The FBI is taking a hard line against businesses who engage in overseas corruption. That’s why we’re seeing the development of FBI International Corruption Squads. The squads are designed to investigate both sides of international corruption, from the entities that take the bribes to the companies that provide them. This is just the first step in what is likely to be an international crackdown.
To avoid becoming part of this, companies are going to need to take measures to stay compliant with the Foreign Corrupt Practices Act. It’s quite a bit easier to get money out of the companies that provide bribes than it is to get it back from the individuals who take them. That’s why the FBI targets the companies that foster these corrupt relationships, rather than targeting one specific individual or regime. Companies have deep pockets, after all. With a heavy focus on ending corruption in global business, companies need to be more vigilant than ever to eliminate risks of FCPA violations.
What Corruption Squads Investigate
One of the most recent cases that the FBI Corruption Squad brought was the case of Rolls-Royce plc. The company was accused of bribing foreign officials to receive government contracts in the U.S., the U.K., and Brazil, among other places. To settle the issue, they’ve agreed to pay a $170 million fine. In court papers, the company admitted to paying about $35 million in bribes to gain confidential information and a possible edge on proposals.
That’s the fine line that some companies have trouble with—gaining that edge. Where does client schmoozing end and improper business dealing begin? Deciding that means looking at what the FBI’s International Corruption Unit considers during their investigations. Specifically, they look at the following three factors in these cases:
- Corrupt intent – Corrupt intent means that the individual gave someone something with the intention of wrongfully receiving something else.
- Willfulness – The FBI also looks at whether the individual was acting with the knowledge that the act was illegal. However, it should be noted that the person does not have to have knowledge of the FCPA to prove willfulness.
- Exchange for value – The bribe doesn’t have to be in cash. Anything of value can be considered a bribe if it’s given with the intention of getting something else in return.
The heaviest factor of these three is corrupt intent. After all, companies take clients out to dinner or bring the occasional gift all the time. The FCPA isn’t designed to prevent that. Instead, it’s designed to stop companies from interfering with fair trade by using gifts to pay for favoritism.
Due to the lack of a specific threshold, it’s hard to tell the difference between a gift and a bribe. In some countries, it’s even customary to give gifts, making that line even blurrier. While the FBI’s anti-corruption units are generally designed to focus on large cases, there’s no guarantee that the crackdown on international corruption won’t change that. It’s entirely possible that they will go after smaller cases in the future, as a way to make an example of the middle ground players. That means now is the time to weed out corrupt intent among your employees and stay on the right side of the FCPA, and the FBI.
Staying on the FBI’s Good Side
There are a few tips that you can use to stay off the radar when it comes to the FBI’s crackdown on corruption. After all, you want your employees to continue building relationships and breaking the ice with overseas clients without risking the appearance of corrupt intent. Here are a few ways to manage this:
- Have a specific dollar limit per client annually for gift expenses – This prevents employees giving large gifts and it keeps them from giving a series of small gifts to get around limits.
- Have a detailed reporting process for gift expenses – This should include providing receipts and information on who the gift was given to.
- Be very careful with travel and entertainment gifts – It’s not entirely unusual for companies to sponsor their own training for clients and then write the cost of that training off as a business expense. It’s also not uncommon for companies to bribe officials under the guise of travel and entertainment expenses. Companies can offer workshops free of charge, but should stop short of providing travel expenses and other reimbursements.
- Have a strict no third-party gift policy – Many companies have gotten in trouble when their employees gave gifts to third parties with the goal of influencing someone else. Avoid the appearance of this by not giving gifts to third parties at all, unless those gifts are nominal in nature. Think flowers for the client’s wife rather than a five-figure spa weekend.
- Have reporting procedures for employees with concerns – It’s possible your employees may eventually meet with a potential client who makes it clear they expect a bribe. Have a procedure for employees to follow when this happens to protect your company.
- Regularly assess employee corruption risk levels – If you have an employee in a foreign market who may be at risk, it’s a good idea to do yearly assessments using Remote Risk Assessment (RRA). This is a brief, phone-based interview where employees can answer ethical questions like ‘have you ever made an illegal payment to a foreign official?” The employee’s answers can then be assessed using proprietary technology, allowing you to find employees who are most at risk for an FCPA violation.
Global business can be difficult, especially with the FBI putting a heavy focus on anti-corruption. Even the most well-meaning company can get caught up when they don’t take a proactive approach. AC Global risk currently offers RRA technology for use in assessing employee risk under the FCPA. Our interviews allow you to accurately assess your organization and take corrective measures as necessary. For more information on our technology, contact us today.