Austria: U.S.: Highly Anticipated FCPA Resource Guide released

The U.S. Securities and Exchange Commission and the U.S. Department of Justice recently released a "Resource Guide to the U.S. Foreign Corrupt Practices Act" regarding the application and enforcement of the Foreign Corrupt Practices Act ("FCPA") The Guide is available at:

http://www.sec.gov/spotlight/fcpa/fcpa-resource-guide.pdf

While the FCPA Resource Guide ("Guide") does not represent a change in FCPA enforcement, it includes an extensive discussion of the FCPA. It provides useful examples and consolidates the relevant existing case law and the Guiding Principles for the enforcement of the FCPA in the U.S.

In practical terms, the Guide provides helpful guidance on the set-up of a compliance program by companies.

1. Compliance Program Guidance

The Guide provides the standards and cornerstones for the set-up of a compliance program. Each company has to establish a tailor-made structure for itself. As there is no "one-size fits it all" approach, each program should be adapted according to the specific risks the company is facing.

However, according to the approach taken by the U.S. authorities, certain common criteria for an efficient compliance program do exist:

  • Risk assessment: A Risk Assessment is fundamental for the development of a strong compliance program. Based on the risks identified, the company should accordingly devote the necessary resources to addressing these risks.
  • Training and Continuing Advice: Communication of compliance throughout the company is essential. The compliance program should be followed and adhered to by employees at all levels of the company.

    The training audience might differ according to the degree an employee is exposed to certain risks (e.g. sales personnel encounter other risks than accounting staff).

    Besides providing accurate training, the company, depending on the size and complexity of its business, should in any event install appropriate measures to advise its staff on the company's ethical principles and its compliance program.
  • Incentives and Disciplinary measures: First and foremost, the program should cover all members of the company; no one should be beyond its reach. Violations should be sanctioned by disciplinary measures. The Guide notes that positive incentives for staff members in the form of promotions, or for improving and developing a company's compliance program and for ethical and compliant leadership, may further optimize a compliance pro-gram
  • Third-Party Due Diligence: Third parties, including consultants and agents, can be misused to conceal the payment of bribes. Performing a risk-based due diligence before operating with third parties is therefore of key importance. While the specific character of such due diligence might vary, it should be done according to the Know-Your-Business-Partner-principle.

    However, (i) the company should in any case inform itself about the third party's qualifications, including its possible relations with public officials, (ii) the role and the terms under which a third party operates should be clearly expressed in contractual terms, and (iii) the company should have the possibility to control its contractual engagement with third parties. This approach includes trainings, the stipulation of a right to audit, and the requirement that compliance certificates be provided. In addition, the third parties should adhere to similar compliance standards.
  • Confidential reporting of misconduct and internal investigation: A compliance program should include mechanisms to enable employees to report suspected or actual misconduct on a confidential basis and without fear of reprisals. To that end, companies may, for example, install anonymous hotlines or employ ombudsmen. In case of a reported allegation of suspicion, companies should possess an efficient, reliable and properly funded process geared at investigating the allegation. Furthermore, the company should ensure the proper documentation of its response to the al-legation, including any mediation or disciplinary measures it may apply.
  • Continuous improvement: The compliance program is subject to a constant process of improvement. As business changes over time, a company's compliance program must reflect such changes and should adapt to them promptly.
  • Pre-Acquisition Due diligence and Post-Acquisition Integration: A company needs to perform a proper due diligence prior to a merger or acquisition. Companies engaging in a due diligence should know about any possible FCPA exposure and accordingly apply a solid risk analysis. The Guide signals that action against the successor company might only hap-pen under limited circumstances, for example in cases "where the successor company directly participated in the violations or failed to stop the misconduct from continuing after the acquisition".

2. What does "anything of value" mean?

The FCPA prohibits paying, offering, promising to pay or authorizing to pay or offer money or "anything of value" to a foreign official. The Guide notes that there are no de-minimis threshold amounts for corrupt payments or gifts. It acknowledges, how-ever, that the FCPA permits reasonable gifts, travel and entertainment where there is a bona fide business purpose. Facilitation payments are only permitted under restricted circumstances. In addition, small gifts or tokens of esteem or gratitude are not prohibited. The company may thus, for example, pay for the airfare of a public official who is travelling to inspect a company's facility for a legitimate business purpose.

3. Who is a foreign public official?

The Guide's discussion of who constitutes a "foreign official" focuses principally on the meaning of the term "instrumentality" of a foreign government. The Guide notes that whether a company is an "instrumentality" is "fact-specific" and depends on the entity's ownership or control, respectively its status and function. A foreign government ownership stake of 50% or more is a good indicator; however, even an entity with a lower rate of foreign government ownership may be deemed an "instrumentality" of a foreign government.

4. Facilitation Payments – a narrow exception

The Guide reiterates the narrow facilitation payment exception under the FCPA and acknowledges that the facilitation payments exception only applies to "routine governmental action" that involves non-discretionary acts.

5. Summary

The Guide provides a comprehensive overview of the FCPA statute and offers important insights into the U.S. authorities' regulatory approach to vigorously enforcing the FCPA. The standards for a compliance program outlined in the Guide are similar to the ones issued along with the UK Bribery Act 2010 and thus constitute major incentives for companies to consider re-evaluating their current compliance programs. As a result, an efficient compliance program should enable the company to mitigate its exposure to FCPA liability.

The Guide makes it clear that in accordance with the US Sentencing Guidelines, which govern the sentencing of companies, an effective compliance program is regarded as part of an organization's remediation. Having an effective compliance program may thus lead to a reduction in the organization's culpability for violations, if the company did not unreasonably delay reporting the offence.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement

    Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of www.mondaq.com

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

    Disclaimer

    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

    Registration

    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

    Cookies

    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

    Links

    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

    Mail-A-Friend

    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

    Emails

    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .

    Security

    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at enquiries@mondaq.com.

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions