ILMA Compoundings January 2017 - 37

critically important, as virtually every
FCPA prosecution has a common thread
- improper employee activity. Another
way to look at it is that for most companies, 80 percent of the FCPA compliance
risk will come from less than 20 percent
of its business. It is necessary to understand the company's specific FCPA risks.
In addition to FCPA compliance
training, here are some of the other
items I stressed to the ILMA member for
FCPA risk management and avoidance:

HIRING: It is essential to know individuals hired for your international
operations. Employment opportunities, including unpaid internships, are
considered a "thing of value" that can
trigger FCPA liability. Early last year, a
company agreed to pay $7.5 million to
settle an FCPA prosecution that included hiring relatives of Chinese officials to
gain favorable positioning for its wireless
communication technologies.
A clear message from this case is that
the company should have realized that
the new hires did not have the requisite
skills or background for the jobs they
were filling. Stated differently, what
is the true motivation in hiring these
individuals? Did they go through the
company's standard hiring process, and
are they qualified to fill the positions?
Efforts by managers or others to push a
foreign applicant "through the process"
need to be questioned and vetted.
INVESTIGATIONS: DOJ has launched
a one-year pilot program for companies to
self-report potential FCPA violations and
receive reduced penalties. If the company
identifies conduct that could lead to an
FCPA prosecution, an investigation with
the assistance of counsel should be conducted to determine whether self-reporting
under the pilot program makes sense. The
results of any investigation can help the
company if DOJ launches a prosecution.

FIRING/DISCIPLINE: DOJ, so far, has
decided not to prosecute five cases under
the pilot program. In each of these cases,
the department has offered comments
on the consequences for the employees
who engaged in the triggering misconduct. In the declination letters, DOJ
acknowledged terminations, suspensions,
pay and bonus freezes and reductions
of responsibilities for the offending
employees. DOJ seems to place value on
remedial steps to deal with the employee's wrongdoing.
As the FCPA enforcement trend
continues, monitoring international employee activity closely is an imperative.
An FCPA compliance program, along
with consistency in hiring, investigations
and disciplinary actions, can minimize
the risk of violations.
Lastly, I suggested FCPA compliance
clauses in any foreign contracts. It is
important to specifically stress FCPA
compliance and require your foreign partners to represent that they understand the
key elements of the law and will comply
with it. Further, you may want to include
a clearly worded audit clause, requiring
the partner to provide documents and assistance in any investigation. You should
retain the ability to terminate the contract
if you believe an FCPA violation has
occurred. FCPA compliance terms should
not be negotiable. If a potential partner
refuses to execute the contract with such
clauses, then find another partner.
The FCPA is not mysterious. Rather, problems arise because company
management fails to focus on what needs
to be done and to dedicate the necessary
resources to protect the company.
My best for 2017.  
Leiter serves as general
counsel to ILMA, representing the Association since
1981. He may be reached at
202-466-6502 or jleiter@bmalaw.net.

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ILMA Compoundings January 2017

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