The Department of Justice and the Securities & Exchange Commission has issued their much-awaited regulatory guidance entitled, “A Resource Guide to the U.S. Foreign Corrupt Practice Act.” It is a comprehensive overview of the Foreign Corrupt Practices Act. More important, it describes the DOJ’s and the SEC’s enforcement approach and priorities in relation to the FCPA. Therefore, the Guide, released November 14, 2012, provides critical insight as to how these regulatory and law enforcement organizations will assess potentially wrongful conduct within corporate organizations. It also offers insight on how these agencies will determine whether to hold an employer organization responsible for the misdeeds of its employees or agents.
The Guide acknowledges that each investigation requires fact-specific review and analysis. It notes that presence of a corporate compliance program is a common factor in determining whether there will be organizational liability and whether the organization will be subject to prosecution, regulatory fines, or otherwise shielded from responsibility.
In the Guide, the DOJ and SEC take a “common-sense and pragmatic approach” to evaluating an organization’s compliance program by asking three simple, albeit broad, questions:
- Is the Company’s compliance program well-designed?
- Is it being applied in good faith?
- Does it work?
Jackson Lewis LLP’s Corporate Governance and Internal Investigations Practice Group will publish a Special Report of Jackson Lewis summarizing the Guide. The Special Report will explain the key elements of an effective compliance program and how to implement that program so as to deliver an emphatic “yes” to these three questions.
To protect the investing public, the Sarbanes-Oxley Act of 2002 mandated effective compliance programs. To protect taxpayer dollars, the Federal Acquisition Regulations require that federal contractor organizations have effective compliance programs also. The new Guide now makes clear that effective compliance programs not only are a requirement, but an essential tool for an organization’s own survival and well-being. Company boards, senior management teams, and corporate officers are unequivocally on notice that mediocre compliance programs represent a dereliction of duty.
The time is now to develop, update, or polish-off your corporate compliance programs. As important as any capital asset, a best practice corporate compliance program can literally mean the difference between an organization that prospers (notwithstanding the misdeeds of wayward employees) or an organization that falters in the face of an FCPA problem.