FCPA Compliance and Ethics Blog

May 14, 2010

The Role of Human Resources in FCPA Compliance-Part II

In our most recent 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.

The author will discuss this topic in greater depth in an upcoming webinar on the role of HR in FCPA compliance, Tuesday, May 18th at 2 PM CDT. For information and registration details go to https://secure.confertel.net/tsregister.asp?course=509107.

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 or entity that relies on this publication. The Author gives his permission to link, post, distribute, or reference this article for any lawful purpose, provided attribution is made to the author. The author can be reached at tfox@tfoxlaw.com.

© Thomas R. Fox, 2010

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