Bribery and corruption take many forms, and two recent cases illustrate some examples of how those types of fraud arise.
First, a stunning years-long, company-wide business strategy detailed in the FCPA enforcement action involving Panasonic Corp and its U.S. subsidiary, Panasonic Avionics, Inc., offers lessons in fighting bribery, corruption, and fraud that should be studied by every compliance practitioner, so they can use the information to pressure test their own compliance programs.
There are clear indicia that can be used going forward, specifically regarding questions around the business qualifications of third parties and the use of otherwise unqualified third parties. One innovative bribery scheme used by Panasonic Avionics involved the offering of a consulting position to an employee of a state-owned enterprise, while that same employee was negotiating a contract with Panasonic Avionics for his employee. Obviously, this was a clear conflict of interest and one that should have been detected in due diligence.
The Panasonic FCPA case additionally garnered other lessons—those from the domestic arena. In a move that was blatantly anti-competitive, as well as a conflict of interest and corrupt, the company paid a domestic third-party agent who was negotiating on behalf of a customer for inside information on the customer’s negotiating strategy and other details that allowed Panasonic Avionics to secure business.
Next, a scheme concocted by Hewlett-Packard in Mexico involved appending an unapproved third-party agent to an approved agent to work as a sub-agent. Both the Hewlett-Packard and the Panasonic cases demonstrate that there must be cross-checks performed on approved, existing agents on an ongoing basis to satisfy both ongoing monitoring and a minimum standard FCPA compliance program around third parties.
There are many facets to every FCPA enforcement action and declination. If you look hard enough, you can not only discern the lessons to apply to your compliance program, but also use those lessons to pressure test your compliance regime.