FCPA Compliance and Ethics Blog

July 24, 2013

Honoring Helen Thomas and Praising FCPA Compliance Policies

This past weekend Helen Thomas passed away. She truly was a one-of-a-kind. The Dean of the White House Press Corp when she died, having covered every president from John F. Kennedy to Barack Obama for United Press International (UPI) and later for Hearst Newspapers. According to her obituary in the New York Times (NYT), entitled “50 Years of Tough Questions andThank You, Mr. President’”, by David Stout “She covered John F. Kennedy’s presidential campaign in 1960, and when he won she became the first woman assigned to the White House full time by a news service.” I remember her for the Hearst syndicated bi-weekly column she wrote on national issues, she would mix in tales of her long reporting career with current events for some great pieces.

I thought about Helen Thomas, her reporting and her columns when I read a recent piece in the Houston Business Journal (HBJ) by John Allen, entitled “Company policies are source and structure of stability”. This article has some interesting and important insights into the role of policies in any Foreign Corrupt Practices Act (FCPA) or UK Bribery Act compliance program. Allen says that the role of policies is “to protect companies, their employees and consumers, and despite an occasional opposite outcome, that is typically what they do. A company’s policies provide a basic set of guidelines for their employees to follow. They can include general dos and don’ts or more specific safety procedures, work process flows, communication guidelines or dress codes. By establishing what is and isn’t acceptable workplace behavior, a company helps mitigate the risks posed by employees who, if left unchecked, might behave badly or make foolhardy decisions.”

Indeed in the Department of Justice (DOJ)/Securities and Exchange Commission (SEC) FCPA Guidance, compliance policies are one of the ten hallmarks of an effective compliance program. The FCPA Guidance states that the DOJ and SEC will consider “Whether a company has policies and procedures that outline responsibilities for compliance within the company, detail proper internal controls, auditing practices, and documentation policies, and set forth disciplinary procedures” in making any assessment of whether to prosecute a company.”

Allen notes that policies “are not a surefire guarantee that things won’t go wrong, they are the first line of defense if things do.” The effective implementation and enforcement of policies demonstrate to regulators and the government that a “company is operating professionally and proactively for the benefit of its stakeholders, its employees and the community it serves.” If it is a company subject to the FCPA, by definition it is an international company so that can be quite a wide community.

Allen believes that there are five key elements to any “well-constructed policy”. They are:

  • identify to whom the policy applies;
  • establish the objective of the policy;
  • explain why the policy is necessary;
  • outline examples of acceptable and unacceptable behavior under the policy; and
  • warn of the consequences if an employee fails to comply with the policy.

The FCPA Guidance list several components of what should be considered in compliance policies and states “Among the risks that a company may need to address include the nature and extent of transactions with foreign governments, including payments to foreign officials; use of third parties; gifts, travel, and entertainment expenses; charitable and political donations; and facilitating and expediting payments.”

Allen notes that for polices to be effective there must be communication. He believes that training is only one type of communication. I think that this is a key element for compliance practitioners because if you have a 30,000+ world-wide work force, simply the logistics of training can appear daunting. Small groups where questions about compliance policies can be discussed and detailed questions raised can be a powerful teaching tool. Allen even suggests posting FAQ’s in common areas as another technique. And please do not forget that one of the reasons Morgan Stanley received a declination to prosecute by the DOJ was that it sent out bi-monthly compliance reminder emails to its employee Garth Peterson for the seven years he was employed by the company.

Interesting, Allen emphasizes “having policies written out and signed by employees provides what some consider the most vital layer of communication. A signed acknowledgement can serve as evidentiary support if a future issue arises.” I also like it when others recognize my ‘Document, Document and Document’ mantra for FCPA compliance.

The FCPA Guidance ends its section on compliance policies with the following, “Regardless of the specific policies and procedures implemented, these standards should apply to personnel at all levels of the company.” Allen puts a bit differently in that “it is important that policies are applied fairly and consistently across the organization.” He notes that the issue can be that “If policies are applied inconsistently, there is a greater chance that an employee dismissed for breaching a policy could successfully claim he or she was unfairly terminated.” This last point cannot be over-emphasized. If an employee is going to be terminated for fudging their expense accounts in Brazil, you had best make sure that same conduct lands your top producer in the US with the same quality of discipline.

One of the things that I think made Helen Thomas great as a reporter was that she did her homework, she researched the issues, sought out knowledgeable sources and then asked direct questions when she was in front of the most powerful person in the world, the President of the United States. In her NYT obit, it stated, “In an interview with The New York Times in May 2006, Ms. Thomas was characteristically uncompromising and unapologetic. “How would you define the difference between a probing question and a rude one?” she was asked. “I don’t think there are any rude questions,” she said.”

I think that the same concept can be brought across to compliance policies. The work may not seem glamorous but it is essential to creating a viable component to any effective compliance program. Allen ended his article with the following “When policies take into account the interests of employees, partners and external stakeholders, and not merely the company’s self-preservation, they can be an excellent source of stability and strength.” This closely mirrors the FCPA Guidance which says that anti-corruption compliance policies, “can be a good way to conserve corporate resources while, if properly implemented, preventing and detecting potential FCPA violations.”

So thank you Helen Thomas and I can’t wait for your first Press Conference in the great hereafter.

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, 2013

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