Perils of the Global Supply Chain Series – Part 1
Can You Be Too Focused on the Foreign Corrupt Practices Act? How FCPA-Only Training Can Hurt Global Companies
Those working in today's in-house law departments or supervising global supply chains and third-party business partners have become sensitive to the significant dangers posed by not complying with the U.S. Foreign Corrupt Practices Act (“FCPA”). The well-publicized recent events surrounding Wal-Mart's FCPA woes have only raised already-elevated anxiety levels.
The FCPA continues to be the undisputed global anti-corruption leader in terms of enforcement actions, with U.S. enforcers chalking up roughly 74% of the world's anti-corruption cases; but it certainly is not the only anti-bribery game in town.
Many companies required to comply with the FCPA also "do any business" in the United Kingdom. The UK authorities interpret this phrase broadly to include, for instance, a company that only has one salesperson working out of his home in London. Companies with even such superficial UK business connections fall under the landmark U.K. Bribery Act's expansive global jurisdiction. This poses a significant challenge for companies, as the U.K. Bribery Act's broad sweep criminalizes a far broader swath of conduct than the FCPA.
Most "off-the-shelf" online FCPA training programs advise employees that certain actions are legal. The U.K. Bribery Act (and, for that matter, the U.S. Travel Act), however, declares many of those same actions illegal.
By training employees and third-party business partners – such as agents, distributors, consultants and joint venture partners – only on the FCPA without first independently assessing which foreign anti-bribery laws may also govern corporate conduct, companies leave themselves open to significant legal exposure.
Consider, for example:
- The FCPA permits "grease"/"facilitation" payments (that is, small-scale bribes for routine, non-discretionary governmental functions). The U.K. Bribery Act, and virtually all foreign anti-corruption laws, explicitly criminalize such payments.
- The FCPA only prohibits giving bribes. The U.K. Bribery Act prohibits both giving and receiving bribes.
- The FCPA only prohibits bribery of foreign officials. The U.K. Bribery Act and U.S. Travel Act additionally prohibit commercial/"private" bribery.
- The FCPA provides an affirmative defense for "promotional expenses" that are "reasonable and bona fide." The U.K. Bribery Act does not automatically exempt such payments from liability.
- The FCPA does not provide an affirmative defense for companies having robust anti-corruption programs. The UK Bribery Act, in sharp contrast, imposes strict liability when company employees or agents engage in bribery, but also provides an affirmative defense for companies who had in place "adequate procedures" to prevent bribery.
UK v. FCPA Comparison Chart
The U.K. Bribery Act is the most far-reaching anti-corruption instrument of its kind. (Once a company falls under its jurisdiction, all conduct of its employees and third-party business partners, no matter where that conduct occurs or whether it has any bearing on the United Kingdom, must comply with the U.K. law's requirements.) The United Kingdom, moreover, is the world's second most active enforcer of anti-corruption laws. Companies falling under the U.K. Bribery Act's jurisdiction and training employees and third-party business partners on anti-corruption must, therefore, be sure to cover not only what is illegal under the FCPA, but also what is illegal under the U.K. Bribery Act and the U.S. Travel Act.
Training that appropriately addresses both the U.S. and U.K. anti-corruption laws will also cover most, if not all, domestic anti-bribery laws that concern companies doing transnational business. Global Anti-Bribery Comparison Chart
Comprehensive, integrated anti-corruption trainings that are sensitive to a company's global risk profile not only serve to prevent misconduct, but also put the company in the best position, should misconduct occur, to persuade the authorities that its anti-corruption policies and procedures are sound and supported by appropriate trainings; thus, any misconduct was an aberration and there is no need to take action against the company.
© 2012 Perkins Coie LLP