"The large number of FCPA cases and the formation of specialized FCPA units within Federal agencies, suggest that this is a long-term initiative for regulators," said Bill Olsen, Grant Thornton economic advisory service principal and the firm's FCPA practice leader. "While working with our clients to address issues in this area, we have observed that many multinational organizations are especially interested in tactics that will fully address their FCPA risks."
"Organizations doing business globally usually have a robust ethics and compliance program in place," said David Childers, president and CEO of EthicsPoint. "Having a management-supported program visible in the organization helps show a company's commitment to conducting business correctly — and can reduce potential penalties."
The two firms offered the following 10 common misconceptions that companies should address to stay in compliance with the FCPA and potentially avoid penalties:
1."Based on our company profile, we don't have any FCPA risks."
If a company has even a few interactions with overseas markets, assessing potential FCPA or other anti-corruption risks is highly recommended.
2."We are a private company so we don't have to be concerned with the FCPA"
Although many of the highly publicized FCPA enforcement actions have been against public companies, private companies are just as likely to come under review by government enforcement agencies.
3."Our employees know our position on ethics because our policies spell it out."
Assuming that a company's code of conduct ensures adequate conveyance of management's position on ethics may be a misplaced perception; the tone at the top must be emphasized throughout the company on an ongoing basis to be effective.
4."As long as employees and agents have certified that they have not paid bribes, we have done enough."
A simple cursory certification by employees, sales agents, business consultants or others operating on behalf of the company will not hold up as a defensible position when a company needs to explain to regulators the actions taken to prevent bribery payments.
5."These are challenging economic times. We need to make cutbacks in FCPA compliance, just as we have in all other areas of the business."
Budget reductions and decreased spending in this area can potentially lead to increases in corrupt payments as overseas agents and business partners have a sense of what they can get away with. The downside of an enforcement action against a company can easily outweigh budget cuts.
6."Our global whistleblower hotline is effective because no violations have been reported to date."
Fewer than 3 percent of misconduct reports that come into an organization occur through the hotline. An organizational imperative must exist to capture reports of wrongdoing — regardless of method — and to paint a true picture of the risks posed to the organization.
7."Since we don't have a controlling interest in our overseas business partnership, we have no need or authority to extend our compliance program and policies."
A company must protect themselves by ensuring that joint venture partners are conducting business in accordance with FCPA and local corruption laws, regardless of ongoing control.
8."We will determine how to address an FCPA violation once a violation is identified."
Determining how to handle misconduct on the fly will typically result in missteps and delays during the investigation. Establishing an investigative protocol prior to the occurrence of any FCPA wrongdoing can save significant time and money.
9."Every business unit and sales office undergoes the same FCPA compliance testing, regardless of the type of business and location."
A company's risk of FCPA or local anti-corruption law infractions may vary based on the location and type of business conducted.
10."Common practice in our industry is to pay for airfare and lodging for foreign officials to attend conferences or trade shows."
The practice of paying extravagant travel and entertainment expenses is viewed as a cost of doing business in certain countries. However, companies will run afoul of the law if they do not abide by the policies established by U.S. regulators and overseas prosecutors.
More information on these FCPA misconceptions is available at www.ethicspoint.com/FCPA or www.GrantThornton.com/FAIS.