Anti-Bribery Compliance: Fcpa Programs and Bribery Risk Management

An FCPA compliance program is an anti-corruption compliance system built to satisfy the DOJ-SEC FCPA Resource Guide hallmarks. The program must be risk-based, with a written code of conduct, tone at the top, and an empowered compliance officer. The DOJ FCPA Corporate Enforcement Policy rewards companies with effective programs at the time of a violation with declination or reduced penalties.

FCPA compliance counsel designs the FCPA compliance program to satisfy DOJ and SEC hallmarks, advises on the risk assessment process that identifies the company's bribery risk exposure, and advises on the documentation requirements that demonstrate program effectiveness to prosecutors.

International bribery risk arises whenever a company interacts with foreign government officials or state-owned enterprises in connection with business. High-corruption countries require more intensive due diligence, more frequent training, and enhanced monitoring of expense reports and hospitality. The UK Bribery Act 2010 applies to any company that does business in the United Kingdom and covers commercial bribery, requiring a corporate compliance anti-corruption program that addresses both the FCPA and UK Bribery Act simultaneously.

Global anti-corruption counsel assesses international bribery risk exposure, advises on the overlapping requirements of the FCPA and the UK Bribery Act, and advises on the Transparency International risk-tier framework for allocating compliance resources.

An effective corporate compliance anti-corruption program requires seven operational elements. The first is a written anti-bribery policy that prohibits all forms of bribery and requires approval for high-risk payments. The second is tone at the top, and the third is a compliance officer with sufficient independence and resources. The remaining four are risk-based training, a confidential reporting mechanism, internal controls, and periodic testing and auditing.

Corporate compliance counsel designs and implements the corporate compliance anti-corruption program, advises on the policy elements and approval thresholds that satisfy DOJ and SEC standards, and advises on the compliance officer empowerment requirements that distinguish a paper program from one that reduces bribery risk.

Third parties create the highest FCPA agent liability exposure in anti-bribery compliance programs. Anti-bribery due diligence must screen for shell company bribery structures. FCPA clauses in third-party contracts make compliance obligations binding on the agent. More than 90 percent of FCPA enforcement actions involve intermediary payments.

Corporate due diligence counsel designs the third-party due diligence program for anti-bribery compliance, advises on the risk-tiered screening process for agents and consultants, and advises on the FCPA contractual requirements that must be included in third-party agreements.

FCPA internal controls bribery risk management requires that transactions are properly authorized and accurately recorded in the books and records. Expense reports and petty cash accounts are the most common channels for bribery payments. An internal controls failure is a separate FCPA violation even if no actual bribe was paid.

Anti-corruption investigations counsel assesses internal controls against FCPA books and records requirements, identifies control gaps that create enforcement exposure, and advises on control enhancements required before an investigation opens.

Periodic compliance auditing verifies that the anti-bribery compliance program is operating as designed and identifies potential red flags. Red flags in bribery compliance auditing include payments to shell companies, expense claims without documentation, and commission rates inconsistent with market norms. A red flag identified and investigated through documented follow-up produces a materially better outcome with regulators than a red flag left uninvestigated.

Compliance audit counsel designs and conducts anti-bribery compliance auditing programs, advises on the independence and rigor standards that distinguish a genuine audit from a pro forma review, and advises on the escalation protocols when a red flag is identified.

A corporate monitor is an independent expert appointed by the government as part of an FCPA enforcement resolution. The monitor verifies that the company is implementing required compliance remediation and reports on progress to the government. Avoiding monitorship is the most significant financial and operational achievement in an FCPA enforcement resolution.

Monitorships counsel advises on the conditions under which a corporate monitorship can be avoided in an FCPA enforcement resolution, advises on the compliance program improvements required before resolution, and advises on management of an active monitorship to minimize scope and duration.

An internal whistleblower program is the anti-bribery compliance mechanism most likely to detect violations before they reach the SEC. When a violation is identified, FCPA voluntary disclosure to DOJ under the Corporate Enforcement Policy creates a presumption of declination. Self-disclosure must be timely and complete. The anti-corruption compliance system must include a documented protocol for evaluating violations and a clear decision-making framework for the self-disclosure determination.

Investigations, compliance and ethics counsel advises on the design of whistleblower and internal reporting programs that satisfy SEC and DOJ expectations, advises on the voluntary self-disclosure decision and conditions that maximize declination probability, and advises on the investigation response protocol that must be in place before a government inquiry.