In an earlier post, we discussed that one sign of a mature
Foreign Corrupt Practices Act (FCPA) compliance and ethics program is the
extent to which a company's Human Resources (HR) Department is involved in
implementing a compliance solution. In the prior posting we discussed training,
employee evaluation, succession planning and hotlines and investigations. In
this post, we will discuss background screening, doing 'more with less' and,
finally, what to do when the government comes calling.
Background
Screening
A key role for HR in any
company is the background screening of not only employees at the time of hire,
but also of employees who may be promoted to senior leadership positions. HR is
usually on the front lines of such activities, although it may in conjunction
with the Legal Department or Compliance Department. This requirement is
discussed in the Federal Sentencing Guidelines for Organizations (FSGO) as
follows "The organization shall use
reasonable efforts not to include within the substantial authority personnel of
the organization any individual whom the organization knew, or should have
known through the exercise of due diligence, has engaged in illegal activities
or other conduct inconsistent with an effective compliance and ethics program."
What type of background
checks should HR utilize in the FCPA compliance and ethics arena? The consensus
seems to be that HR should perform at least routine civil, criminal and credit
background checks. Care should be noted in any such request made in countries
outside the United States as such information may be protected by privacy laws
or where the quality of such information is different in substance from that of
the United States. For instance in the United Kingdom, the request of a credit
check can negatively impact a prospective employee's credit score so such a
background check may not provide useful information to a prospective employer.
Additionally, although it
may be difficult in the United States to do so, a thorough check of references
should be made. I say that it may be difficult because many companies will only
confirm that the employee worked at the company and only give out the
additional information of dates of employment. In this situation, it may be
that a prospective employer should utilize a current employee to contact former
associates at other companies to get a sense of the prospective employee's business
ethics. However, it should be noted that such contacts should only be made
after a thorough briefing by HR of the current employee who might be asked to
perform such duty.
A company can also use HR
to perform internal background checks on employees who may be targeted for
promotions. These types of internal background checks can include a detailed
review of employee performance; disciplinary actions, if any; internal and
external achievements, while employed by the company and confirmation of both ethics
and compliance training and that the employee has completed the required annual
compliance certification. An key internal function where HR can be an important
lead is to emphasize that an employee, who has been investigated but cleared of
any alleged ethics and compliance violations, should not be penalized.
When the
Government Comes Calling
While it is true that a
company's Legal and/or Compliance Department will lead the response to a
government investigation, HR can fulfill an important support role due to the
fact that HR should maintain, as part of its routine function, a hard copy of
many of the records which may need to be produced in such an investigation.
This would include all pre-employment screening documents, including background
investigations, all post-employment documents, including any additional
screening documents, compliance training and testing thereon and annual
compliance certifications. HR can be critical in identifying and tracking down
former employees. HR will work with Legal and/or Compliance to establish
protocols for the conduct of investigations and who should be involved.
Lastly, another role for HR
can be in the establishment and management of (1) an Amnesty Program or (2) a
Leniency Program for both current, and former, employees. Such programs were
implemented by Siemens during its internal bribery and corruption
investigation. The Amnesty Program allowed appropriate current or former
employees, who fully cooperated and provided truthful information, to be
relieved from the prospect of civil damage claims or termination. The Leniency
Program allowed Siemens employees who had provided untrue information in the
investigation to correct this information for certain specific discipline.
Whichever of these programs, or any variations that are implemented, HR can
perform a valuable support role to Legal and/or Compliance.
Doing More with Less
While many practitioners do
not immediately consider HR as a key component of a FCPA compliance solution,
it can be one of the lynch-pins in spreading a company's commitment to
compliance throughout the employee base. HR can also be used to 'connect the
dots' in many divergent elements in a company's FCPA compliance and ethics
program. The roles listed for HR in this series are functions that HR currently
performs for almost any US company with international operations. By asking HR
to expand their traditional function to include the FCPA compliance and ethics
function, a US company can move towards a goal of a more complete compliance
program, while not significantly increasing costs. Additionally, by asking HR
to include these roles, it will drive home the message of compliance to all
levels and functions within a company; from senior to middle management and to
those on the shop floor. Just as safety is usually message Number 1, compliance
can be message 1A. HR focuses on behaviors, and by asking this department to
include a compliance and ethics message, such behavior will become a part of a
company's DNA.
Visit the FCPA Compliance and Ethics Blog,
hosted by Thomas Fox, for more commentary on FCPA compliance, indemnities and
other forms of risk management for a worldwide energy practice, tax issues
faced by multi-national US companies, insurance coverage issues and protection
of trade secrets.
This publication
contains general information only and is based on the experiences and research
of the author. The author is not, by means of this publication, rendering
business, legal advice, or other professional advice or services. This
publication is not a substitute for such legal advice or services, nor should
it be used as a basis for any decision or action that may affect your business.
Before making any decision or taking any action that may affect your business,
you should consult a qualified legal advisor. The author, his affiliates, and
related entities shall not be responsible for any loss sustained by any person
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© Thomas R. Fox, 2010