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FCPA Compliance: Getting Local Buy-In in Latin America

Getting local buy-in is essential to successful FCPA compliance efforts. It can be the difference between a check-the-box, attend-the-training program, and program that is values-based and internalized by company employees. It can facilitate an efficient compliance environment that works with operations instead of a program that creates obstacles, working against the company’s business functions.

Achieving local buy-in for your compliance program in Latin America is not always easy. Business culture can play a role, as FCPAméricas has discussed [1]. People might be used to doing things a certain way. Sometimes corporate culture must change to make compliance work.

Such change is not something that happens overnight. Introducing concepts like third party due diligence, compliance certifications, and audit rights over business partners can cause surprise and be interpreted as intrusive, even when the local person or entity has nothing to hide – “Are you questioning my way of doing business?”

How do compliance practitioners ensure their programs gain traction on the ground given these challenges? Gradually. Building local buy-in is a process. Based on my own experiences, two steps are key.

Phase 1: Introducing the Rules. The first stage is about education. Take time to introduce the rules. Do so in local languages. And then take time to listen and respond to questions. “Buy-in” is about demonstrating to people that compliance is in their interests. There are lots of ways to do this, but listening to questions and responding to your audience is a vital element of all of them.

Some people respond to rules and will follow them, some respond to potential penalties, and others respond to appeals to their sense of business ethics or personal morality. Good training includes responses to all of these motivators. Thus, describe how employees can be penalized, describe the limits of the law, and invoke ethical mores and describe how business culture can be improved.  Specifically,

– Be prepared to explain why U.S. laws are relevant, regardless of whether one thinks they should apply. Detail why enforcers are interpreting laws the way they are.

– Describe the FCPA cases that have involved that country. Explain how your company, like the ones previously subject to – enforcement, does not wish to incur a similar multi-million dollar penalty. Explain how you do not want to go to jail and how you suspect they do not either.

– Explain why governments are signing on to treaties and implementing their own enhanced anti-corruption rules.

– Show how compliance is part of your company’s corporate culture. As employees of the company, they should pay attention. Tell how the company has the potential to influence their industry to be cleaner.

– Discuss why curbing corruption might be a good thing for their country, and how corruption corrodes institutions including businesses.

– Tell stories about other companies that have successfully adopted compliance programs while their businesses still flourished.

– Take your time and listen to questions and respond – by email afterwards if necessary.  Discuss follow-up, including where employees can go with questions.

Since compliance concepts are often new to some audiences, the process of introduction can take time. It can take a year to fully sink in, even if training is done well and repeated consistently. Expect – and be prepared to respond to – doubt, skepticism, and pushback. Take care not to offend your audience by seeming superior or judgmental. Be as patient as possible during a defined transition period. Take heart in the fact that anti-corruption concepts are ultimately rooted in notions of business ethics and fairness, concepts that are universal no matter the culture.

Phase 2: Obtaining Endorsement. Once you have introduced compliance rules and concepts, it is time to get sign-off on them. At a basic level, a signature on a certification form is necessary and a good first step. But note that, as a general matter, the relatively casual way in which U.S. lawyers require certifications and endorsements is often inconsistent with local norms, and a cause of anxiety. Latin American legal systems are generally modeled on the Portuguese or Spanish systems, which rely heavily on notaries to legalize documents. When seeking such certifications, understand the formal process within which certifications are requested.

Real endorsement begins after your employees and partners have been able to see compliance in action. Once people participate, they are more likely to embrace. During rollout of your program, your employees might hear about new FCPA investigations or enforcement actions involving their region. The schemes that come to light about Embraer, Avon, Wal-Mart, and others will help give context to compliance requirements, and make your job easier.

If steps one and two are done correctly, you will have laid a foundation on which your foreign employees, third parties, and partners can begin to internalized the new compliance program. You will never have 100% buy-in. But at least some of your team members and partners are now positioned to teach others.

The FCPAméricas blog is not intended to provide legal advice to its readers. The blog entries and posts include only the thoughts, ideas, and impressions of its authors and contributors, and should be considered general information only about the Americas, anti-corruption laws including the U.S. Foreign Corrupt Practices Act, issues related to anti-corruption compliance, and any other matters addressed. Nothing in this publication should be interpreted to constitute legal advice or services of any kind. Furthermore, information found on this blog should not be used as the basis for decisions or actions that may affect your business; instead, companies and businesspeople should seek legal counsel from qualified lawyers regarding anti-corruption laws or any other legal issue. The Editor and the contributors to this blog shall not be responsible for any losses incurred by a reader or a company as a result of information provided in this publication. For more information, please contact Info@MattesonEllisLaw.com [2].

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© 2012 Matteson Ellis Law, PLLC