On Wednesday, at the ACI FCPA Bootcamp, there was an
excellent presentation by Jay Martin, Vice President, Chief Compliance Officer
(CCO) and the Senior Deputy Counsel for Baker Hughes Incorporated and Jacki
Trevino, Senior Manager, Corporate Compliance at Fluor Corporation. I have
heard both of them speak and I can assure you that they both know the Foreign
Corrupt Practices Act (FCPA) and their compliance stuff. They both also always
have a great power point presentation that you can take away from any
presentation either one of them makes. Yesterday was no different on either
The topic of their presentation was "FCPA Compliance
Best Practices: Success Stories of Robust and Effective Anti-Corruption
Compliance Programs in High Risk Markets" and as you might guess from such
a title, there was a significant amount of information discussed. Today, I
wanted to focus on one part which dealt with investigation protocol. I think
that one of the key lessons to be drawn from the ongoing Wal-Mart FCPA matter
is that back in the 2006 time frame, when the corporate office was made aware
of allegations of bribery and corruption regarding its Mexican subsidiary, the
corporate office either did not have an investigation protocol in place, or
perhaps even worse, it had one and disregarded it when the allegations bubbled
up to Bentonville.
Trevino presented the Fluor investigation protocol which
consists of the following five steps (1) Opening and Categorizing the Case; (2)
Planning the Investigation; (3) Executing the Investigation Plan; (4)
Determining Appropriate Follow-Up; and (5) Closing the Case. I recognize that
if a case of significant bribery or corruption is uncovered that there may be
more or additional steps that you may need to take. However if you follow this
basic protocol, you should be able to work through most investigations, in a
clear, concise and cost effective manner. Furthermore you should have a report
at the end of the day which should stand up to later scrutiny if a regulator
comes looking. Finally, you will be able to document, document, and document,
not only the steps you took but why and the outcome obtained.
Step 1: Opening and Categorizing the Case.
Under this first step, you should categorize the ethics and compliance
violation. You should notify the relevant individuals, including those on your
investigation team and any senior management members under your notification
protocols. After notification, you should assemble your investigation team for
preliminary meetings and assessments. This Step 1 should be accomplished in one
to three days after the allegation comes into compliance, either through your
reporting structure or other means.
Step 2: Planning the Investigation.
After assembling your investigation team, you should determine the required
investigation tasks. These would include document review and interviews. If
hard drives need to be copied or documents put on hold or sequestered in any
way, or relationships need to be analyzed through relationship software
programs or key word search programs, this should also be planned out at this
time. These tasks should be integrated into a written investigation or work
plan so that the entire process going forward is documented. Also if there is a
variation from the written investigation plan, such variation should be
documented and an explanation provided as to why there was such a variation.
Lastly, if international travel is involved this should also be considered and
planned for at this step. This Step 2 should be accomplished with another one
to three days.
Step 3: Executing the Investigation Plan.
Under this step the investigation should be completed. I would urge that the
interviews not be effected until all documents are reviewed and ready for use
in any interviews. Care should be taken to ensure that an appropriate Upjohn
warning is issued and that the interviewee clearly understands that whoever is
performing the interview represents the company and not the person being
interviewed, whether they are the target of the investigation or not. The
appropriate steps should also be taken to preserve the attorney-client
privilege and attorney work product assertions. This Step 3 should be
accomplished in one to two weeks.
Step 4: Determining Appropriate Follow-Up. At
this step the preliminary investigation should be completed and you are ready
to move into the final phases. In some investigations, it is relatively easy to
determine when the work is essentially complete. For example, if the allegation
is both specific and narrow, and the investigation reveals a compelling and
benign explanation for the conduct alleged, then the investigation typically is
complete and you are ready to convene the investigation team and the relevant
business unit representatives. This group would decide on the appropriate
disciplinary steps or other actions to take. This Step 4 should be completed in
one day to one week.
It must be cautioned that at this step, if there are
findings of specific or discrete allegations of corruption and bribery, a
decision must be made as how to handle such findings going forward.
Step 5: Closing the Case.
Under this final step, you should communicate the investigation results to the
stakeholders and complete the case report. Everything done in the above steps
should be documented and stored, either electronically or in hard copy form
together. The case report should be completed. This Step 5 should be completed
in one day to one week.
With the growing number of reports to the Securities and
Exchange Commission (SEC) Whistleblower program under Dodd-Frank, companies are
under increasing pressure to get up and running quickly on any claim of bribery
and corruption that is brought forward. By using the Fluor investigation
protocol that Trevino has laid out, you will have a ready-made process in place
to start from. If your company does not have such a protocol I would suggest
that you tailor this process to fit the needs of your company. If your company
does have an investigation protocol in place, I would suggest that you review
it in need of the one that Trevino has presented to us.
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.
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© Thomas R. Fox, 2013
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