02/10/2010 09:38:00 AM EST
Change in the Wind for FCPA Ethics and Compliance Programs?
Thomas Fox, Esq.
On January 21, 2010, the United States Sentencing Commission (USSC) proposed amendments to the Federal Sentencing Guidelines. These proposed changes included several which are used as the basis for the consideration of penalties for companies which violate the Foreign Corrupt Practices Act (FCPA).
These changes could require serious re-evaluations by companies of their FCPA ethics and compliance policies, the proposed changes which would apply are as follows:
1. Effective Compliance and Ethics Program. The proposed amendment would change the Commentary to clarify the remediation efforts required to satisfy the requirement for an effective compliance and ethics program. These changes would add a new requirement which sets the reasonable steps to respond appropriately after criminal conduct is detected, including remedying the harm caused to identifiable victims and payment of restitution to any harmed victims.
2. Recommended Conditions of Probation for Organizations. This proposed amendment changes the recommended conditions of probation for organizations. Under the proposal, the current distinction between conditions of probation imposed solely to enforce a monetary penalty and conditions of probation imposed for any other reason are consolidated into one subsection. This will allow a supervising Court, which makes a determination that there is a need for organizational probation, to have at its disposal, all conditional probation terms available for consideration.
3. Engagement of Independent Monitor. This proposed amendment inserts specific language regarding the engagement of an independent, properly qualified, corporate monitor. This language reflects discussions and complaints regarding the use of monitors which have been ongoing over the past years, including incorporating changes from the House bill entitled, “Accountability in Deferred Prosecution Act of 2009″, introduced in April, 2009 by House Democrats. The proposed changes clarify that the monitor shall make period reports to the supervising Court on the organization and the disposition of funds received. Finally, the proposed amendment inserts specific language requiring the company to submit to a reasonable number of regular or unannounced examinations of books and records by experts engaged by the Court or the monitor.
4. Board and High Level Management Involvement. This proposed amendment makes three requirements aimed at the highest levels within a company. First the Board “shall be knowledgeable…about the compliance and ethics program and shall exercise reasonable oversight”…Second, a “High-level” person within a company is required to ensure the organization has an effective ethics and compliance program. Third, specific individuals may have day-to-day responsibility for the ethics and compliance program but they must have access to “high-level personnel…or the governing authority” AND must be given “adequate resources” and “appropriate authority” to complete their charge.
Thomas Fox has practiced law in Houston for 25 years. He
is now an Independent Consultant, assisting companies with FCPA and
International Transaction issues. He was most recently the General Counsel at
Drilling Controls, Inc., a worldwide oilfield manufacturing and service
company. In this role, he oversaw the delivery of legal services for Drilling
Controls and its corporate parent, Aibel Group Ltd., on a worldwide basis, with
current emphasis on FCPA compliance, export and commercial operations. He can
be reached at:
Phone:
832.744.0264 Email: tfox@tfoxlaw.com Website: www.tfoxlaw.com