Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

FCPA Boot Camp


Published on

ACI's 7th Houston FCPA Boot Camp will provide you with practical strategies and best practices for addressing high risk areas for enforcement across global business operations while taking you deeper into the world of FCPA and anti-corruption compliance.

Published in: Business, Economy & Finance
  • Be the first to comment

FCPA Boot Camp

  1. 1. FCPA Compliance Best Practices ACI’s 7th Annual FCPA Bootcamp Jacki Trevino Jay Martin © 2010 Fluor. All Rights Reserved.
  2. 2. About Jay G. Martin Jay is the Vice President, Chief Compliance Officer and the Senior Deputy General Counsel for Baker Hughes Incorporated (“BHI”). Prior to joining BHI, Mr. Martin was a Shareholder at Winstead Sechrest & Minick P.C., a Partner at Phelps Dunbar and Andrews & Kurth, and the Assistant General Counsel of Mobil Oil Corporation’s Worldwide Exploration and Production Division in Fairfax, Virginia. Mr. Martin has also served as General Counsel of Mobil Natural Gas, Inc. in Houston, Texas. Mr. Martin holds JD, MPA and BBA degrees from Southern Methodist University in Dallas, Texas. While in private practice, Mr. Martin was engaged in a wide variety of domestic and international energy transactions, and regulatory matters for natural gas exploration and producing companies, oil field service companies, marketers, pipelines and refiners. Mr. Martin’s practice involved such diverse matters as participating in generic federal and state restructuring proceedings in the natural gas and electric industries, drafting virtually every type of domestic and international oil and gas agreement, working on mergers and acquisitions, asset acquisitions and divestitures, handling a significant number of energy lending transactions including but not limited to mezzanine and conventional production based financings and work-out situations, and advising clients on a wide variety of natural gas marketing and processing matters. Mr. Martin also regularly handled problems for clients arising under the Foreign Corrupt Practices Act, the U.S. Economic Sanctions Laws and Arab Boycott Regulation. In addition, Mr. Martin developed broad experience in crisis management, designed corporate compliance programs for clients, and conducted many types of internal investigations for clients. .
  3. 3. About Jacki D. Trevino Jacki is currently the Senior Manager, Corporate Compliance at Fluor Corporation. Prior to joining Fluor, she was the Chief Compliance Officer at Global Compliance, where she was responsible for the development, administration and management of Global Compliance’s internal ethics and compliance program. In addition, Jacki was actively involved in consulting with Global Compliance’s clients to assist them in building effective compliance programs. Jacki also spent seven years as the Assistant Director, Global Ethics & Compliance at Dresser, Inc. Jacki was integral in the creation of Dresser’s ethics and compliance program including the design and implementation of a new Code of Conduct and an ethics and compliance training program. She also developed and implemented global ethics and compliance policies and procedures, established a program to manage third parties, and managed internal investigations of reported business misconduct. Jacki was one of the first in the industry to obtain the certification of Certified Ethics and Compliance Professional (CCEP). She has long been an active leader in the ethics and compliance community and an active member with the Ethics and Compliance Officer Association (ECOA), the Society for Corporate Compliance and Ethics (SCCE), the Practicing Law Institute (PLI) and The Conference Board. Additionally, Jacki is a frequent speaker on ethics and compliance industry speaking agendas and webinars. Her areas of expertise within global ethics and compliance include program design, development, implementation and management.
  4. 4. FCPA Guidance “To avoid being held liable, U.S. companies are encouraged to exercise due diligence and to take all necessary precautions to ensure that they have formed a business relationship with reputable and qualified partners and representatives.” “The Lay Persons Guide to the FCPA” published by the United States Department of Justice “In appropriate circumstances, [the] DOJ and SEC may decline to pursue charges against a company based on the company’s effective compliance program, or may otherwise seek to reward a company for its program, even when that program did not prevent the particular underlying FCPA violation that gave rise to the investigation.” A Resource Guide to the U.S. Foreign Corrupt Practices Act published by the United States Department of Justice and the Securities and Exchange Commission 3
  5. 5. Investigations and Prosecutions Investigators focus on:  Are you acting in good faith?  Do you have a healthy, robust compliance program?  What is the likelihood of the offense reoccurring?  Did your compliance program uncover this issue?  Was there an appropriate response?  Was the issue widespread?  Was there prompt remedial action?  Was there a prompt and forthcoming voluntary disclosure?  How did you respond?  If this issue identified weaknesses in your compliance program, have they been corrected?  Is your compliance program a paper or a “check the box” program only? 4
  6. 6. Elements of an Effective Anti-Corruption Compliance Program Risk Assessment Commitment Compliance Infrastructure Policies, Procedures, Internal Controls Disciplinary Guidelines Communication and Training Third Party Accountability Monitoring and Auditing Review and Testing M&A Activity 5
  7. 7. Anticorruption: Elements of an Effective Compliance Program Risk Assessment  Geographical and country risk  Interaction with governmental officials  Industry sectors of operation  Extent of third party usage  Importance of licenses and permits  Degree of governmental oversight and inspection  Volume and importance of goods and people clearing customs and immigration
  8. 8. Anticorruption: Elements of an Effective Compliance Program Commitment  Strong, explicit and visible support  Appropriate measures to encourage and support a robust and effective ethics and compliance program  Adequate funding  Adequate resources  Adequate support
  9. 9. Anticorruption: Elements of an Effective Compliance Program Compliance Infrastructure  Dedicated that includes designated responsibility to one or more senior corporate executives for:  Implementation and oversight of policies, standards and procedures  “Compliance Officer” must have direct reporting obligations to independent body such as:  Internal Audit  Board of Directors  Board of Director committee  Must have adequate level of autonomy from management, sufficient resources and authority
  10. 10. Anticorruption: Elements of an Effective Compliance Program Policies, Procedures, Internal Controls  Must be explicit, clearly articulated and visible  FCPA and other global anticorruption laws  Policies and procedures must include directives that “reduce the prospect of violations of anticorruption laws and the company’s own compliance code.”  Cover policies toward “gifts, hospitality, entertainment, and expenses; customer travel, political contributions; charitable donations and sponsorships; facilitation payments; and solicitation and extortion.”  Applicable to all officers, directors, employees and third parties acting on behalf of the organization  Internal controls to avoid and address potential violations of books, records and accounting provisions  “Reasonably designed to ensure the maintenance of fair and accurate books, records and accounts and ensure they cannot be used for the purpose of bribery or concealing such bribery.”
  11. 11. Anticorruption: Elements of an Effective Compliance Program Disciplinary Guidelines  Must carry serious consequences for violations of anti-corruption laws, compliance code, policies and procedures by  Directors, officers, employees, third parties  Reasonable steps to remedy harm and prevent further misconduct
  12. 12. Anticorruption: Elements of an Effective Compliance Program Communication and Training  Effective communication and periodic training on policies and procedures to  Directors, officers, employees, third parties  Know and understand  Annual certification to certify compliance and training requirements
  13. 13. Anticorruption: Elements of an Effective Compliance Program Third Party Accountability  “Institute appropriate due diligence and compliance requirements pertaining to the retention and oversight”  Inform third parties of the company’s commitment to abiding by laws and ethics and compliance standards  Obtain “reciprocal commitment” reflecting understanding and acceptance  Agreements and contracts (including renewals) have proper anti-corruption language and that the company may have the right to:  Audit  Terminate
  14. 14. Anticorruption: Elements of an Effective Compliance Program Monitoring and Auditing  Ongoing to ensure effectiveness  Directed to company’s key risk areas  Measure for effectiveness  Regular audits of books and records (including third parties)
  15. 15. Anticorruption: Elements of an Effective Compliance Program Review and Testing  Designed to evaluate and improve effectiveness  At least once a year to assess relevant developments in international and industry standards  Update and adapt policies, procedures, internal controls and compliance program to ensure continued effectiveness
  16. 16. Anticorruption: Elements of an Effective Compliance Program M&A Activity  Pre-closing activities should focus on:  Assessment of financial controls  Business locations  Use of third parties  Prior internal investigations  Compliance culture  Existence of policies, training and audit practices  Hotline reporting systems and action taken  Overall compliance structure  Post-closing activities should focus on:  Embedding compliance culture within newly acquired company  Training on key risk areas in a timely manner  Providing clear, concise and understandable polices and procedures  Setting the expectations early  Providing employees with an avenue to report violations and ask questions
  17. 17. Anti-Corruption Risk Areas for Engineering and Construction Companies ♦ ♦ ♦ ♦ Third parties Geographic Interface with Government Officials Pre-Qualifications, RFP’s, MSA’s, Export and Developmental Bank Funding ♦ Contract Provisions  Code of Conduct  Compliance Programs SUPPLIERS’ SUPPLIERS PARTNERSHIPS  Audit & Termination Rights  Damages for Violations SUBCONTRACTORS JOINT VENTURES CONTRACTORS FLUOR AUDITORS LOBBYISTS DISTRIBUTORS INT’L INTERMEDIARIES AGENTS CONSULTANTS VENDORS DOMESTIC AGENCIES OFFSHORE SERVICE PROVIDERS DEALERS / RESELLERS FOREIGN DISTRIBUTORS 16 TEMPORARY EMPLOYEES SUPPLIERS INT’L JOINT VENTURES  Training Requirements  Procurement Protocols SUPPLIERS IN EMERGING MARKETS DATA VENDORS
  18. 18. Alan Boeckmann – Former Fluor Chairman and CEO “This is an issue we're absolutely passionate about. Corruption has a corrosive impact on market opportunities and the general business climate. It deters investment, curbs economic growth and sustainable development, distorts prices and undermines legal and judicial systems. Regrettably, this situation is endemic in many areas of the world. It is our responsibility and obligation to our stakeholders and the global community to do what we can to mitigate this challenge." Remarks by Alan Boeckmann ECOA 2007 Annual Business Ethics & Compliance Conference Los Angeles – September 26, 2007 17
  19. 19. Fluor Compliance Policies, Guidelines & Practices ♦ Code of Conduct – Centerpiece to program – Values and risk-based – Learning aids ♦ HR Policies – HR-720 Anti-Bribery & Corruption – HR-705 Reporting, Investigations & Corrective Action – Export Compliance Manual ♦ Guidelines – Third-Party Expectations (Fluor’s Business Conduct and Ethics Expectations for Suppliers and Contractors) – Sales & Marketing Toolbox: Legal/Contracts section regarding Agents – Procurement Practices ♦ Project-specific practices 18
  20. 20. Training Requirements Code of Conduct Training  Periodic requirement of all salaried employees Must complete within 3 weeks of hire  Web-based program  Covers the key elements included in the Code of Conduct Ethics Certification  Annual requirement of all salaried employees & all FGG employees  On-line certification; manual forms available  Employee acknowledges their acceptance to adhere to the Company’s Code of Conduct and Government Supplement if applicable  Provides an opportunity to disclose ethical concerns  Provides an opportunity to disclose potential conflicts of interest Employment Law for Supervisors and Managers (new)   How to handle C&E allegations and Employment Law  On-line course (approximately 60 minutes)  19 One-time requirement of all U.S. based supervisors/managers Live training (approximately 2 hours)
  21. 21. Training and Communication Risk Based Training & Communications  Targeted to employees in key business functions  Specific to areas of risk including:  Anti-corruption  Financial Integrity  Export Controls  Health, Safety and Environmental  Human Resource Topics  Face to face training  Articles  Merry Compliance and Happy Ethics  Fluor co-chairs anti-corruption workshop in New Delhi  Stop Corruption: Avoiding the Slippery Slope to Bribery  Fluor ranked top performer by TI in assessment of anticorruption measures  Seaton and Boeckmann receive prestigious Mallan award  Financial Integrity: Expense Report Red Flags  What Would You Do? What is appropriate and what is forbidden? Test your Compliance & Ethics savvy with this hypothetical case.  Fluor’s Commitment to Combating Trafficking in Persons (TIPs) 20
  22. 22. Results of Ethical Behavior – Bottom Line ♦ ♦ ♦ ♦ ♦ ♦ Win bids – outshine competitors Attract and retain top talent Access to capital Sustainability / Corporate Responsibility Avoid costs of damages, settlements, fines, fees… Awards  Winner of the 2007 Great Dallas Business Ethics Award  Top 100 list for World’s Most Ethical Companies in 2007, 2008, 2009, 2010, 2011 and 2012 (Ethisphere Magazine)  Earned distinction of “Ethics Inside Certified” in 2007 (Ethisphere Magazine)  Government Contractor Ethics 2008 Rankings (Ethisphere Magazine):     Number 3 for “Best Ethics Program Overall” Number 2 of the 100 Largest Contractor Ethics Programs Top 10 contractors for “Best Code of Business Conduct and Ethics” Top 10 “Best Ethics Training and Communications Program”  Fluor CEO named one of the Top 10 Most Influential Leaders in Business Ethics in 2007 (Ethisphere Magazine)  Fluor named one of the 100 Best Corporate Citizens by the Corporate Responsibility Officers Association in 2009  Top 50 list for Most Admired Companies in 2004-2012 (Fortune Magazine)  Number 1 in Engineering & Construction category 2012  VP Corporate Compliance, named to “2009 & 2010 Attorneys Who Matter” list (Ethisphere)  Ranked 2009 "Best Overall Governance, Compliance and Ethics Program - small to mid-cap” (Corporate Secretary Magazine)  VP Corporate Compliance, named 2009 “Corporate Secretary of the Year – small to mid-cap” (Corporate Secretary Magazine) 21
  23. 23. Other Training ♦ Live – Anti-Corruption – Export Compliance ♦ Web-Based – Anti-Corruption – Export Compliance – Anti-Boycott – Insider Trading – Supervisory Under Development – Conflicts of Interest – Sales Program – Procurement Program – FGG – many others ♦ 22
  24. 24. Due Diligence Agents Suppliers of Services Suppliers of Goods Basic OCR Screen Project Specific Business Partners On-Going Business Ventures (e.g. ICA Fluor) Site Inspections Internal & External Interviews Criminal Records Check Further DD dependent on risk profile * Litigation Review Financial Review Verification of Company Information Including Officers & Directors Enhanced Global Database Checks & Adverse Media Screen Third Party Compliance Questionnaire 23
  25. 25. Investigation Protocols The Investigation Protocols are general protocols that help ensure consistency and high-quality, thorough investigations across Fluor. The protocols focus on 5 key areas: 1. Opening & Categorizing the Case 2. Planning the Investigation 3. Executing the Investigation Plan 4. Determining Appropriate Follow-Up 5. Closing the Case Investigating Departments Include: ♦ Corporate Security ♦ HSE ♦ HR ♦ Industrial Relations ♦ Internal Audit ♦ Law 24
  26. 26. Joint Ventures – Red Flags “Associated person” could include a joint venture partner (posing additional risk of liability for failure to prevent bribery) ♦ Red Flags include: ■ Involves “high risk” jurisdiction known for corruption ♦ Mitigation and Solutions include: ■ Lacks experience with product, field or industry or qualified staff • Ensure Senior Manager board role / seat at table of JV Partner ■ Objects to anticorruption contract provisions or certifications • Enhanced due diligence of JV Partner to detect undisclosed violations ■ Reference checks reveal potential JV Partner’s flawed background or reputation ■ JV Partner’s reliance on public officials to secure contracts ■ Unusual contract terms or payment arrangements requested by JV Partner • Adequate monitoring regarding the activities carried out within the JV • Enhanced contract provisions • Training ■ Excessive, false or inadequately described payments requests in JV books & records ■ Unusual or overly generous subcontracting arrangements ■ JV Partner offers preferential access to government officials / government deals 25
  27. 27. Agents, Advisors and Business Consultants – Red Flags Agents can pose significant legal, regulatory and reputational risks. Anti-corruption laws impose implicit duty to vet its third parties. ♦ Red Flags include: ■ Agent is located or doing business in a country with high levels of corruption ■ Objections to representations regarding compliance with anti-corruption laws ■ Lacks experience with product, field or industry or qualified staff ■ Disproportionate commission/fees/cash payments onshore vs. offshore ■ Fees linked to a percentage of the project cost or value ♦ Mitigation and Solutions include: • Justification for use of Agent • Fees negotiated according to market rates only • "Ability to terminate” for identified breach by Agent • Enhanced due diligence screen • Enhanced contract provisions • Training ■ Request for money to be paid into a personal or offshore bank account ■ Services detailed to be provided are vague ■ Agent is a relative or close associate of a present or former official 26
  28. 28. Suppliers – Red Flags Suppliers which provide services should be scrutinized as business partners. Risk that such companies supply chain is from high risk countries. ♦ Red Flags include: • Previously convicted of, or is alleged to have been involved in illegal conduct • Rising expenses for goods and services • Increasing purchases from one vendor • No division of duties between new vendor approval and authorization for purchasing • Contracts written to limit competition • Same vendor wins contracts by small margins ♦ Mitigation and Solutions include: • Embed compliance principles and signatory requirements within Internal Procurement process • Develop meaningful measurements to analyze trends on vendor wins and vendor concentration • Instill mandatory RFP process (e.g. 3 estimates per contract) • Audit rights • Contract always goes to the bid received last • Splitting one purchase into multiples to avoid the approval process • Paying above-market prices for goods or services 27
  29. 29. M&A – Red Flags Risk of becoming implicated in corruption charges based on inherited liabilities. Need to seek protection against the acquisition of tainted assets ♦ Red Flags include: ♦ Mitigation & Solutions include: ■ Involves “high risk” jurisdiction known for corruption • Extended due diligence to determine undisclosed violations ■ Objects to anticorruption contract provisions or certifications • Risk profile for target based on volume of sales & agents ■ The target is heavily reliant on licenses, or consents issued by the local government • Negotiate protections for closing exposure ■ Substantial volumes of the target’s business is conducted through agents. • Implement procedures to protect against transfer of tainted assets/personnel • Acquisition Representations & Warranties ■ Deficient record and book-keeping practices at target ■ Historic corruption inquiries relating to the Target or Target's Senior Management 28
  30. 30. Conclusion 29