FCPAméricas Blog
“Every Dollar Has a Name”: Avoiding sham contracts in Latin America
5.17.2013
Personal finance guru and motivational speaker Dave Ramsey is known to say that “every dollar has a name” when advising audiences on how best to manage their money. This maxim holds true for companies seeking to comply with the FCPA as well. By implementing controls that help ensure that each company dollar is assigned a name, that its destination is recorded with a degree of specificity, companies reduce foreign bribery risks.
Take the problem of sham third party contracts for example. Like the problem of phantom vendors (discussed previously by FCPAméricas), sham contracts present perpetual FCPA risk for companies in Latin America. How do they work? Companies, or their employees, create phony written agreements with third parties, perhaps a consultant or outside vendor. The company makes payments to the third party for purported goods or services. In reality, the entity provides no legitimate services, or not at the level to justify the compensation. The rest of the money is used to bribe foreign officials on the company’s behalf to achieve some business advantage, thereby violating the FCPA. Schemes like th... Read more
Beyond the FCPA: Commercial Bribery, the Travel Act, and Compliance
5.14.2013
Today’s guest post is from anti-corruption attorney Matthew Fowler who formerly worked as a compliance officer at a multinational defense company.
When I was an in-house compliance officer, the issues that kept me up at night were not the ones covered by our compliance program. They were the unknown unknowns – the issues I feared were lurking just off radar. Commercial bribery fits the profile of that kind of issue, since it is not prohibited by the FCPA. But it is an issue that belongs squarely on the radars of compliance officers.
Commercial bribery – bribes paid to people working in the private sector – is not addressed by the FCPA, which criminalizes promises or payments made to “foreign government officials.” Similarly, U.S. federal law does not prohibit bribery in private commercial activity. However, many states do prohibit commercial bribery, and the Travel Act “federalizes” such state law prohibitions. Failing to properly record commercial bribes could also result in violations of the books and records provisions of the FCPA.
The Travel Act
The Travel Act prohibits the use of means of interstate or foreign commerce if the underlying activity is prohibited by state law. It s... Read more
Preaching to the Choir, and the Sinners: FCPA compliance training in Latin America
5.10.2013
On Mexican highways, there are official government signs that read, “Conduce con precaución. Tu familia te espera” (Drive carefully, your family is waiting for you), and “Después de un accidente, ya nada es igual” (After an accident, nothing is the same). On some routes, the government might leave wreckage from car accidents with signs that read, “In January 2013, six people died here.”
It seems that the Mexican government has identified various ways of convincing people to drive safely. Some drivers follow speed limit signs. Others respond only to speed traps and bumps in the road. As it appears, some are affected by emotional appeals.
How might these lessons be relevant to FCPA compliance training in Latin America?
TRACE President Alexandra Wrage has categorized the various audiences of FCPA compliance training into different groups. There are the “bottom-liners,” also known as “box-checkers.” They are interested in knowing the rules, and focus on adhering to them. They care less about good corporate citizenship and more about being on the right side of company policy and the law. T... Read more
