FCPA: Questions and answers

22 September 2011
Last week’s webinar Foreign Corrupt Practices Act: Your Company’s Future on the Line, encouraged a lot of discussion and resulted in several interesting questions from attendees for presenter and FCPA expert Roy McDonald. Here are some of the highlights, as well as Roy’s answers:

Q. How far down the chain does third party liability go?  What about second- and third-tier business intermediaries who may work directly for the third party?

A. I don't think there is any limit on how far down the chain third party liability may go, so long as all of the elements are met.  Of course, the further down the chain you go, I think it would be harder to meet some of those elements and for the government to argue that the company in question knew or should have known what was going on.  At the same time, however, I don't think the government would take a company off the hook because they more cleverly or elaborately paid bribes through the use of multiple intermediaries.  As a result, I think there remains some risk for companies no matter how far down the chain you go.

Q. What export compliance training programs would you recommend?

A. The best compliance training programs –including export compliance, as well as FCPA/anti-corruption compliance—are those that are tailored to the company and its particular circumstances and needs.  The government wants to see programs that are thoughtfully put in place, taking into consideration the specific operations, locations, and audience (e.g., making sure sales people in China are provided training in the native language and addressing the types of risks those sales people may face), as opposed to "off the shelf" programs that may have limited relationship to the particular circumstances of the entity in question.  The best training programs are often conducted in-person by people with sufficient expertise/experience and involve significant interaction with the audience. 

Q. What is the continued applicability of the FCPA in light of the UK Anti-Bribery Law for an organization with operations in both the UK and the USA?  Are there provisions of the FCPA that are MORE strict than the UK Anti-Bribery Law?

A. You are correct in implying that, generally speaking, the UK Bribery Act is in many ways a stricter version of the US FCPA.  For example, the UK Bribery Act covers receipt of bribes, commercial bribery, failure by a company to prevent bribery, and does not have a stated facilitating payments exception.  However, there is not specific books and records provision in the UK Bribery Act.  Also, the fact that the UK Bribery Act has an "adequate procedures defense" written into the statute, whereas the FCPA does not have such a defense, could perhaps be considered an element in which the FCPA is stricter (although, in enforcing the FCPA, the US government would typically look at whether a company has sufficient procedures in place).

Even though the language of the UK Bribery Act appears stricter than the language of the FCPA, a company with ties to the US still has to be compliant with the FCPA, and in that sense, the FCPA is still applicable.  Indeed, when considering the way the FCPA has been enforced by the US government (and beyond just the statutory language), the UK Bribery Act is not necessarily much more strict.  Moreover, the US is still far and away the most advanced in enforcement of such law, at least historically (we shall see how much resources the UK government will put behind enforcement of the UK Bribery Act and how such enforcement will proceed).

Q. Are there any obligations for companies to train their employees or third-party contractors on their obligations under the FCPA?

A. While there is no language in the FCPA statute itself expressly requiring training, having an anti-corruption training program has been, and continues to be, considered one of the hallmarks to being FCPA compliant.  Among other things, the US Federal Sentencing Guidelines for Organizations identifies effective training as a key component that could allow companies to mitigate sentences. The overall effectiveness of a FCPA compliance program, including training, is one of the factors that the Department of Justice reviews in determining whether or not to charge a company.  Further, when the US government prosecutes and/or settles FCPA actions with companies, it practically always requires that the companies put in place an effective training program.