Enforcement agencies in the international trade arena are increasingly scrutinizing international trade compliance programs in deciding on the appropriate penalty for violations of the FCPA, export controls, economic sanctions and anti-boycott laws. The latest example involves SEC and Justice Department non-prosecution agreements with Ralph Lauren about allegations of FCPA violations in Argentina where the penalties imposed were relatively small.
They were relatively small despite the seriousness of the offenses because of the Company’s compliance program. According to an SEC press release, “This NPA [nonprosecution agreement] shows the benefit of implementing an effective compliance program.”
The Ralph Lauren case illustrates, if ever there was one, how important it is to have an effective compliance program. What is effective, of course, is in the eye of the beholder, but the SEC and Justice gave great weight to Ralph Lauren’s employees and the Company being able to detect and deal with corruption issues in an easy and effective way. They also gave great weight to the Company’s renewal of its compliance program as the Company's circumstances changed. An effective compliance program is, of course, a mitigating factor under the Federal Sentencing Guidelines.
Years of experience have taught us that simplification is the watchword. Also key is tailoring the compliance program to the Company’s circumstances and revisiting the program from time to time to deal with changed circumstances. Consistent enforcement is essential as well.