1. Develop and maintain full situational awareness.
Prior to engaging in overseas transactions, and during such transactions, it is crucial that parties develop a full cultural and political understanding of the countries, and the specific territories, in which they are operating.
Who is in control? Is it a government or is it a military? Are there particular agencies/ministries on which they will rely? Are some agencies/ministries more likely than others to solicit corrupt payments? What are the specific legal and regulatory requirements with which they will need to comply that their in-country personnel, local representatives, and intermediaries may seek to circumvent?
The above are all crucial questions to asses and answer before, and throughout, contract performance.
2. Manage your intermediaries.
Without question, intermediaries present the most significant FCPA vulnerability to U.S. companies operating overseas, in part because they are generally difficult to monitor, in part because they often have different perspectives on what we consider corruption, and, most importantly, because the FCPA holds U.S. companies liable for constructive knowledge that the third parties which they contract are making corrupt payments to foreign officials on their behalf.
3. Implement effective reporting mechanisms.
Regardless of their level of training or experience, compliance personnel generally rely on honest reporting by their corporate and in-country colleagues in order to predict, avoid, and, if necessary, mitigate, FCPA violations. Accordingly, it is crucial that customized and effective reporting mechanisms be put in place that enable personnel to identify and immediately report suspicious activity.
4. Train your finance personnel.
Finance personnel are on the front lines of FCPA compliance, as it is they that will first identify payment anomalies. As such, finance personnel must have a sophisticated understanding of the FCPA and the transaction-specific “red flags” that are indicative of violative behavior.
5. Set the tone.
None of the foregoing measures will be effective if corporate leadership does not encourage a culture of compliance. Accordingly, it is crucial that senior management make clear, both in writing and during interactions with employees and third parties, that compliance is a top priority and that non-compliance will not be tolerated under any circumstances.
About the Authors
Downrange authors Jennifer Huber and Adam Munitz are Partners in Fluet’s International Trade + Transactions Practice. Focusing primarily on the defense, security, and intelligence sectors, Jennifer and Adam help businesses translate their domestic successes into overseas growth and assist foreign entities with sensitive investments in, and acquisitions of, U.S. businesses.
Additional information regarding their capabilities and previous representations can be found on the International Trade + Transactions practice page.
