The SEC announced last week another agreement by an international bank to pay approximately $30 million to resolve charges in connection with alleged improper hiring practices in the Asia Pacific region to influence foreign officials. The financial giant in this agreement joins several banks recently resolving FCPA charges in connection employment practices overseas. In April 2015, a bank agreed to pay $14.8 million to settle SEC charges that the bank violated the FCPA by providing student internships to family members of Middle East sovereign wealth fund officials. In November 2016, another international bank and its Hong Kong subsidiary agreed to pay approximately $265 million to resolve FCPA charges that bank violated the FCPA by awarding jobs to friends and relatives of Chinese government officials in return for banking deals. These enforcement actions send a clear message that U.S. authorities will prosecute bribery in all forms, including offers of employment and internships for the relatives and friends of foreign government officials.
The underlying facts in this latest settlement are consistent with the pattern of conduct alleged in prior resolutions involving improper hiring practices. Namely, that while these significant multinational institutions had implemented policies and procedures related to hiring, those policies were either ignored or circumvented, and unqualified personnel were awarded employment or internships to curry favor with foreign officials. In light of these enforcement actions, companies operating overseas should evaluate their policies and procedures with respect to hiring persons connected to or referred by government officials (“connected persons”), keeping the following in mind:
- Revisit the company’s anti-corruption policy to ensure that it clearly identifies offers of employment as potential bribes sufficient to trigger FCPA liability.
- Ensure that all Human Resources hiring policies adequately address the possibility of hiring connected persons.
- Provide targeted FCPA training to hiring managers and Human Resources personnel to assist them in understanding the risks of hiring connected persons and in reviewing related policies and procedures.
- Adopt enforcement procedures for reviewing and approving the potential employment of connected persons. Such a process could include:
- Advertising publicly any open positions, clearly stating the requested qualifications;
- Requesting information about potential connections to government officials in preliminary applications, including the name, title, and government agency or department of the related official;
- Reviewing to ensure that a connected person’s qualifications align with the advertised position and with previous hires in similar positions;
- Seeking legal and/or compliance approval prior to making any offer of employment;
- Devising a process and assigning responsible persons to ensure connected persons are treated the same as other employees and not afforded special treatment; and
- Implementing recusal procedures for connected persons from any matters involving the related government official.
While no process is perfect, companies can take steps to help avoid coming under scrutiny for their foreign hiring practices by thoughtfully implemented hiring practices. Doing so will position the company to better address any risks that may arise when offering employment and internships to connected persons overseas.