverage for FCPA claims..." Excerpt
from article by Stephen T. Raptis of Mannatt, Phelps & Phillips, LLP
FCPA enforcement and compliance
The bottom line as far as your international business development efforts? This is an active area that is becoming more so. Small size, ignorance and good intentions will not serve to spare your business from the wrath of DoJ - and remember violations for which you are responsible may have occured without your knowledge and been comitted by an agent or other non-employee representative.
Want to get a handle on your compliance and other aspects of your international business legal exposure?
Contact Consilium Global Business Advisors to discuss how we can help coordinate that important initiative.
And
download our free eBook on "Initial Legal Considerations for an Export Program."
Evolutionary Marketing & New Markets Blog
Posted by
Ed Marsh on Tue, Jun 26, 2012 @ 03:09 PM
What's the point?
You probably naturally fall into one of two international business development categories - at least roughly. You may either
"seed" or "solo." And depending on which basic approach is comfortable, you probably embrace the idea of an
international business consultant - or reject it. Either way, you've probably got an opinion on it.
But at what point do you decide that the nuance, and "ins & outs" of
international business development are outside of your core competencies? Maybe when you realize that there's simply too much for you to know and master. (
Download our free eBook - "An Export Dozen - 12 things that even many exporters don't know about international business.")
Make more money
A capable international business consultant (they really need to have an executive management perspective, not just years of mid-level experience) will help you make more money. Enterprise valuation enhancement, tax reduction, channel optimization and target market selection are areas in which an insightful export consultant will boost revenue, profit and wealth.
Cost less money
At the same time an expert international business consultant will intuitively help to husband your resources.
International sales growth is a marathon. Folks that really know the process understand which investments are critical (e.g. travel) and which aren't. Spending a bunch of money on L/Cs that drive you nuts and frustrate your customers? Perhaps an appropriate foreign receivables insurance policy would save a bundle. And of course, picking the right markets and channel model are fundamental skills which, if done correctly, prevent huge wastes of precious resources.
Protect you
Risk mitigation is a third are in which an international business consultant will bring value. There's no substitute for experience and savvy in this area. (
Read a recent piece by Consilium's Ed Marsh from InternationalMan.com on FCPA considerations.) From proper application of
Incoterms 2010 to global medical evacuation insurance and export compliance, they should bring a breadth of expertise to mitigate the many risks inherent in international business.
Are you open to assistance?
The question is always if you are willing to be helped. If you "have all the answers" then it's not worth the investment. On the other hand if you know your product and your company particularly well, but recognize that others bring comparable expertise in their areas of specialization and seek that expertise to help you succeed, then an international business consultant is probably a dynamite investment.
Want to learn how Consilium Global Business Advisors helps companies make money, save money and manage risks?
Contact us to talk about your situation. And
download our free whitepaper "Six Keys to Selecting the Right Export Advisor."
Evolutionary Marketing & New Markets Blog
This post was contributed by Michael Volkov of LeClairRyan and first appeared on Volkov's Corruption, Crime & Compliance Blog (regarding FCPA compliance and current reform initiatives)
SMBs may not have a CCO (Chief Compliance Officer) by title - but they sure have one by responsibility. Whether it's the CEO, president, CFO or VP of International Business Development (it had better be all of them!) the company's culture is almost certainly the foundation upon which any compliance program is built. How does a company create a 'culture of compliance' to avoid FCPA enforcement hassles?
Creating a Culture of Compliance
Companies like to tout their “culture of compliance.” Sometimes companies have it and sometimes they do not. As a Chief Compliance Officer, make sure you check under the hood when you join a company which hires you promising a commitment to a “culture of compliance.” These words are critical but they can be empty promises.
There is a fundamental disconnect between a “culture of compliance” and the bottom line profits. Corporate actors have not made the connection between profits and compliance. If you are a compliant company, you do not necessarily earn profits. Even the flip-side may not be true – if you violate the law, you will not make a profit. One thing we can all agree on – a non-compliant company will to overcome at least reputational harm to its brand and its image. That can translate to the bottom line.
If profits do not necessarily track compliance, then how do you create a “culture of compliance” and what are the benefits of doing so? Academic research in this area is needed – far beyond anecdotal evidence, but quantitative models and measurements are needed.
I would suggest looking at this issue in a more holistic way. Officers and employees often identify with the organization they work for as a part of their own self-image. When I work for a company, I consider myself a part of that company, with a stake in that company, and an interest in its future. Not just for my own selfish motivation for a continued paycheck but as part of my identity.
The trick to creating a “culture of compliance” is to appeal to each officer and employee’s self-image and translate that into an organizational image which everyone can embrace. I am willing to bet that companies with a “culture of compliance” have fewer incidents of fraud, thievery or other corporate misconduct. Companies that pay lip-service to a culture of compliance will suffer higher rates of fraud and misconduct. This is a profound grasp of the obvious.
Companies which foster a culture of compliance will likely benefit far more then the cost of designing and implementing programs required to create such a culture. I am sure that productivity increases with such a culture but I am waiting for such a study to confirm such a conclusion.
What is well known is that a CEO statement of commitment to compliance is only a beginning step, and a very small step, in creating a culture of compliance. A commitment to follow though is the only way to ensure a culture of compliance. In this respect, the tone-at-the top needs to filter down through actions, not words, to compliance.
A Chief Compliance Officer is the leader of this effort – not the General Counsel, not the Internal Auditor. From the Board, down to the employee, the CCO and his or her office has to make this a daily priority – where and how will the message be delivered today?
If the CCO has the backing of the Board and senior management, the message will be communicated. If the CCO does not have the support of the Board and senior management, it is time for the CCO to find a new job at a new company. In the words of Monty Python and the Holy Grail, “Run Away! Run Away!” CCOs would be well-advised to make sure they are walking into a true corporate culture of compliance.
Original version is located here -http://corruptioncrimecompliance.com/2012/06/creating-a-culture-of-compliance.html----------------------------
Need some help establishing compliance programs for your SME?
Contact Consilium Global Business Advisors for assistance with that and the myriad of other international business challenges including
channel management,
international marketing and
international market selection.
Read more on FCPA considerations, and download our
free eBook on initial exporting legal considerations.
Michael Volkov is a former federal prosecutor with almost 30 years’ experience in a variety of government positions and private practice. Michael’s practice focuses on white collar defense, corporate compliance, internal investigations, and regulatory enforcement matters.Michael has experience in the Foreign Corrupt Practices Act, compliance counseling, special committee representations, money laundering, Office of Foreign Asset Control (OFAC), export controls, sanctions and International Traffic in Arms, False Claims Act, Congressional investigations, online gambling and other regulatory enforcement issues.
Evolutionary Marketing & New Markets Blog
This post was contributed by
Michael Volkov of
LeClairRyan and first appeared on Volkov's
Corruption, Crime & Compliance Blog (regarding FCPA compliance and current reform initiatives)
SMBs often form close and reliant relationships with a small cadre of professional advisors. In the advisors' desire to support the SMB, and in the owners loyalty to core advisors, sometimes roles are convoluted and quality of counsel suffers. This is an interesting look at several reasons why lawyers are better suited to handle compliance issues than accountants. The bottom line is that avoiding FCPA enforcement requires planning, strategy and a compliance program.
Attorney or Accountant?
In the compliance world, lawyers and accountants are strange bedfellows. Sometimes they need each other, and sometimes they do not. Each has advantages and disadvantages. Working together, you get both.
I shudder when I think of companies that have hired accounting firms to conduct internal investigations, design compliance programs, or audit compliance programs. Please do not misunderstand me. I have worked with some terrific forensic accountants who are brilliant. Unfortunately, they are not always the right fit for the job.
Lawyers can't do it all themselves
Lawyers cannot handle these same tasks alone. Forensic accountants are an invaluable partner. In an internal investigation, forensic accountants can identify suspect transactions, accounts and offices. In auditing a compliance program, they can zero in on the weak links and identify areas for further investigation. When designing and implementing a compliance program, accountants can help with internal controls to make sure that suspect transactions are identified.
Lawyers have a big advantage over accountants – they have the attorney-client privilege and they do not have a duty to disclose misconduct (with certain minor exceptions which do not come into play very often in compliance). The privilege is a must have when operating in the compliance and enforcement arena. It protects communications between company officers and employees and company counsel. It allows counsel to advise the company on the best way to proceed, and it facilitates problem-solving. The absence of a duty to disclose is again invaluable to promote counsel guidance and assistance to the company.
Accountants obligations
Accountants do not have a privilege. Communications between accountants and company officers and employees are completely discoverable to the government. It is a wonder that accountants have not been dragged before grand juries very often but the risk is significant.
Accountants have a duty to disclose if they identify violations and are not satisfied by the company’s response. This is referred to as their “10A” obligation to report company misconduct internally and externally if the company does not satisfactorily resolve the issue.
Lawyers and accountants have another significant difference – lawyers have to advise company witnesses of their Upjohn rights which may cause the witness to seek their own counsel. Accountants do not have to advise company witnesses of their Upjohn rights and can question the witness. Of course, the witness can seek counsel anytime even if not advised of the right to do so.
Best of both worlds
With all these pluses and minuses and pros and cons, there is a good solution, which many companies follow. Some do not and it is hard to understand why. A company can maximize benefits and minimize downsides by retaining both, and doing so through the attorney. What do I mean? The company should initially retain the attorney, and then have the attorney retain the accounting firm to provide counsel with forensic accounting services which are needed for counsel to advise the company on compliance issues. This is the proper structure for a project and must be carried out by having counsel attend every interview or interaction with company officers and employees relating to the specific matter.
Working together, attorneys and accountants can bring about optimal solutions. Companies that work with one to the exclusion of the other only increase their risks for enforcement or compliance breakdowns.
---------------------
Ready to look at taking simple, prudent steps to improve your anti-corruption / FCPA compliance? Eager to avoid FCPA enforcement hassles?
Contact Consilium Global Business Advisors. Interested in a quick overview of export and international related legal considerations? Download our free eBook.
Original version is located here -
http://corruptioncrimecompliance.com/2012/05/should-you-hire-an-accounting-firm-or-a-lawyer-or-both.html Michael Volkov is a former federal prosecutor with almost 30 years’ experience in a variety of government positions and private practice. Michael’s practice focuses on white collar defense, corporate compliance, internal investigations, and regulatory enforcement matters.
Michael has experience in the Foreign Corrupt Practices Act, compliance counseling, special committee representations, money laundering, Office of Foreign Asset Control (OFAC), export controls, sanctions and International Traffic in Arms, False Claims Act, Congressional investigations, online gambling and other regulatory enforcement issues.
Evolutionary Marketing & New Markets Blog
Posted by
Ed Marsh on Mon, Apr 30, 2012 @ 08:30 AM
No company is innocent
"Show me the company and I'll find you the corruption" - modern day anti-corruption officials might seem to borrow a line from Stalin's dreaded chief of secret police Lavrenti Beria.
That's the reality of most of the newly invigorated and increasingly harmonized and enforced international anti-corruption regulations. The reach is so extensive that indeed it is truly likely that every company has exposure.
And yet many companies remain naively ignorant of both the breadth of risk and severity of consequences of
FCPA enforcement actions.
Onerous provisions
The US
FCPA (Foreign Corrupt Practices Act) and the
UK Bribery Act of 2010 contain provisions which startle and alarm most companies. These include:
- exposure in jurisdiction of the law even if the violation occurred in a different jurisdiction (American companies which have business activities in the UK could be punished there for violations occurring in a completely unrelated market)
- liability for actions of 3rd parties (if a company's agent engages in corrupt practices of their own accord, without any knowledge of the company)
- responsibility to prevent corruption in addition to the obligation to refrain from acting corruptly
- personal criminal liability for officers and directors
And yet most companies have the simple belief that if they simply refuse to pay bribes they are "safe." That is dangerously naive.
Common and insidious situations
And that naiveté actually contributes to the sorts of situations that can trip companies up. The majority of the investigations brought recently by the US DoJ into possible FCPA violations are focused on "facilitation payments" to customs officials.
Imagine the position of a company which has done "clean business" and secured an order, built and shipped the product. Now with the L/C about to expire, the product is being held by customs based on specious assertions. The company faces a huge loss (as the customs agent knows) and works feverishly to find a solution. Suddenly the shipment clears and all seems fine....except that the local agent had actually made the requested payment to secure the release of the product from customs hold.
And companies in international business should suffer no illusions - corruption is endemic world wide. It is accepted in many markets as evidenced by the open acknowledgment that lifestyles of government employees are predicated on supplementing meager salaries with bribes.
I have personally experienced markets where government officials print private residence address and telephone on the reverse side of business cards, and I recently sat in a meeting in an ASEAN country where a potential buyer explained to me AND THE US CONSULAR employee who accompanied me that the deal could certainly be struck - but only with "money under the table." Perfect colloquial English and without any pretense at euphemism.
Good news
The good news is that companies can take a number of simple and inexpensive steps to achieve compliance and minimize their risks of being entangled in FCPA enforcement actions. But it's simply not enough to have a corporate philosophy that "We don't pay bribes."
A formal compliance program involves written policies, periodic training of employees & 3rd parties, and clearly articulated expectations which are modeled and reinforced by leaders and managers.
Mitigating the risk of FCPA enforcement is feasible and affordable - but acknowledging the exposure is the critical first step which many companies avoid.
Ready to look at putting an appropriate program in place in your company?
Contact Consilium Global Business Advisors to discuss how we can help with practical and common sense approaches to this and other international business challenges.
Tired of trying to figure it all out as you go with a limited staff? Download our free whitepaper on selecting an
export consultant to understand what support options are available.
Evolutionary Marketing & New Markets Blog
Posted by
Ed Marsh on Fri, Apr 20, 2012 @ 08:30 AM
This post was contributed by
Michael Volkov of
LeClairRyan and first appeared on Volkov's
Corruption, Crime & Compliance Blog (regarding FCPA compliance and current reform initiatives)
Companies often focus on transactional details of early export - including logistics and customs challenges. But they may fail to anticipate how susceptible these areas are to FCPA challenges and corruption. What's a company to do in order to avoid FCPA enforcement hassles?
Navigating the Corruption Risks of Foreign Customs Clearance
If you look closely at the list of FCPA enforcement actions, a large percentage of FCPA violations have focused on illegal payments made to secure customs clearance. This is not surprising. The equities facing a company can be very risky – customs clearance is a bottleneck critical to the company; and foreign customs officials know that they have leverage to extract illegal payments from a company or a company’s agent.
Companies usually rely on a customs clearance company or a third-party agent to assist them in this process. This makes sense because it is onerous to navigate the local laws, regulations and practices used in various countries. Companies need to make sure that the customs clearance company or third-party agent is subject to a thorough due diligence review. Once approved, monitoring is a must and it is critical to respond to any potential red flags or suspicions is critical.
In establishing this relationship, the billing and documentation must be detailed and specific to each transaction. Even if there are a large number of deliveries, there must be a detailed accounting of each payment made by the customs clearance company or the third party agent. Without detailed billing information, it is impossible to monitor the customs clearance company or third party agent, and prevent the reimbursement of an illegal payment.
One of the more difficult issues in this area is the application of the FCPA’s “facilitation payment” exception which authorizes a payment to foreign government officials for non-discretionary (“routine”) decisions in the customs clearance process. The line between proper and improper facilitation payments is difficult. The risks are even more complicated by the fact that the customs clearance company or the third party agent may be faced with a decision to pay such an expediting fee which may be ratified by reimbursement of the fee.
As an example, if a shipment is delayed at a border because of a minor paperwork error, would the payment of an expediting fee to the customs official to clear the shipment despite the error be considered a nondiscretionary action or a discretionary action outside the facilitation payment exception?
It is also difficult to rely on the facilitation payment exception because of the fact that such payments are now prohibited by the UK Bribery Act and other foreign countries. The global anti-corruption trend is to prohibit such payments because of the risk for misconduct that they create.
How should a company respond to these risks?
- Ensure that all customs paperwork is prepared correctly and in conformance with local law and regulations for the destination. The risk of bribes increases when a company’s shipment is delayed or seized at the foreign country’s border. If the paperwork is correct in every detail, the risk of such a delay or seizure is reduced.
- Select a customs clearance company or third party agent which has robust anti-corruption compliance procedures. The due diligence process for selecting a vendor to assist in customs clearance should be comprehensive. If the vendor has a good compliance program and operates in a number of countries or regions in the world, it would be a good idea to use this company for customs services in a number of countries.
- Communicate your company’s compliance expectations to the customs clearance company or third-party agent.
- Review in detail all customs clearance invoices and demand detail on each payment. It is important to avoid ambiguous terms for payments which may cloak illegal bribes. This may require modification of the accounts payable process to conduct a detailed review of every invoice. If a red flag is identified, the reviewer must respond and elevate the issue for resolution.
Ready to take the simple and prudent steps required to create the building blocks required for a comprehensive compliance program? Tired of worrying about your exposure to FCPA enforcement actions?
And download our free eBook on "Initial Legal Considerations for Exporters"
Original version is located here -
http://corruptioncrimecompliance.com/2012/04/navigating-the-corruption-risks-of-foreign-customs-clearance.html Michael Volkov is a former federal prosecutor with almost 30 years’ experience in a variety of government positions and private practice. Michael’s practice focuses on white collar defense, corporate compliance, internal investigations, and regulatory enforcement matters.
Michael has experience in the Foreign Corrupt Practices Act, compliance counseling, special committee representations, money laundering, Office of Foreign Asset Control (OFAC), export controls, sanctions and International Traffic in Arms, False Claims Act, Congressional investigations, online gambling and other regulatory enforcement issues.
Evolutionary Marketing & New Markets Blog
This post was contributed by
Michael Volkov of
LeClairRyan and first appeared on Volkov's
Corruption, Crime & Compliance Blog (regarding FCPA compliance and current reform initiatives)
Many companies are vaguely aware of the obligations for FCPA compliance in their international business dealings, but most SMEs don't have formal programs in place. Compliance is an ongoing process, though, and the criminal and civil liability of executives is enforced with increasing severity. Several business organizations continue to lobby for reform, but thus far it appears that there will not be substantive changes to the regulations.
The drumbeat continues for reform
The Justice Department has bought itself time but is now feeling the pressure on its upcoming guidance. Do not hold your breath when it comes to the FCPA Guidance. It will not contain any big surprises — it may restate a lot of the law and the principles of prosecution but it will not reflect any significant changes in the overall enforcement program.
Secretary of State Hillary Clinton’s recent defense of the FCPA confirms that the Administration does not intend to “weaken” the FCPA, either by its guidance or by supporting legislative changes. With the fortunes of President Obama continuing to rise, DOJ will be even more resistant to such changes. Secretary Clinton’s recent speech may reflect the State Department’s position against any reform and push back against discussion at DOJ to reform the law or issue guidance which gives some relief to the business community.
Discussion of business impact
As I have noted before, the primary audience for FCPA reform is not on Capitol Hill – legislators are just a means to an end – which is pressure on the Justice Department. There is little likelihood that the business community will be able to enact any serious legislative reform to the FCPA, especially in an election year when representatives and Senators are focused more on the election than legislation. However, the business community has been successful in changing the debate and focusing on the impact such laws have on American businesses.
Larry Thompson, the former Pepsi General Counsel, has unique credibility in this debate given his business role and his position as the former Deputy Attorney General in the Justice Department. His proposals were reasonable and measured: (1) a safe harbor, post-closing period in which an acquiring company is allowed to review, fix and report any FCPA violations committed by an acquired company before the acquisition; and (2) a compliance defense where the actions of a few violators are contrary to a significant compliance program.
Reform should focus on corporate criminal liability
The real issue with respect to corporate criminal liability boils down to the doctrine of
respondeat superior. Based on this doctrine, the actions of a single corporate actor can be imputed to a company despite the overall compliance efforts of the law-abiding corporate actors. Reform needs to focus on this issue and the impact on businesses.
The debate needs to focus on measured and reasonable issues – not exaggerated arguments on loss of American competitiveness or claims that American businesses cannot compete. Those arguments are not persuasive. Practical and common sense solutions to specific problems and issues will, in the end, carry the day.
Ready to look at taking simple, prudent steps to improve your anti-corruption / FCPA compliance?
Original version is located here -
http://corruptioncrimecompliance.com/2012/04/fcpa-reform-the-latest-developments.html Michael Volkov is a former federal prosecutor with almost 30 years’ experience in a variety of government positions and private practice. Michael’s practice focuses on white collar defense, corporate compliance, internal investigations, and regulatory enforcement matters.
Michael has experience in the Foreign Corrupt Practices Act, compliance counseling, special committee representations, money laundering, Office of Foreign Asset Control (OFAC), export controls, sanctions and International Traffic in Arms, False Claims Act, Congressional investigations, online gambling and other regulatory enforcement issues.
Evolutionary Marketing & New Markets Blog
This post was contributed by
Michael Volkov of
Mayer Brown and first appeared on Volkov's
Corruption, Crime & Compliance Blog (regarding export compliance and FCPA issues)
Training — A Critical Component of an Anti-Corruption and Export Compliance Program
The importance of anti-corruption training is often understated in comparison to other elements of a an anti-corruption compliance program. Perhaps we should start with the term “training” and broaden the concept to what it really is — “communicating, listening and responding.”
For compliance officers and staff, training programs is the one critical opportunity to educate, listen and learn from the audience. It is a two-way communication process, and should be viewed that way within the company.
1.
Basic Content: The basic message of the program should be to underscore the importance top management places on compliance; to educate attendees as to the basic legal requirements, the specific company policies, and the reasons for the policies; and to establish contact persons for questions and answers.
2.
Audience: The organization of audiences within the company is critical. Depending on the risk assessment, it is important to design different training programs for different audiences. Separate programs should be developed for top management and the Board; legal staff in headquarters; regional and or separate business division counsel; sales staff that deal with foreign government officials; and business/administrative staff that deal with foreign government regulatory agencies and offices; and auditing/accounting controls staff.
3.
Buy-In: The compliance officer needs to establish him or herself as an “asset” not an “enforcer.” No employee responds to threats or compliance personnel who act as naysayers. To the contrary, the message needs to demonstrate that compliance is not in conflict with business development. Good compliance practices can be used to create commercial benefits. Problems can be solved, deals can be restructured, and compliance can be an asset in this area, provided that the attitude of cooperation is communicated.
4.
Asking Questions and Listening: Perhaps nothing is more important for a compliance officer to do during training but to ask specific questions of lawyers, staff and others on the “front line” to hear their concerns, to respond to their needs and try to incorporate these ideas into the ultimate policies or policy reviews. For example, I always recommend that compliance staff ask sales staff what types of gifts, entertainment and meals they believe they need to provide to potential customers to advance their sales goals. You may be surprised by the answer — what they want to do may not be a real concern.
5.
Record-Keeping: It is important to keep comprehensive records relating to the training program itself. Attendance certifications, on-line training participation and other records should be preserved and audited to ensure that all employees are participating in the required training program. This is important to demonstrate a successful compliance program.
Consilium Global Business Advisors advises companies on a variety of aspects of international business including FCPA compliance. Original version is located here -
http://corruptioncrimecompliance.com/2012/03/training-a-critical-component-of-an-anti-corruption-compliance.html Michael Volkov is a former federal prosecutor with almost 30 years’ experience in a variety of government positions and private practice. Michael’s practice focuses on white collar defense, corporate compliance, internal investigations, and regulatory enforcement matters.
Michael has experience in the Foreign Corrupt Practices Act, compliance counseling, special committee representations, money laundering, Office of Foreign Asset Control (OFAC), export controls, sanctions and International Traffic in Arms, False Claims Act, Congressional investigations, online gambling and other regulatory enforcement issues.
Evolutionary Marketing & New Markets Blog
This post was contributed by
Michael Volkov of
Mayer Brown and first appeared on Volkov's
Corruption, Crime & Compliance Blog
Many companies incorrectly assume that using unaffiliated channel partners (distributors, agents and contractors) insulates them from FCPA exposure. Not only is that naive and incorrect, but further they have obligations to educate their channel partners and regularly review the shared obligations.A comprehensive international business development program will include various compliance topics as a component of overall export assistance. regrettably many paid advisors overlook this step and nearly all DIY export programs miss it entirely.
Is anyone reading the mail?
FCPA websites and blogs are filled with company advertisements offering due diligence services, guaranteeing facts and results. But this is only one piece in the due diligence puzzle and process. Designing a review protocol, ensuring that information is gathered and reviewed, and most importantly, requiring a brief memo reflecting the review and decision-making process, along with a statement of reasons for approving a third party, will immunize the company from future prosecution. Assuming each review is done in accordance with a pre-established process, and reflects reasonable care and analysis, then there is no way the company or any executive can be prosecuted for a criminal offense. A mistake in judgment never can be “corrupt” intent.
Every company needs to set up a procedure for reviewing third party agents. There are an infinite number of ways to accomplish this review.
First, who should review a proposed third-party agreement?
Depending on the size of the company, such review should be done by a central office or official as high in the company’s hierarchy as possible. This ensures that consistent standards are applied in the review process and that the company has an overall picture of third party hiring practices. Once approved, the agent’s individual sales deals can be reviewed by regional or local counsel (assuming that the reviewing person has been trained.
Second, what should the review package include?
The package should include the following: a proposed written contract which has anti-corruption protections, audit authority and anti-corruption training requirements; background check and investigation of any relevant issues (e.g. red flags); questionnaire and completed checklist of items. A memorandum documenting the due diligence review and the reasons for going forward with the proposed arrangement.
Third, how should the agent be integrated into the company’s compliance program?
The third party agent needs to participate in the company’s anti-corruption training program, certify as to his or her attendance, and agree to be subject to the company’s compliance procedures or have in place its own anti-corruption compliance program.
Many companies skip this simple but critical step
A recent KPMG survey revealed that company’s are not taking some basic steps to ensure third-party compliance with anti-corruption requirements.
• Two in five U.S. and U.K. organizations with written anti-bribery and corruption policies do not distribute them to agents, distributors, vendors, brokers, joint-venture partners or suppliers.
• Three in five companies with such compliance programs that incorporate employee training do not require any third-party representatives to participate in the training.
• Nearly one in three U.S. and one in four U.K. companies require training less than once a year.
• Three in five companies do not exercise “right to audit clauses” in third party contracts.
• More than half of the U.S. and 10 percent of the U.K. companies do not obtain periodic compliance certifications from those with whom they do business in other countries.
These deficiencies are not a good sign – companies need to make a great effort to ensure integration of third parties into the compliance structure.
Original version is located here -
http://corruptioncrimecompliance.com/2012/02/third-party-due-diligence-a-critical-part-of-compliance.htmlMichael Volkov is a former federal prosecutor with almost 30 years’ experience in a variety of government positions and private practice. Michael’s practice focuses on white collar defense, corporate compliance, internal investigations, and regulatory enforcement matters.
Michael has experience in the Foreign Corrupt Practices Act, compliance counseling, special committee representations, money laundering, Office of Foreign Asset Control (OFAC), export controls, sanctions and International Traffic in Arms, False Claims Act, Congressional investigations, online gambling and other regulatory enforcement issues.
Evolutionary Marketing & New Markets Blog
This post was contributed by
Michael Volkov of
Mayer Brown and first appeared on Volkov's
Corruption, Crime & Compliance Blog
A big 'what if'
What if – and this is a big what if – your company is
starting from scratch on its anti-corruption compliance program? Your company’s Code of Conduct includes a paragraph prohibiting foreign bribery and mandating accurate books and records, and says little more. Some companies are able to relate to these questions.
At the outset, your company has to recognize a couple of reality checks – your compliance program will take a year to two years until it is fully implemented. You cannot roll out your entire program with one big announcement, expect buy in or expect the program to be effective.
So, what do you do first? How do you prioritize your effort?
Where to begin?
First, you take a deep breath and work within the realities. Second, you have the Board and/or top management authorize and direct the design and implementation of the compliance program. And, of course, you have to secure a commitment to resources. With these assurances in hand, now we get to the fun part.
The tone-at-the-top is your launching pad, whether it comes from the Board or from senior management. The message has to be communicated effectively and throughout the organization.
With the message, comes a commitment to design and implement a new anti-corruption compliance program that is comprehensive and important to the organization. The compliance officer now needs to act and act quickly to create a framework for the program, with the assistance of internal auditors and other key players in the company.
The most important task ahead is the risk assessment – a broad examination which examines all of the components of the company, the nature and extent of government interactions, the existence of financial controls, policies and procedures for gifts, meals, travel and entertainment, as well as general due diligence of third parties, joint venture partners and merger and acquisitions.
Focus on risk assessment
The risk assessment must be carefully conducted in order to identify the risks which will then be used to develop the overall compliance program and what issues need to be emphasized. Too often, the risk assessment is viewed as a mechanical exercise more than a careful and deliberate review mechanism which provides a solid foundation for a compliance program.
In future posts we will examine in greater detail the risk assessment and the subsequent steps which need to occur as you develop and roll out your compliance program.
Think it's time to update your anti-corruption policies in house?
Original version is located here -
http://corruptioncrimecompliance.com/2012/02/writing-on-a-blank-slate-creating-an-anti-corruption-program.htmlMichael Volkov is a former federal prosecutor with almost 30 years’ experience in a variety of government positions and private practice. Michael’s practice focuses on white collar defense, corporate compliance, internal investigations, and regulatory enforcement matters.
Michael has experience in the Foreign Corrupt Practices Act, compliance counseling, special committee representations, money laundering, Office of Foreign Asset Control (OFAC), export controls, sanctions and International Traffic in Arms, False Claims Act, Congressional investigations, online gambling and other regulatory enforcement issues.
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