How “Respect Your Elder” Can Present FCPA Compliance Difficulties

How “Respect Your Elder” Can Present FCPA Compliance Difficulties

 This article was reprinted with permission from FCPA Professor

Among the reasons Foreign Corrupt Practices Act compliance is difficult for even the most well-managed business organization operating in the global marketplace is the obvious fact that a company is not a computer on auto-pilot.

Rather, as highlighted in “Revisiting an FCPA Compliance Defense,”

“Doing business in international markets often requires hiring local workers who are products of different cultures and experiences, speak different languages, and are located in different time zones from corporate headquarters. While bribery is prohibited by the written laws of every country and while a suitcase full of cash to a government official to obtain or retain a government contract is a universal wrong regardless of culture, language, or experience, this is where the consensus often ends. Even with gold-standard compliance policies and procedures, the practical reality of monitoring and supervising this vast and diverse network of individuals is difficult and even gold-standard compliance policies and procedures are not foolproof.”

FCPA scrutiny is best minimized when, among other things, employees (regardless of rank, title or position) are able to spot FCPA risk and report concerns or suspicions to the appropriate personnel within the company.

Problem is we are all taught from an early age to “respect our elders” and this cultural norm is even more pronounced in certain cultures outside of the U.S.  In many countries, this cultural norm permeates all facets of life including the workplace.  In short, the same cultural diversity that so enriches a business organization can present compliance difficulties.

From my FCPA practice experience conducting internal investigations abroad, I have direct knowledge of certain instances of FCPA scrutiny that arose in Asian countries where the conduct under investigation focused on the “patriarch” of the office (in other words the elder male), yet under circumstances where the traditional gatekeepers in the company  (in-house counsel, finance and auditing professionals, etc.) were either younger males, or more often, younger females who appeared culturally paralyzed to voice their concern or suspicion regarding the “patriarch.”

The “respect your elder” dynamic, which is positively viewed in other aspects of life, presented compliance difficulties for this particular company, and no doubt many other companies operating in Asia where this cultural value is most revered.

While outside the FCPA context, this recent post “Learning to Speak Up When You’re from a Culture of Deference,” on a Harvard Business Review site by Professor Andy Molinsky is spot-on.  He writes:

“Many of us are uncomfortable speaking with people of higher status. We can feel self-conscious, unsure of what to say, and afraid what we’re going to say — or what we’re saying — is the wrong thing. After these conversations, we often replay in our heads what we said, analyze what we shouldn’t have said, or realize what we should have said but didn’t. But imagine what communicating up the hierarchy is like for people from countries and cultures where notions of hierarchy are much deeper and much more ingrained than ours. Where even as a small child you are taught to speak only when spoken to, and that in the presence of authority figures, like your parents, your teachers, or your boss, you should remain quiet, put your head down, do solid work, and hope to be noticed.”

In the article, Professor Molinsky offers advice that “organizations and particularly leaders of organizations [can] do to lessen the brunt of this liability of deference for their employees from other cultures.”  Much of the practical advise seems self-obvious at first blush, yet – as in other aspects of compliance – sometimes the self-obvious is not so self-obvious.

Moreover, recognizing the existence of a hidden problem (in other words how the “respect your elder” dynamic – so noble in other aspects of life – can present compliance difficulties) is often the first step to crafting company specific responses to counteract the problem.

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

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