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FCPA Blog Daily News

Entries in Compliance (41)


Our worthy goal of keeping people successful and safe

Today I write from Berlin, staying in what was old East Berlin. Last week I spoke at an event in Malaysia. Both societies that have experienced and are experiencing (respectively) political, social and economic change that was once unimaginable.

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Six common pitfalls and blind spots to avoid when creating compliant organizations

For companies that are serious about being proactive and that see compliance as a competitive advantage rather than a box-ticking exercise, we believe several lessons can be drawn from our background in helping organizations see around unexpected corners -- whether those be geopolitical in nature, compliance related or high-stakes security and risk.

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Compliance salaries rise. Is that a good thing?

In a January article in the French financial newspaper Les Echos, entitled “Salaries: compliance can pay big,” journalist Delphine Iweins reported that according to a 2019 compliance compensation study by the French firm Atorus Executive, 35 percent of the responding enterprises are now confident in legal compliance officer and compliance manager positions.

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Zero-tolerance policies are dishonest and damaging 

These days, I sometimes begin my classes on corruption with an unusual admission. I announce to my students -- who may be judges, police officers, military investigators, bureaucrats or any other variety of public official -- that corruption is not a problem removed from me. I am corrupted too.

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And the big compliance story for 2019 is . . . . 

Nearly every corporate anti-bribery violation reveals problems with internal controls.

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The ‘frozen middle’ can make or break a compliance program

Denise Lee Yohn is a go-to expert on brand-building for national media outlets. She's also a popular speaker and consultant, and an influential writer.

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What's better for you? Centralized or decentralized anti-corruption compliance

As the United Nations Global Compact discusses in their business anti-corruption guide, centralized and decentralized models have their own strengths and weaknesses with regard to control, consistency and understanding of local nuance.

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Richard Bistrong: The compliance community is shaped by common challenges

At an event last week in London, one of my co-panelists was Brian Saulnier, a partner at K&L Gates. More than ten years ago he was part of an outside team, engaged by my former employer, to look into my illegal conduct, including the United Nations bribery investigation, among other allegations.

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Despite crackdown, Asia firms are slow to comply

Only 40 percent of Asia companies have anti-bribery policies in place, compared with a global average of 81 percent last year.

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Walmart's Move For Mexican Dominance 

By all accounts, Walmart's appetite for growth in Mexico was insatiable. The drive to dominate the retail market there, according to the New York Times, allegedly led the company to pay $24 million in bribes to fast track store permits.

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The Future Of Compliance

A couple of months ago, John Sherman of the Kennedy School at Harvard stopped by. He talked about the OECD's new guidelines which, he said, are a non-binding code of conduct that "strengthens the link between compliance, ethics, and human rights."

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Naked Corporate Defendants

The Second Circuit Court of Appeals has affirmed the decision in U.S. v. Ionia Management, S.A., shooting down attempts to change the way corporations are held liable for the criminal acts of their employees through respondeat superior. As we've said many times, nothing has had a greater impact on enforcement of the Foreign Corrupt Practices Act against corporations than respondeat superior, which leaves companies defenseless once employees are found to have committed violations.

The amicus brief in Ionia had argued that respondeat superior makes it too easy to impute criminal liability to corporations. But the Second Circuit's three-judge panel (Calabresi, Livingston, McLaughlin) didn't buy the argument. In rejecting the idea that a compliance program should be counted in a company's favor, the court said:

We note that this argument is made only by amici curiae and not by Ionia, and so we are not obligated to consider it. But the argument, whoever made it, is unavailing. Adding such an element is contrary to the precedent of our Circuit on this issue. See Twentieth Century Fox Film Corp., 882 F. 2d at 660 (holding that a compliance program, “however extensive, does not immunize the corporation from liability when its employees, acting within the scope of their authority, fail to comply with the law”). And this remains so regardless of asserted new Supreme Court cases in other areas of the law. As the District Court instructed the jury here, a corporate compliance program may be relevant to whether an employee was acting in the scope of his employment, but it is not a separate element.
So for now, at least, organizations will continue to face vicarious liability for nearly all criminal acts of employees -- even low-level personnel "acting against explicit instructions and in the face of the most robust corporate compliance program," as the amicus brief put it.

But here's the problem: respondeat superior does more harm than good. Sure, it produces a 100% corporate "conviction" rate in FCPA cases, which must go down well at the Justice Department. But, it probably doesn't deter illegal behavior or encourage better compliance programs. And it puts overwhelming pressure on organizations to resolve threatened criminal cases. Because of the catastrophic effects of any potential conviction, companies have to settle with the government. So they rush into agreements that may require them to waive the attorney–client privilege, hand over employees' private documents and data, cut off support for their legal defense, and fire those who don't cooperate with government investigations.

In other words, our criminal justice system is robbing corporations of the chance to defend themselves. What's worse, it's trampling the fragile rights and protections of individuals. That's why respondeat superior needs serious fixing, and soon.

Read the Second Circuit's per curiam opinion in U.S. v. Ionia Management S.A. here.