Model Anti-Bribery Policy/FCPA Version

Transcription

1 Model Anti-Bribery Policy/FCPA Version

2 Model Anti-Bribery Policy/FCPA Version This model anti-bribery policy template is intended to assist organizations in creating a values-based anti-bribery and anti-corruption policy. While this template focuses on the U.S. Foreign Corrupt Practices Act, it can be modified and broadened as needed. INTRODUCTION [COMPANY] is committed to conducting its business ethically and in compliance with all applicable laws and regulations, including the U.S. Foreign Corrupt Practices Act (FCPA) and other laws that prohibit improper payments to obtain a business advantage. 1 This document describes [COMPANY] s Policy prohibiting bribery and other improper payments in the conduct of [COMPANY] business operations and employee responsibilities for ensuring implementation of the Policy. Questions about the Policy or its applicability to particular circumstances should be directed to [COMPLIANCE COUNSEL]. Policy Overview [COMPANY] strictly prohibits bribery or other improper payments in any of its business operations. This prohibition applies to all business activities, 2 anywhere in the world, whether they involve government officials or are wholly commercial. 3 A bribe or other improper payment to secure a business advantage is never acceptable and can expose individuals and [COMPANY] to possible criminal prosecution, reputational harm or other serious consequences. This Policy applies to everyone at [COMPANY], including all officers, employees and agents or other intermediaries acting on [COMPANY] s behalf. Each officer and employee of [COMPANY] has a personal responsibility and obligation to conduct [COMPANY] s business activities ethically and in compliance with the law. Failure to do so may result in disciplinary action, up to and including dismissal. 1 This model policy is designed for use in international operations. It focuses on the U.S. FCPA, which provides a baseline for companies subject to U.S. jurisdiction. Text can be modified to emphasize other national anti-bribery laws. Adjustments also can be made to reflect the tone and approach used elsewhere in an organization s compliance program. This sample has been developed for general educational purposes (e.g., an FCPA guide or brochure), but may be adapted for use in more formal technical documents. 2 Text may be added detailing the Policy s applicability to subsidiaries and affiliates. Under the FCPA, parent companies are responsible for compliance at all majority-owned or -controlled affiliates and for encouraging comparable practice at non-controlled affiliates. Anti-bribery policies may be implemented on an enterprise-wide basis or, alternatively, addressed through equivalent policies and practices at subsidiaries and affiliates. 3 This model policy prohibits commercial bribery, as well as bribery of foreign government officials. Although comprehensive bribery prohibitions are standard in corporate codes of conduct, some organizations prefer to address commercial bribery in separate policy documents. Text can be amended for this purpose, bearing in mind that FCPA books and records provisions requiring complete and accurate recording of transactions (see below) apply equally to both types of bribery. 2

3 Improper payments prohibited by this policy include bribes, kickbacks, excessive gifts or entertainment, or any other payment made or offered to obtain an undue business advantage. 4 These payments should not be confused with reasonable and limited expenditures for gifts, business entertainment and other legitimate activities directly related to the conduct of [COMPANY] s business. 5 [COMPANY] has developed a comprehensive program for implementing this Policy, through appropriate guidance, training, investigation and oversight. 6 [CHIEF COMPLIANCE OFFICER] 7 has overall responsibility for the program, supported by [SENIOR BUSINESS MANAGERS]. [COMPLIANCE COUNSEL] is responsible for giving advice on the interpretation and application of this policy, supporting training and education, and responding to reported concerns. Compliance with U.S. Foreign Corrupt Practices Act The prohibition on bribery and other improper payments applies to all business activities, but is particularly important when dealing with government officials. The U.S. Foreign Corrupt Practices Act and similar laws in other countries strictly prohibit improper payments to gain a business advantage and impose severe penalties for violations. The following summary is intended to provide personnel engaged in international activities a basic familiarity with applicable rules so that inadvertent violations can be avoided and potential issues recognized in time to be properly addressed. 4 Text may be added conditioning any gift or other thing of value to a foreign official on prior authorization, provided on a category or case-specific basis. Although not required by law, reasonable blanket approval procedures can help to reduce confusion and inadvertent violations, as well as associated implementation costs. FCPA policy statements that adopt this approach may cross-reference and/or list generally authorized categories. 5 FCPA policy statements often cross-reference, and may summarize, separate guidelines for permissible gifts, business entertainment and other legitimate promotional activities. This topic and drafting options are addressed below in the section on FCPA affirmative defenses and accompanying footnotes (at 4-5). 6 FCPA policy statements often refer to, and may include a general description of, an organization s compliance program. Text in this paragraph is illustrative and should be tailored to a particular organization s compliance structure. Additional functional responsibilities may be listed (e.g., audit, HR) or, alternatively, cross-referenced in an org chart or other organizational guidelines for the compliance program. 7 List the senior official (by title) with overall responsibility for the anti-bribery program. This often will be the same official responsible for other compliance areas. Reference also can be made to business unit heads or other senior managers, who in many programs share managerial responsibility for compliance. The sentence that follows describes functions typically performed by the general counsel or another senior lawyer. 3

4 OVERVIEW OF THE FCPA The FCPA is a criminal statute that prohibits improper payments to government officials to influence performance of their official duties. 8 It makes it unlawful for any U.S. company and its employees or agents to offer, promise, pay or authorize the payment of anything of value to any foreign official a term that is very broadly defined to help the company obtain or keep business or secure some other improper business advantage. This prohibition applies whether the offer or payment is made directly or through another person. In addition to prohibiting improper payments to foreign officials, the FCPA requires U.S. companies and their controlled affiliates to keep accurate books and records of the transactions in which they engage and to maintain a system of internal controls that, among other things, can prevent slush funds and off-the-books accounts that might be used to facilitate or conceal questionable foreign payments. FCPA accounting requirements apply to all business activities, not just those involving foreign officials. The penalties for violating the FCPA are severe. For a company, potential sanctions range from multi-million dollar fines and disgorgement of any business profits from an improper payment to loss of export privileges or eligibility to compete for U.S. government contracts. These sanctions are in addition to potential reputational damage and investigation and defense costs, which may arise even without a formal government prosecution. The penalties for individuals can be even more severe, including substantial fines and imprisonment. COMMON QUESTIONS ABOUT THE FCPA When does the FCPA bribery prohibition apply? The FCPA prohibition applies to improper payments made by a U.S. person anywhere in the world, whether or not there is any other connection to the United States. The term U.S. person includes both U.S. companies and individuals who are citizens or permanent residents of the United States. Foreign nationals also may be prosecuted for causing, directly or through a third person, any act in the U.S. in furtherance of a corrupt payment. 9 8 Policy statements typically include a basic summary of the applicable legal framework, in this model the FCPA. As noted, other national laws may be substituted for non-u.s. organizations. 9 Questions or hypothetical examples may be added to illustrate relevant coverage issues for example, the status of U.S. nationals employed by a foreign affiliate or other non-u.s. organization. Where appropriate, reference also can be made to FCPA issuer jurisdiction with respect to foreign-based companies. 4

5 What does the FCPA prohibit? The FCPA makes it unlawful to bribe a foreign official to gain an improper business advantage. An improper business advantage may involve efforts to obtain or retain business, as in the awarding of a government contract, but also can involve regulatory actions such as licensing or approvals. Examples of prohibited regulatory bribery include paying a foreign official to ignore an applicable customs requirement or to accelerate a tax refund. 10 The FCPA bribery prohibition has been interpreted very broadly. A violation can occur even if an improper payment is only offered or promised and not actually made, it is made but fails to achieve the desired result, or the result benefits someone other than the giver (for example, directing business to a third party). Also, it does not matter that the foreign official may have suggested or demanded the bribe, or that a company feels that it is already entitled to the government action. While certain limited exceptions may apply (described below), these should never be relied upon without first seeking expert guidance. Who is a foreign official? A foreign official under the FCPA can be essentially anyone who exercises governmental authority. This includes any officer or employee of a foreign government department or agency, whether in the executive, legislative or judicial branch of government, and whether at the national, state or local level. Officials and employees of government-owned or controlled enterprises also are covered, as are private citizens who act in an official governmental capacity. The FCPA prohibition also applies to political parties and candidates, and to officials of public international organizations such as the United Nations. 11 Foreign official status often will be apparent, but not always. In some instances, individuals may not consider themselves officials or be treated as such by their own governments but nevertheless exercise authority that would make them a foreign official for purposes of the FCPA. Personnel engaged in international activities are responsible under this Policy for inquiring whether a proposed activity could involve a foreign official or an entity owned or controlled by a foreign government, and should consult with [COMPLIANCE COUNSEL] when questions about status arise. 10 These examples are drawn from recent enforcement actions. Adjustments can be made to reflect regulatory bribery scenarios commonly associated with a particular business sector or activity. 11 Questions or hypothetical examples may be added to illustrate applications common to a particular business sector or activity for example, the governmental status of doctors at a public hospital for medical equipment manufacturers or pharmaceutical companies. 5

6 Business Promotion Gifts, business entertainment and other legitimate promotional activities involving foreign officials may be permissible under the FCPA in certain limited circumstances. For example, the Act does not prohibit modest gifts at holidays, company logo gifts and routine business meals. To comply with the FCPA, such expenditures must be reasonable in cost, related to a legitimate business promotional activity or performance of an existing contract, and otherwise consistent with [COMPANY] business practices. [Insert prior approval and reporting requirements, if any.] What types of payments are prohibited? The FCPA prohibits offering, promising or giving anything of value to a foreign official to gain an improper business advantage. In addition to cash payments, anything of value may include: Gifts, entertainment or other business promotional activities; Covering or reimbursing an official s expenses; Offers of employment or other benefits to a family member or friend of a foreign official; Political party and candidate contributions; Charitable contributions and sponsorships. Other less obvious items provided to a foreign official can also violate the FCPA. Examples include in-kind contributions, investment opportunities, stock options or positions in joint ventures, and favorable or steered subcontracts. The prohibition applies whether an item would benefit the official directly or another person, such as a family member, friend or business associate. 12 Are there any exceptions? 13 The FCPA does not prohibit reasonable promotional or other business activities, including legitimate charitable contributions or sponsorships. Special care is required, however, when foreign officials may be involved to avoid any appearance that benefits are being offered to improperly influence the performance of official duties. Standards and procedures for engaging in these activities are detailed in separate policy statements, available [SOURCE].14 The FCPA also contains a limited exception for payments expressly authorized under the host country s written law. This is a very narrow exception, however, requiring prior approval by [COMPLIANCE COUNSEL] Questions or hypothetical examples may be added to illustrate the broad scope of this rule and/or applications of particular relevance to an organization s business. 13 This section briefly identifies three affirmative defenses listed in the FCPA for legitimate promotional and marketing activities, payments authorized by host country law, and facilitation payments. These can be presented separately and in greater detail, depending on the document s intended purpose and audience. 14 Guidelines for permissible activities may be detailed in this document or cross-referenced. Relevant topics include (a) routine gifts, meals and entertainment, (b) promotional expenses (e.g., entertainment, travel reimbursement), (c) political party and candidate contributions, and (d) charitable contributions and sponsorships. Standards and procedures for dealings with foreign officials may be addressed in general guidance documents or, alternatively, in materials developed expressly for this purpose. 15 Where relevant, additional text may be included elaborating the practical limitations on this exception. 6

7 Finally, in certain limited circumstances, a payment to a foreign official may qualify under a narrow FCPA exception for facilitating payments made to secure routine government action. 16 Examples of routine action recognized under the FCPA include: Obtaining permits, licenses or other official documents that qualify a person to do business in a foreign country; Processing governmental papers such as visas ; Providing police protection or mail service; Scheduling inspections associated with contract performance or shipment of goods; Providing phone, power or water service ; Loading or unloading cargo, or protecting perishable products or commodities from deterioration; Other similar actions that are ordinarily and commonly performed by an official. Payments under this exception may only be made to expedite actions to which the company is already entitled and may not involve discretionary action by the foreign official. Facilitation payments may never be used to win or retain business or to influence discretionary decisions regarding compliance with building codes, environmental, health and safety rules or other regulatory requirements. Moreover, even if a payment falls within the FCPA exception it may still violate local law in the host country or counterpart laws in other countries prohibiting foreign bribery that may not exempt facilitation payments. Because facilitation payments can raise significant legal and business issues, reliance on this narrow exemption from FCPA liability is strongly discouraged and may not be undertaken without prior written approval of [COMPLIANCE COUNSEL]. Further, all facilitation payments remain subject to FCPA accounting and recordkeeping requirements and must be properly described in company records This model policy follows the traditional FCPA practice permitting facilitation payments in certain limited circumstances. Many organizations, however, no longer include this exception in their anti-bribery programs either because host country law and counterpart laws in other jurisdictions may not recognize a facilitation exception or a policy determination has been made not to allow such payments even where legal. Practice also varies considerably with respect to tone, procedures (e.g., mandatory prior approval), and recordkeeping. The controls included here are illustrative only, and should be further elaborated for organizations that retain a facilitation payments option. 17 Text may be added establishing guidelines for payments where prior approval is not possible due to exigent (i.e., extreme or emergency) circumstances. Such guidelines typically require clear documentation and prompt reporting to an appropriate senior manager (e.g., comptroller, compliance counsel), and may also establish a payment cap (e.g., $100). Guidelines should reiterate the routine government action limitation. 7

8 Facilitation Payments Except under extreme or emergency circumstances, prior written approval is required for all facilitation payments. If prior approval is not possible because of concerns about safety or safe passage, the payment should be made and then clearly documented and reported to [CHIEF ACCOUNTING OFFICER] and [CHIEF COMPLIANCE OFFICER] as soon as possible. Can [COMPANY] be held responsible for improper payments by third parties? Yes. The FCPA applies whether a bribe is made directly or through an agent, consultant or other intermediary. Under the law, [COMPANY] and individual officials or employees may be held liable for improper payments by an agent or other intermediary if there is actual knowledge or reason to know that a bribe will be paid. 18 Willful ignorance which includes not making reasonable inquiry when there are suspicious circumstances is not a defense, and it also does not matter whether the intermediary is itself subject to the FCPA. All employees therefore must be alert to potential red flags in transactions with third parties. 19 Are there special accounting and recordkeeping requirements? Under the FCPA, [COMPANY] and its affiliates must keep accurate books and records that reflect transactions and asset dispositions in reasonable detail, supported by a proper system of internal accounting controls. These requirements are implemented through [COMPANY] s standard accounting rules and procedures, which all personnel are required to follow without exception. Special care must be exercised when transactions may involve payments to foreign officials. 20 Off-the-books accounts should never be used. Facilitation or other payments to foreign officials should be promptly reported and properly recorded, with respect to purpose, amount and other relevant factors. Requests for false invoices or payment of expenses that are unusual, excessive or inadequately described must be rejected and promptly reported. Misleading, incomplete or false entries in [COMPANY] s books and records are never acceptable. 18 This is a non-technical formulation of the knowledge standard for a general readership. Documents developed for other purposes may substitute the statutory standard, with additional interpretative guidance. (The statute defines knowing to include a firm belief that a third party will make an improper payment or an awareness of facts that create a high probability of such payment occurring.) 19 Red flags are circumstances that may suggest a potential improper payment (such as excessive agent fees or use of an offshore bank account). Red flags typically are addressed in guidelines for conducting risk assessment and due diligence reviews (see below). 20 This section addresses the basic FCPA books and records requirement, which as noted applies to all payments not just those involving foreign government officials. Listed practices are illustrative. Some organizations include and/or cross-reference additional specific accounting guidelines e.g., establishing approval/reporting channels, documentation requirements for expense reimbursements, controls for wire transmittals, etc. 8

9 Third Party Checks [COMPANY] has established detailed standards and procedures for the selection, appointment and monitoring of agents, consultants and other third parties. These standards and procedures must be followed in all cases, with particular attention to red flags that may indicate possible legal or ethical violations. Due diligence ordinarily will include appropriate reference and background checks, written contract provisions that confirm a business partner s responsibilities, and appropriate monitoring controls. Do other countries have similar anti-bribery laws? Yes. Many countries now have laws similar to the U.S. FCPA that prohibit bribery of foreign officials by their citizens and companies, which can include local subsidiaries and affiliates of a foreign-based company. These laws are comparable to the FCPA, but can differ in important respects such as the treatment of facilitation payments. In addition, virtually all countries have domestic laws that prohibit bribery of their public officials. [COMPANY] requires all employees and agents to comply in all respects with applicable foreign laws and regulations. The laws that apply to particular international business activities include those of the country in which the activities occur, as well as others that (like the U.S. FCPA) govern the international operations of national companies and citizens. Employees involved in international operations should consult with counsel to ensure that they are aware of, and are complying with, applicable laws. 21 Working with Agents and Other Third Parties [COMPANY] from time to time may engage the services of an agent, consultant or other intermediary to support its business activities, or may participate with business partners in a joint venture or other business structure. These relationships are important to [COMPANY] and provide valuable contributions in many areas of business, but can also pose compliance challenges and thus require appropriate measures to prevent bribery. This Policy applies in all material respects to business conducted with or through an agent, consultant, joint venture or other business partner. Employees who manage, supervise and/or oversee the activities of third parties working with [COMPANY] are responsible for ensuring that such persons or entities understand and fully comply with this Policy, through appropriate measures. 22 Measures appropriate to a particular relationship or transaction may vary and should be identified pursuant to established guidelines, in consultation with [COMPLIANCE COUNSEL] International activities are potentially subject to multiple anti-bribery laws, depending on the location of activities and nationality of affiliates and individuals. Applicable laws, which can vary in significant respects, typically are identified through risk assessment reviews. 22 Text may be added describing risk assessment or other means used to identify corruption risks and appropriate prophylactic measures. 23 Guidelines for selecting and managing agents, consultants and other intermediaries and participating in a joint venture or consortium may be cross-referenced or enumerated. Topics commonly addressed include (a) risk assessment, (b) third-party due diligence, (c) bribery red flags, (d) required contract provisions, (e) monitoring and audit, and (f) documentation. Guidelines also typically establish selection procedures, including retention authority and approval and reporting requirements. LRN s Creating a Corporate Policy: Third Party Representatives ( Agents ) identifies core practices for selecting and managing agents and consultants. 9

10 Common Red Flags 26 Red flags that warrant further investigation when selecting or working with an agent, consultant or other third party vary from case to case. Common examples to watch for include: Transactions involving a country or sector known for corrupt payments; Background checks that raise questions about a third party s reputation, qualifications or trustworthiness; A third party suggested or recommended by a foreign official; Family or other relationships that could improperly influence the decision of a customer or government official; Compensation arrangements that are disproportionate, non-transparent or otherwise unusual; A third party who objects to FCPA representations and warranties or other elements of this policy. Personnel working with agents and other third parties should pay particular attention to unusual or suspicious circumstances that may indicate possible legal or ethics concerns, commonly referred to as red flags. The presence of red flags in a relationship or transaction requires greater scrutiny and implementation of safeguards to prevent and detect improper conduct. 24 Appointment of an agent or other third party ordinarily requires prior approval by an appropriate senior manager, description of the nature and scope of services provided in a written contract, and appropriate contractual safeguards against potential violations of law or [COMPANY] policy. 25 Employee Responsibilities This Policy imposes on all personnel specific responsibilities and obligations that will be enforced through standard disciplinary measures and properly reflected in personnel evaluations. All officers, employees and agents are responsible for understanding and complying with the Policy, as it relates to their jobs. 27 Every employee has an obligation to: Be familiar with applicable aspects of the Policy and communicate them to subordinates; Ask questions if the Policy or action required to take in a particular situation is unclear; Properly manage and monitor business activities conducted through third-parties; Be alert to indications or evidence of possible wrongdoing; and Promptly report violations or suspected violations through appropriate channels. The Company s managers have a particular responsibility to ensure that subordinates, including agents, receive proper training, and to monitor for compliance with the Policy. 24 Text may be added recommending and/or requiring consultation with an appropriate designated official in the compliance office or legal department. 25 Text may be added detailing specific approval procedures and requirements and/or standard contract provisions. 26 FCPA policy statements often list common red flags. This listing is illustrative and can be adapted to reflect an organization s particular business and risk profile. 27 An appropriate certification requirement may be added for certain high-risk job functions. 10

11 Reporting Possible Violations Any employee who has reason to believe that a violation of this Policy has occurred, or may occur, must promptly report this information to his or her supervisor, the next level of supervision, or [COMPANY s COMPLIANCE COUNSEL]. Alternatively, information may be reported in confidence by calling the [COMPANY HOTLINE]. 28 Retaliation in any form against an employee who has, in good faith, reported a violation or possible violation of this Policy is strictly prohibited. Employees who violate this Policy will be subject to disciplinary action, up to and including dismissal. Violations can also result in prosecution by law enforcement authorities and serious criminal and civil penalties. When seeking guidance and/or reporting concerns, the following contacts and reporting options are available to you: [INSERT COMPANY GUIDANCE/REPORTING CHANNEL CONTACTS AND OPTIONS] 28 Text may be added describing internal reporting/investigation responsibilities. Some policies also include specific guidance on reporting responsibilities and channels for agents or other third parties. 11

12 About LRN: Inspiring Principled Performance Since 1994, LRN has helped 10 million people in over 400 companies worldwide simultaneously navigate complex legal and regulatory environments and foster ethical cultures. LRN s combination of practical tools, education, and strategic advice helps companies translate their values into concrete corporate practices and leadership behaviors that create sustainable competitive advantage. In partnership with LRN, companies need not choose between living principles and maximizing profits, or between enhancing reputation and growing revenue: both are a product of principled performance. LRN is the trusted partner to leading businesses including Procter & Gamble, Apple, Pfizer, Johnson & Johnson, Viacom, DuPont, Rolls-Royce, 3M and The Dow Chemical Company. We help our partners engage their employees in over 100 countries, and have offices in Los Angeles, New York, London and Mumbai. For more information, visit on Twitter, or call: North America Global 12