Holding Individuals Accountable

By Teresa Anderson

“When the situation is gray, senior managers must make the decision,” says Scher. “And in some companies, these difficult decisions never reach the highest level of management.”

Companies should also focus on unethical conduct, not just illegal conduct. If employees are taught to avoid unethical behavior, they will be meeting a much more stringent level of behavior than the law requires and are far less likely to unintentionally break the law.

According to Scher, bad behavior does not happen overnight and isn’t always the result of a single decision. Sometimes, a series of poor decisions lead to a larger problem. And over the course of a series of decisions, what was acceptable can change. “In many of the government actions, what the company was doing was acceptable 50 years ago. At one time, paying bribes was a tax-deductible business expense,” he notes.

Companies should strive to help management in each country avoid violating the FCPA. They have to get them to understand, for example, that it doesn’t matter if bribes are viewed as the norm in that country.

“Training is key,” says Scher. Again, it comes back to ethics. “We think more clearly if we think of these as ‘ethical problems’ rather than ‘legal problems.’”

Another key component of a good compliance program is a risk plan that is designed to uncover FCPA problems. And companies must learn to view risk differently for FCPA than for other aspects of the business, according to Shah. For example, under Sarbanes-Oxley, companies are required to pay attention to the major parts of their business. This is the concept of “materiality.” Companies are urged to look at all risks but to give special attention to those that are material to the business.

“The FCPA doesn’t care about materiality,” explains Shah. “A high-risk location might only represent a tiny part of your manufacturing business, for example, but it might constitute the majority of your FCPA risk. West Africa might be a tiny part of your business, but if your business sells to the government via third parties in West Africa, that may increase your FCPA risk. The government wants to know if corruption is going on there.”



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