Seeing and Believing Key for Compliance Regulators

With the sharp rise in anti-bribery enforcement in recent years, many companies have sought protection by putting compliance programs in place. The problem for some is that, having established such programs, they are lulled into a false sense of security. Anti-bribery settlements are signaling that the mere existence of a compliance program may not be sufficient. Enforcers are scrutinizing compliance measures to determine whether they are robust enough to actually mitigate risk and reduce the likelihood of illegal conduct. Ironically, companies that have transgressed in the past may be ahead of the curve, as they are likely to have forcibly or voluntarily improved their compliance protocols.

U.S. regulators have enhanced their arsenal in several ways, including by heightened international cooperation with other government authorities. Also, Dodd-Frank has given the SEC the authority to settle civil cases through administrative proceedings.

Requirements for an effective compliance program are outlined in the Federal Sentencing Guidelines, and in further guidance published by the SEC and DOJ. The author suggests several ways to enhance programs, among them: Scrutinize relationships with subcontractors; be wary of gifts, even small ones; monitor for commercial bribes; expand due diligence to span the entire counter-party population instead of just high-risk third parties. Take particular note of a recent jury conviction that added clarity to the FCPA’s meaning of “foreign official,” to include “any officer or employee of a foreign government or any department, agency or instrumentality thereof.”