Early in 2015, the FBI launched a new program aimed at routing out foreign bribery in which it established three dedicated international corruption squads, based in New York City, Los Angeles, and Washington, D.C. The FBI reported that members of these three squads—agents, analysts, and other professional staff—have a great deal of experience investigating white-collar crimes and, in particular, following the money trail in these crimes. Now, the Department of Justice is taking aim at corporations and investing resources into the evaluation of the effectiveness of corporate compliance programs.
On November 3, 2015, the DOJ Fraud Section announced that it hired Hui Chen, a lawyer with previous experience as a federal prosecutor and international corporate compliance, as a full-time Foreign Corrupt Practices Act compliance expert. In that position, she will be responsible for the following:
- Providing expert guidance to Fraud Section prosecutors as they consider whether to prosecute business entities, including the existence and effectiveness of any anti-corruption compliance program that a company had in place at the time when the criminal conduct occurred, and whether the corporation has taken meaningful remedial action, such as the implementation of new compliance measures to detect and prevent future wrongdoing;
- Helping prosecutors develop appropriate benchmarks for evaluating corporate compliance and remediation measures; and
- Providing expert guidance after a corporate resolution is reached to help prosecutors evaluate whether implementation of the company’s compliance and remediation measures has been effective and in keeping with the terms and purposes of Fraud Section resolutions.
There has been a lot of speculation about the potential ramifications of this DOJ development since the possibility of hiring such an expert was first announced in July 2015. What is clear is that compliance should be high on corporate agendas for 2016. The DOJ’s move will likely lead to even greater and closer scrutiny of compliance programs. The first step employers should take in responding to this change is to conduct a prompt and thorough review of their compliance programs, starting with their Code of Conduct, their internal controls, monitoring, hotline, management of investigations and reporting protocols to law enforcement.
The hallmarks of a good compliance program including the following key elements:
- Commitment from senior management and a clearly articulated policy against corruption.
- Code of conduct and compliance policies and procedures.
- Oversight, autonomy, and resources.
- Risk assessment.
- Yearly FCPA and Code of Conduct/Compliance training.
- Incentives and disciplinary measures.
- Third-party due diligence and payments.
- Confidential reporting and internal investigations.
- Continuous improvement: Periodic testing and review.
- Mergers and acquisitions: Pre-acquisition due diligence and post-acquisition integration.
Once the program is in place, employers cannot rest on their laurels. Instead, they must review their compliance programs periodically and assess risk, instill a strong culture of ethics and compliance at the top levels of the company, implement effective anti-corruption policies and training, conduct risk-based “due diligence” investigations on third-parties and joint venture parties, maintain strong internal controls and accurate books and records, encourage internal reporting of allegations of fraud or corruption, and investigate allegations of misconduct promptly, take appropriate remedial action, and strongly consider self-reporting to regulators.