- FCPA “Best Practices” Guide
- November 15, 2010 | Authors: Charles A. Hunnicutt; Bryan B. Lavine; Stuart F. Pierson; DeWitt R. Rogers; John S. West
- Law Firms: Troutman Sanders LLP - Washington Office ; Troutman Sanders LLP - Atlanta Office ; Troutman Sanders LLP - Washington Office ; Troutman Sanders LLP - Atlanta Office
The Department of Justice (DOJ) and Securities and Exchange Commission (SEC) recently agreed to resolve investigations of Foreign Corrupt Practices Act (FCPA) violations against the following companies:
- Panalpina World Transport (Holding) Ltd.;
- Transocean Inc;
- Tidewater Marine International Inc;
- Pride International Inc. and Pride Forasol S.A.A;
- Global SantaFe Corp.; and,
- Noble Corporation
These separate cases arose from transactions in which DOJ alleged that the companies engaged in bribing numerous foreign officials in an effort to circumvent local rules and regulations relating to the import of goods and materials in foreign jurisdictions. The companies agreed to pay a total of $156,565,000 in criminal penalties. Also, the SEC announced its settlements with these companies, which involve civil disgorgement, interest and penalties totaling approximately $80 million. The matters stem from an investigation that focused on allegations of foreign bribery in the oil field services industry.
Additional details on each investigation, including the Criminal Information filings, Plea Agreements, Deferred Prosecution Agreements, and other court documents are located at: http://www.justice.gov/opa/opa&under;documents.htm.
More importantly for U.S. businesses engaged in international transactions or with foreign subsidiaries, each of the Deferred Prosecution Agreements included an attachment entitled “Corporate Compliance Program.” Each company had to agree to continue to conduct, in a manner consistent with all obligations under the Agreements, appropriate reviews of its existing controls, policies and procedures. The Corporate Compliance Program attachment would appear to set forth DOJ’s current FCPA “best practices” guidelines and can provide valuable guidance for any company in assessing their current FCPA policies and procedures.
In the Corporate Compliance Program attachment DOJ indicates that, at a minimum, companies should include the following elements as part of it controls and procedures:
- Promulgation of clearly articulated and visible policies against violations of the FCPA.
- Strong, explicit and visible senior corporate support of such policies.
- Implementation of compliance standards and procedures designed to reduce the prospect of FCPA violations, including polices governing:
- Hospitality, entertainment, and expenses;
- Customer travel;
- Political contributions;
- Charitable donations and sponsorships;
- Facilitation payments;
- Solicitation and extortion.
- The assignment of responsibility for the implementation and oversight of such policies, standards and procedures to “one or more senior corporate executives.”
- Annual review and appropriate updates to the program.
- Ensure a system of financial and accounting procedures to maintain accurate books and records.
- Effective internal communication and reporting mechanisms, as well as instituting appropriate disciplinary procedures.
In addition, to the extent that agents and business partners are involved, DOJ expects companies to “institute appropriate due diligence and compliance requirements pertaining to the retention and oversight of all agents and business partners.” These include “properly documented risk-based due diligence pertaining to the hiring and appropriate and regular oversight of agents and business partners,” and informing agents and business partners of the company’s commitment to abide by the prohibitions against foreign bribery, and of the company’s ethics and compliance standards.