Endeavors to stay with FCPA compliance guidelines isn’t anything new for most U.S. companies, but neither is anti-corruption anti-bribery enforcement by the SEC and DoJ against FCPA violators. According to a new mid-year review of FCPA enforcement and trends from the international law firm Shearman & Sterling, companies are (and should remain) vigilant about developing and implementing compliance programs in alignment with the FCPA and DoJ standards – which for the most part of a good thing.
In reading the “Recent Trends and Patterns in the Enforcement of the FCPA” report, two numbers jumped out at me: $130 million, as in financial penalties collected by the government so far this year; and $18.5 million, as in the average penalty per corporation. Yikes.
According to the report, there is the continuing trend of reduced penalties and/or deferred or non-prosecution agreements, where companies take a fine but don’t admit guilt. The DoJ allows this tact in part because those companies can attest to the presence and adherence to some form of compliance program.
The report also points out the ongoing use of compliance monitors to act as something like probation officers (but remember, there is no “conviction” here). Some of these monitoring activities take the form of self-reporting, which puts an increased onus on these companies to have a strong reporting and analytics component to their compliance endeavors.
The report mentions a couple of specific “compliance failures” that are noteworthy. Regarding Smith & Nephew, it contends the pharmaceutical company paid “compliance lip-service” because, as the DOJ alleges, “the company learned of the bribes and instructed the distributor to stop paying them, but it failed to take any action to confirm that the bribes had stopped.” In the case against medical device manufacturer Orthofix, regarding the company’s training materials, “the government noted that the company had FCPA compliance materials but that they were only in English and had been distributed to employees that did not speak, or were not fluent in, English.”
It’s a good report on where we’re at with the FCPA. Many are pushing for a greater emphasis on compliance programs as a way to give companies a defensible posture against prosecution. Others want to see more stringent laws like what we see in the UK regarding “facilitation payments.” But in the end, know that compliance efforts like those put forth by the FCPA work to protect everyone and keep an even playing field. And enforcement? It’s not going away.
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Learn how compliance professionals can create an efficient continuous improvement loop as prescribed in the recent guidance to take advantage of transaction monitoring in combination with ethics and compliance programs.