Five Important Compliance Principles to Prevent FCPA Liability

The FCPA Paparazzi has done a great disservice to the business community.  Call it a complete lack of credibility.  Legal marketing has become confused in this day and age – marketing has now been turned into the “Fear Factor,” meaning that lawyers need to scare potential clients into hiring them.  That is flat out wrong.    

Each week, new client alerts, client warnings and other cries of impending disaster are transmitted through the Internet to businesses.  If I were a general counsel, I would have them on “auto delete.”  Talk about a waste of time and effort. 

Instead, what lawyers should be focusing on is a critical question: what specific proactive steps can a company take to prevent FCPA liability?

To me, that is the $64,000 question (with no inflation adjustment).  I will try and be more specific.  Here are the five important principles to prevent FCPA liability.

1.  Good Faith – A company that wants to comply with the law and acts in good faith is unlikely to violate the law.  How about that for a truism?  But let’s be more specific about “good faith.”  A company does not exercise good faith when it identifies a legal prohibition and attempts to circumvent the prohibition with an argument and analysis which it knows or suspects is misguided.  Of course, there are close issues, and every possible solution should be identified and analyzed.  In the end, a company “knows” if it is acting with good faith to comply or it is relying on weak or unpersuasive arguments. 

2.  Negate Specific Intent – A company should act in a way to negate any specific intent to violate the law.  The phrase “negate specific intent” means to act in a manner that is inconsistent with the actions of a criminal engaging in a crime.  To be more specific, criminals usually act in secrecy and try to hide their actions.  To negate that inference, a company should take steps to act inconsistently with criminal intent and secrecy.  If a company takes steps which are open and inconsistent with hiding its actions, the company is acting to negate any inference of specific intent to commit a crime.

3.  Document, Document, Document — There is a reason that Tom Fox and I repeat ourselves on the importance of documentation.  A company that documents its compliance program and decisions advances two important principles.  First, by documenting its actions, the company acts to negate specific intent.  A record of its actions is available and creating such a record is inconsistent with the actions of a criminal organization which tries to hide its illegal conduct.  Second, the company has created an important record of the reasons for its actions, and its good faith in trying to comply with the law.  This record is critical to respond to regulators and prosecutors the reasons for its actions.  A company will not be credited if it argues the reasons for its conduct without having a contemporaneous record to corroborate its claims.

4.  Transparency – Transparency is a critical business value for companies trying to comply with the law.  It is a valuable tool to use when a company recognizes that its actions, while close to the line, are defensible and legal.  It is important way to demonstrate the company’s intent to act in good faith.

5.  Proactive Compliance – While this may seem obvious, a business commitment to proactive compliance, in writing and in action, is important to avoiding FCPA liability.  The greater the compliance effort, the more likely regulators and prosecutors will credit company claims of intent to comply with the law.

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