Management of Foreign Business Partners Under the FCPA through an Oversight Committee

Excerpt:

A key tool in the process of managing Foreign Business Partners under the Foreign Corrupt Practices Act (FCPA) is an Oversight Committee. An Oversight Committee can be utilized throughout the entire process of (1) evaluating the need for a Foreign Business Partner; (2) evaluating the information developed through due diligence or in any investigation of a proposed, or current, Foreign Business Partner; (3) reviewing and approving the contractual terms and conditions specific to FCPA compliance to define the basic parameters by which the Foreign Business Partner will conduct business with a US company in the international area and (4) management of the business relationship with the Foreign Business Partner going forward through continued monitoring.

This concept of an Oversight Committee has found favor with the Department of Justice (DOJ), through its use in a Deferred Prosecution Agreement (DPA) with the Monsanto Corporation. The DOJ provided some guidance on the continuing obligation to monitor Foreign Business Partners. In the Monsanto DPA, the DOJ agreed, after the initial due diligence and appropriate review were completed on Foreign Business Partners, for Monsanto to implement certain post contract execution procedures. These requirements, placed upon Monsanto, can be used as guidelines as to what the DOJ will look for from other US companies who have entered into relationships with Foreign Business Partners; especially in the area of ongoing monitoring of the Foreign Business Partner.

In January, 2005, the Monsanto Company entered into a DPA for violating the FCPA in connection with an illegal payment of $50,000 to a senior Indonesian Ministry of Environment official, and the false certification of the bribe as "consultant fees" in the company's books and records. In Appendix B to the DPA, Monsanto agreed to, among other things, "the establishment and maintenance of a committee to supervise the review of (I) the retention of any agent, consultant, or other representative for purposes of business development or lobbying in a foreign jurisdiction", or an Oversight Committee. It should be noted that Monsanto successfully completed the terms of its DPA and was discharged from further obligations under it in 2008.

The scope of this Oversight Committee is not fleshed out in the DPA. However, it is suggested that a company should incorporate both a pre-execution function and a post-execution management function in overseeing the full relationship with the Foreign Business Partner. While this oversight would most necessarily focus on FCPA compliance, there should also be a commercial component to this function. [footnotes omitted]

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