In the recent Teva Pharmaceuticals FCPA enforcement action, the SEC Complaint laid out one of the best descriptions of a paper compliance program I have recently seen. To set the stage, the company had been made aware of illegal payments in its Mexico subsidiary, investigated the allegations and then fired several employees involved. The next step was for the company to upgrade its compliance program going forward.
However the company’s efforts seem to stop there. The Complaint related, “In April 2011, a Teva employee responsible for overseeing the implementation of the anti-corruption compliance program emailed a senior executive responsible for overseeing compliance in Latin America. The email stated that a senior Teva executive had “specifically instructed not to implement a robust system that will enable us to monitor and assure that the same doctor wasn’t invited to a meal more than three times (for example)” and that “the purpose of the global FCPA tool under development is mainly to automate the manual forms; get a more organized and easy process of authorisations with less paper work.””
When the regulators come looking for evidence of an effective compliance program, this is certainly evidence of the opposite. Unfortunately, this is also the attitude of business unit employees who are not well educated in the role of a best practices compliance program, are frustrated by the corporate compliance program being the Land of No, populated by multiple versions of Dr. No or perhaps all of the above. It could also be that senior management is so invested in the bribery and corruption schemes that they do not want anything like effective compliance anywhere near their business operations.
The end of 2016 has seen some stunning FCPA and global anti-corruption enforcement actions. Both Odebrecht/Braskem and Teva have landed in the Top 10 enforcement penalties of all-time. However there is quite a bit of meat in all of the resolution documents which the compliance practitioner can use going forward. This description of a paper compliance program is one of them.