Friday Roundup for Week Ending June 7

Friday Roundup for Week Ending June 7

 This article was reprinted with permission from FCPA Professor

Survey says, an editorial, I'll second that, and spot-on.  It's all here in the Friday roundup.

Survey Says

The recently issued Kroll / Compliance Week Anti-Bribery and Corruption Benchmarking Report was based on responses from "nearly 300 executives" and "participants hailed from all manner of industry."

Survey findings of note.

"Was the FCPA Guidance any help?  Nearly 53 percent rated the guidance as "a good read, but it didn't tell me anything new." Another 23.5 percent deemed it very helpful, 18.8 percent didn't know, and 4.6 percent said the guidance actually left them more confused."

Regarding third parties:

  • "The average respondent reports that his/her company conducts business with more than 3,500 third parties"
  • "Most companies (79 percent) will drop a potential third party even upon rumor of bribery without any hard proof"
  • "47 percent of all respondents said they conduct no anti-corruption training with their third parties at all"

Financial Times Editorial on Bribery Act

I was pleased to speak to the Financial Times in connection with its recent Bribery Act editorial.  It stated in full as follows.

Government Needs to Clarify Application of Bribery Act

Britain was once considered a laggard in the international battle against corruption. The Bribery Act, which came into force in 2011, was the first overhaul of anti-corruption laws in almost a century. Two years on, the government wants to review it. This is sensible, as new legislation can have unintended consequences. But any review should not result in a weaker law. That would only allow greater scope for graft.

The government is responding to complaints from small and medium-sized businesses that the costs of compliance are too high. In particular, they are worried about the ban on facilitation payments, small amounts paid to officials to expedite services such as visas or customs checks. Businesses argue that Britain holds its companies to a higher standard than other countries - particularly the US, where such payments are not banned. They say this puts them at a disadvantage.

These concerns are understandable, but exaggerated. Facilitation payments have always been illegal in the UK. Yet conflicting signals from the authorities have sown confusion. Moreover, the absence of case law leaves companies in the dark as to how the law will be applied and what defence is valid. This has created a climate in which companies easily fall prey to firms peddling overly-prescriptive and costly advice on compliance.

More can and should be done to clarify the circumstances under which a company will be pursued. This will help to counter the scaremongering that has led some businesses to pass up export opportunities. To be fair, the guidelines already allow some flexibility for smaller businesses. They are not expected to use the same procedures as big multinationals. When choosing an agent to open a new market, for example, it might be sufficient to verify business references, conduct an internet search and refer to the local chamber of commerce or UK embassy, as long as the anti-corruption policy is widely enough disseminated. The government's duty is to ensure resources are sufficient to meet such requests.

Authorities must also be consistent. Businesses will not respond to demands that breaches be reported if they fear they will be prosecuted for any and all transgressions.

British companies have other competitive advantages to win business with than bribery. Graft is an evil that blights developing economies and the companies which resort to it. The Bribery Act does not need changing. It just needs supporting.

I'll Second That

Earlier this week in a Wall Street Journal editorial titled "Mum's the Word About SEC Defeats"  Russ Ryan (Partner, King & Spalding and former Assistant Director of the SEC Enforcement Division) stated as follows.  "Like other federal agencies, the SEC has long been good at publicizing its initial accusations of wrongdoing - which is fair enough - but not so good at letting the public know when those accusations turn out to be unfounded or an overreach."  As Ryan rightly noted, in this internet age, "SEC publicity is permanent and widely dispersed.  The regulator's accusations can persist indefinitely among the top search-engine results for the names of those accused."

I'll second that and have previousy written about the same dynamics Ryan highlights under the heading "Writer's Cramp at the DOJ."  See prior posts here and here.

Spot On

Colleen Conry (Ropes Gray) stated as follows in a recent Law360 interview.

Q: What aspects of your practice area are in need of reform and why?

A: The government's attempts to hold foreign companies accountable for having compliance programs that are on par with those we see at companies that are headquartered in the United States are challenging. Foreign companies often lack notice of that expectation and as a result suffer the consequences. Over time, I hope the government will at least consider as one factor the compliance standards that are the norm in the country in which the foreign entity operates.

*****

A good weekend to all.

Read more articles on the FCPA by Mike Koehler at FCPA Professor.

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