In our last two posts, we talked about Wal-Mart's potential exposure under the Foreign Corrupt Practices Act (FCPA) thanks to allegations of bribes paid by its Mexican subsidiary to Mexican government officials and the role of an organization's employees in FCPA compliance efforts. In our final post, we will focus on the steps companies can take to ensure that executives and employees are engaged and educated in these issues.
Making sure that everyone in the company takes FCPA compliance seriously requires ongoing organization-wide efforts. "These are simple things on their face, but they can be complicated to implement," says Susan Kohn Ross, international trade counsel with law firm Mitchell Silberberg + Knupp LLP in Los Angeles. Here are a few steps to consider during this process:
Begin at the top. One of the more disturbing allegations against Wal-Mart is that the company promoted Eduardo Castro-Wright, who is alleged to be a key player in the bribery scandal, to vice chairman in 2008, several years after the company investigated the bribery allegations without taking action. Although one of the first steps Wal-Mart took after the allegations became public was to create a new global FCPA compliance officer position, companies still need to make sure their senior executives set an example for FCPA compliance.
"This starts with the right tone with the officers and the board of directors being willing to enact the right resolutions, and then follow through by appointing a compliance officer who has the flexibility and the budget to enforce the standards of the corporation," says Ross.
Educate all employees. Employee education about the FCPA and the company's expectations around compliance is essential. In some cases, employees who violate the FCPA believe that what they are doing is in the best interest of the company. Someone might get involved in bribery because "they feel that everyone in that location or region does it and that there is no other way we can compete," says Ross. "Even if other people become aware of it, they may not do anything about it."
It is up to the company to explain and reinforce that this behavior is not in the best interest of the company and that people taking such actions will face any criminal charges and pay any fines by themselves. Employees need to understand that they are not "doing their job well by quietly bribing the postman or by authorizing more serious payments through a distributor or agent to get the company business," says Robert A. McTamaney, a partner with law firm Carter Ledyard & Milburn LLP in New York.
Keep it current. Employee education is not a one-time event. Companies must educate their employees continually using written materials, seminars and online learning. Some companies reinforce this by requiring employee review and pass a test on compliance programs at least annually. Because situations and requirements change periodically, companies should provide ongoing updates on developments affecting the law or the compliance program. In addition, companies can arrange speakers to address these issues at sales meetings, executive briefings and other gatherings of employees who are most likely to deal with potential corruption.
Empower people. Education is important but companies also need to be prepared to reinforce desired behavior. If someone comes forward with a well-founded concern or allegation, that employee should be acknowledged as having done something positive rather than being labeled a potential troublemaker. It is also important for companies to empower their people to react appropriately when asked for a bribe. Even if saying no means lost business or opportunities, companies need to acknowledge that the employee did the right thing by saying no.
Be prepared to act quickly. If a potential FCPA violation does occur within the company, executives must be prepared to act appropriately. Filing voluntary disclosures with the relevant agencies, issuing public statements and alerting the board and shareholders should occur as quickly as possible. Any hint of a cover up could be judged even worse than the crime.
