Foreign Corrupt Practices Act: Employee Training Crucial

Artikel im Global Atlanta (David Beasley): For companies doing business abroad, comprehensive training programs for employees and contractors is the most effective way to avoid violating a federal law making it illegal to bribe foreign officials, experts on the law said at a recent State Bar of Georgia symposium in Atlanta. The Foreign Corrupt Practices Act can extend to a company’s agent or contractors in another country, even if executives in the U.S. were unaware of the bribes.

„You want to make sure you have a comprehensive set of documents and policies to support the range of conduct that would be covered by the Foreign Corrupt Practices Act,“ Nisa Gosselink-Ulep, an attorney in the Washington office of Paul Hastings, Janofsky & Walker LLP, told symposium participants.

Companies should consider developing a how-to-guide for employees that would break down the law’s complexities, she added.

„Say I work for your office somewhere in Africa,“ she said. „I may know about the Foreign Corrupt Practices Act and I may be able to say, ‚Oh, I’m not supposed to bribe.‘ But what does that really mean?“

For example, the guide could include information about how to properly make a charitable donation, assuring that the gift won’t be construed as a bribe, said Ms. Gosselink-Ulep.

The manual might also include guidelines for supervising and monitoring contractors who work for the company to ensure that they are also complying with the law, she added.

„It’s also a great place to include information on who to call for help,“ said Ms.Gosselink-Ulep. „We can’t emphasize enough how important having that document is.“

It is important to develop a training program and manual that is targeted directly at the activities of your company, not a generic approach, she said.

„We talked about third parties being a key risk area, but if you don’t use any third parties, you probably don’t need to spend much time on that,“ she said. „But you do want to spend a lot of time training your direct sales force.“

A good start would be to train any employee who will be working outside the United States, said James Parkinson, a partner with Washington-based law firm BuckleySandler LLP.

„Training somebody when they first walk in the door is the best opportunity to get things started on the right foot,“ he said.

Training an employee in person is more effective than video-conferencing or online sessions although that may not always be practical if a company has operations worldwide, he added.

Companies should make sure to adjust training programs to the cultural norms of each country, said Marc Effron, director of investigative services at accounting firm Habif, Arogeti & Wynne LLP accounting firm. In China, for example, employees might not feel comfortable answering questions from an attorney from the U.S. without first consulting with their company superiors, said Mr. Effron.

Getting blank stares from employees during training sessions is a sign that the information on the law is not making its way down the chain of command, said Kathryn Atkinson, partner with the Washington law firm Miller & Chevalier Chartered.

She recounted a training session with a company’s overseas contractors who were hired to obtain visas for executives and government registration for company cars. This training was considered particularly important because these contractors had direct involvement with government officials and it was crucial that they knew that bribes were illegal under U.S. law.

The contractors repeatedly nodded their heads and said, „Yes, Foreign Corrupt Practices Act.“

But when she asked them to explain in their own words what the law entailed, the contractors stopped talking.

„They had practiced saying ‚Foreign Corrupt Practices Act,'“ said Ms. Atkinson. „But they need to know more than that. They don’t necessarily need to know more than that if you go into the visa office or if you go into the car registration office, here are the types of things you may see and here is how we need you to react to that.“

Companies should strive to create a „culture of integrity“  backed up by internal policies and controls that ensure compliance with the law at every stage of operations, she said.

An accounts payable clerk, for example, should be trained to spot a suspicious invoice that may indicate a bribe,  said Ms. Atkinson.

„Are people empowered to raise questions?“ asked Ms. Atkinson. „Going back to the accounts payable clerk, it is unlikely that person is going to question the documentation that’s provided unless the company is telling her on a regular basis, ‚Your job is to put a stop on it if you’re not satisfied the substance and process are both correct.'“

Atlanta-based Coca-Cola Co., which operates in 206 countries, is constantly adjusting and expanding its compliance program, said Benjamin Bard, the company’s ethics and compliance counsel.

The goal is to make sure „compliance is owned by everyone,“ he said.

Coca-Cola’s legal department enlisted the help of the company’s financial auditors for FCPA compliance, said Mr. Bard.

„They’ve been a key ally for us,“ he said.

Before financial auditors were enlisted to help, the Coke legal department in Atlanta would send representatives to conduct all FCPA audits.

„We would travel abroad, do the audit, be on site for a week, talk to people, review documents, review contracts, expense reports, disbursements, hospitality, all types of things and then we would do training while we are on site,“ said Mr. Bard.

Bringing in financial auditors to help with FCPA audits adds a valuable perspective, Mr. Bard added.

„We have a team of more than 100 people who are international auditors who are young, mobile, unattached, who don’t have homes, or cars or plants back here in Atlanta,“ said Mr. Bard. „These people have insight into our company and the nuances of the differences in the way our company works that enables us to tailor the audit so that it is not a scripted audit.“

As the financial auditors conduct the FCPA reviews, they frequently call the legal department  for advice, he said.

„They’re not flying solo,“ said Mr. Bard. „We get questions from them all the time saying, ‚Hey, we’re doing this FCPA audit and we see this gift was given to the president of this country. Is that a problem?'“

In the last year, Atlanta-based United Parcel Service Inc. has expanded its FCPA audits to include third-party contractors, said Norm Brothers, the company’s vice president of litigation.

In order to do this, a company must have audit rights in its business agreements with contractors. Contracts that have been in place for years may have to be rewritten to include those audit rights, Mr. Brothers said. At UPS, some vendors used the renegotiation as an opportunity to push for higher payments for their services, he added.

There were other concerns from vendors as well, he said.

„We did get some push-back on the audit rights and it wasn’t because they were concerned about fraud,“ said Mr. Brothers. „They were concerned about us looking at the books in order to see what their  margins were, how much money they were making on the services. There are a few vendors we haven’t been able to continue to do business with because they weren’t willing to enter those agreements. But for the vast majority it’s worked out fine.“

UPS also has developed a self-audit checklist that contractors can complete annually to identify potential problems with FCPA compliance, said Mr. Brothers.

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