For any corporate leader, a letter from the Department of Justice or SEC announcing an inquiry into an employee’s or contractor’s interactions with foreign officials can be about as welcome as a call from your doctor to come see him about the results of your recent medical test.

For 40 years, the Foreign Corrupt Practices Act has made it a serious crime to use bribery to win a business advantage from foreign officials. Violations have resulted in tens of millions of dollars in fines. Executives have been hit with stiff prison sentences. Corporations have been forced to spend millions of dollars—even hundreds of millions of dollars—defending themselves.

Yet bribery rarely begins as a corporate-level initiative, at least among U.S. companies. It is most often the result of a misguided or rogue individual or contractor. The impact of a bribery investigation, however, is virtually always felt at the corporate level. That’s one reason why U.S. corporate leaders have not only stepped up efforts to ensure their own companies are operating cleanly, but that clean business has become the global norm. This is a difficult task, but one that is increasingly viewed as the ultimate solution to the challenge of steering large multi-national organizations away from the rocky shoals of bribery and corruption charges.

But what makes for a successful enterprise-wide compliance system? First, it must account for the gamut of personal interactions with foreign leaders and local social causes. What are the rules regarding a wedding gift to a long-time customer? Or a bar tab for prospective clients? Or supporting an NGO in a developing country, which just happens to be run by the son of the oil minister?

Second, it takes more than an ethical corporate culture to help people navigate so many permutations of a seemingly simple directive. Anti-corruption programs require training employees and contractors on how to keep all interactions above board, maintain appropriate records, and put systems in place to monitor behavior.

While managing these systems has historically been far from the core competencies of most businesses, an increasing number are moving in this direction. As a result, corporate executives who once felt like they were “flying blind” through the field of compliance are embracing the task as a necessary one.

For 40 years, the Foreign Corrupt Practices Act has made it a serious crime to use bribery to win a business advantage from foreign officials. Violations have resulted in tens of millions of dollars in fines. Executives have been hit with stiff prison sentences. Corporations have been forced to spend millions of dollars—even hundreds of millions of dollars—defending themselves.

This new prioritization shouldn’t be surprising. It comes as corporate anxiety has ratcheted up in the face of some recent eye-popping settlements with the government. As compliance programs emerge, so do sources of help from outside the business sector to promote a more cooperative and mutually supportive environment.

The timing of the compliance trend is corresponding with what may be a fresh look at this issue by the regulators themselves. I’m speaking of the federal government. And yes, they may now be here to help, in the sense that “help” is rooted in a desire to stop real fraud and work with honest companies to genuinely comply with the law.

While the U.S. Department of Justice has beefed up its staff in the Criminal Division’s Fraud Section’s FCPA Unit to investigate cases more quickly and wrap up old investigations, the DoJ is also managing an experimental program in compliance that relies on self-disclosure, cooperation, and remediation. In March, the Justice Department extended this voluntary compliance program by one year.

Along with the extension of this voluntary compliance program is a new tone from the DoJ’s political leadership.

“The Criminal Division’s aims are not to prosecute every company we can, nor to break our own records for the largest fines or longest prison sentences,” Trevor N. McFadden, deputy attorney general, recently told a gathering of corporate compliance officers. “Our goal is for companies and individuals to voluntarily comply with the law.”

As the government finds a more fruitful approach in cooperation, international NGOs also have reason to help corporations up their game. The International Monetary Fund estimates that bribery annually costs the global economy $1.5 trillion to $2 trillion in growth. This happens because bribery distorts prices, results in poor-quality service, harms honest competitors, and weakens the rule of law. It is often the world’s poor who lose the most from bribery’s secondary effects.

As government devises cooperative programs, global NGOs are stepping up to promote compliance. For example, the World Economic Forum’s Partnership Against Corruption Initiative developed principles and shares best practices to help businesses “design corruption out of the system.”

Or consider the International Organization for Standardization (ISO), which represents the standards bodies of 163 countries. In 2016, this NGO announced the creation of an anti-bribery management system standard.

Despite the unwieldy name of ISO 37001, this resource helps organizations—regardless of size or structure—to start, maintain, review, and continuously improve an anti-bribery program.  It is designed to complement existing management systems, and enables organizations (or parts of organizations) to voluntarily pursue certification by an independent, and if desired—accredited, third party.

By leveraging an existing compliance and ethics or anti-corruption program, ISO 37001 can also reduce compliance costs and help corporations create an affirmative culture where employees can take the lead, rather than merely avoid punitive rules. Microsoft is leading the way in the corporate world. It recently announced an intention to seek ISO 37001 certification, while nations such as Singapore, the Philippines, and Peru have announced adoption of ISO 37001.

The move toward compliance programs by businesses and NGOs, coupled with a new willingness by the federal government to help companies achieve the goal of being on the right side of the law, may signal a new opportunity for a Golden Age of compliance. Managing FCPA risks will always be difficult and tricky, but if we can put aside the “gotcha” mentality of opaque rules of enforcement coupled with massive fines and penalties, the result will be better compliance for all. And that will be good for all parties involved.

 

Harold Kim is executive vice president of the U.S. Chamber Institute for Legal Reform. To learn more, visit www.InstituteForLegalReform.com.

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