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Practical Compliance with the Foreign Corrupt Practices Act (FCPA)

Written by: Thomas Chia-San Chow

Reputation Level 7

Posted about 3 years ago. 1 helpful vote, 0 comments

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Designate a Compliance Officer

I think a lot of businesses view this as a nuisance. That is a no no if your business is large enough. (if it’s not, I empathize with your complaint about this) You have SOX (Sarbanes-Oxley) compliance. Get the right people thinking about FCPA too.

Publish Corporate Policy

Again, not done enough. Stick it in your employee handbook. Publish this in your literature. Put it on your website. If its not public, then (1) no one knows about it and (2) your policy isn't known by people who ought to know, and then your job is on the line when trouble happens. Put it up! Just do it.

Insert FCPA language into consultant agreements

This is something that most businesses are guilty of I think. And it’s a darn good idea. Why? Well, where do most of the FCPA violations occur? It’s with your foreign consultants. It’s with that guy you hired on the ground in China… don’t let them do the nudge nudge, wink wink thing and build it into their contract. Is that full proof? No. But do it.

Foreign office audits

Yes, this is very time consuming. But you need someone to do this. (probably the compliance officer I mentioned above) Often, this is where problems happen, so you need to be a good watchdog. Check their finances. Check their books. Hire an auditor. Yes, you may look paranoid, but it's worth it.

Watch for Red Flags

Here are some red flags to watch for: (1) Unusual consulting agreements. Each business should have a standard consulting agreement… and then stick to it. Insist on your agreement. If they don’t want to use it, you probably don’t want to hire someone like this. (2) Bank accounts are controlled locally and not at HQ. (3) Suppliers’ lack of standard invoices. This is opening a can of worms if your suppliers arent doing regular invoicing. Why? Kickbacks. So enforce this on your supplier. You probably don’t want a supplier without one. Sure, you might save some money in the short term, but in the long run, find a good supplier who does good invoicing. (4) If you hear, “You don’t understand how business is done here”. Stay away.