What is the best way to convince foreign nationals to agree to a corporate policy on complying with a U.S. law? In some cases, don’t mention the law.
That’s one lesson Dana Nahlen, senior international counsel at EDS, has learned during her 26 years in the international compliance field. While a compliance policy can—and should—be universal, the way it is implemented and made accessible to employees around the world will vary, she says.
“If you really want to be global, don’t be so U.S.-centric,” Nahlen says. “Think globally, and speak in global terms.”
An especially hot topic in today’s international business arena is compliance with the U.S. Foreign Corrupt Practices Act, which prohibits bribing officials in other countries. While Americans may find it innocuous to be asked to agree to such a policy, people in other parts of the world can be insulted merely by the idea, Nahlen says.
“At first, I would get some foreign agents who would understand fully what this was getting after, but others were offended by it,” Nahlen says. “Why would you even raise this with me, [they would say], of course I’m not corrupt!”
What’s more, Nahlen encountered corporate lawyers and employees outside the United States who questioned why they were required to enforce U.S. laws beyond U.S. borders. To make the compliance policy more palatable to people of different cultures, Nahlen says she learned to describe the anticorruption framework in more general terms, avoiding specific references to the U.S. law.
“Our policy about corruption is designed to meet the law, but I don’t have to mention the Foreign Corrupt Practices Act,” she says. “I have paraphrased what the FCPA requires, but I haven’t mentioned the FCPA.”
“Why is it that no matter where it’s done in the world [bribery] is never done in the open? There’s something truly dirty about it.”
— Jane Wexton,
Partner,
Duane Morris
EDS, a giant in the data services industry, has one global code of conduct for the 138,000 employees even though business practices vary in the 64 countries where EDS does business, Nahlen says.
“Our policies represent a value system as to how EDS is going to do business,” she says, adding that identifying the common themes that underlie the policy aren’t hard to find. “The bigger difficulty is in helping people understand how to work within that policy and how to understand the effect of that policy.”
The value system represented in a policy statement does not necessarily have to conform to all local norms. For example, while some companies may allow (or even require) discrimination based on nationality or sex, the compliance policy can always reflect a higher standard than the minimum required by law.
“There is certainly, in our value system, the perspective that we want to honor each other,” Nahlen says. “If you’re writing your policy, why don’t you take a step back and ask yourself, where do you want to set the line?”
NO GIFT GIVING!
The following excerpt from the FCPA discusses “Prohibited Foreign Trade Practices by Issuers.”
A. Prohibition
It shall be unlawful for any issuer which has a class of securities registered pursuant to section 78l of this title or which is required to file reports under section 78o(d) of this title, or for any officer, director, employee, or agent of such issuer or any stockholder thereof acting on behalf of such issuer, to make use of the mails or any means or instrumentality of interstate commerce corruptly in furtherance of an offer, payment, promise to pay, or authorization of the payment of any money, or offer, gift, promise to give, or authorization of the giving of anything of value to—
(1) any foreign official for purposes of—
(A) (i) influencing any act or decision of such foreign official in his official capacity, (ii) inducing such foreign official to do or omit to do any act in violation of the lawful duty of such official, or (iii) securing any improper advantage; or
(B) inducing such foreign official to use his influence with a foreign government or instrumentality thereof to affect or influence any act or decision of such government or instrumentality,
in order to assist such issuer in obtaining or retaining business for or with, or directing business to, any person;
(2) any foreign political party or official thereof or any candidate for foreign political office for purposes of--
(A) (i) influencing any act or decision of such party, official, or candidate in its or his official capacity, (ii) inducing such party, official, or candidate to do or omit to do an act in violation of the lawful duty of such party, official, or candidate, or (iii) securing any improper advantage; or
(B) inducing such party, official, or candidate to use its or his influence with a foreign government or instrumentality thereof to affect or influence any act or decision of such government or instrumentality.
in order to assist such issuer in obtaining or retaining business for or with, or directing business to, any person; or
(3) any person, while knowing that all or a portion of such money or thing of value will be offered, given, or promised, directly or indirectly, to any foreign official, to any foreign political party or official thereof, or to any candidate for foreign political office, for purposes of—
(A) (i) influencing any act or decision of such foreign official, political party, party official, or candidate in his or its official capacity, (ii) inducing such foreign official, political party, party official, or candidate to do or omit to do any act in violation of the lawful duty of such foreign official, political party, party official, or candidate, or (iii) securing any improper advantage; or
(B) inducing such foreign official, political party, party official, or candidate to use his or its influence with a foreign government or instrumentality thereof to affect or influence any act or decision of such government or instrumentality,
in order to assist such issuer in obtaining or retaining business for or with, or directing business to, any person.
Source
Foreign Corrupt Practices Act (July 22, 2004).
Companies will approach international compliance policy statements differently depending on their industry and home country, but they should always begin with a risk analysis, says Jane Wexton, partner at the law firm of Duane Morris and previously chief compliance officer at GE Money. Once a policy is established, it should be conveyed in language that is accessible to all, and translations should be vetted locally, she says.
Translations “can’t be done by someone in New York who doesn’t know the idiomatic use of language,” she warns. “You have to make sure they are understood in the vernacular. If it’s written in legalese, it’s not a particularly well-written document.”
Wexton
In addition to making the “rules of the road” clear to employees, a policy statement is helpful in promoting a company’s reputation, Wexton says.
“Most companies can afford to pay fines. What they can’t afford as a going concern is loss of reputation,” Wexton says. “[The policy statement] has a great deal to do with preserving your reputation— doing the right thing and having the public and investors believe you’re doing the right thing.”
In conducting training sessions on doing the right thing, Wexton says she sometimes coached business executives around the world to consider the values they would teach their children. Even though an international company will encounter a variety of business practices and cultural norms, the ideas that belong in a policy statement are universal, she says.
For example, while bribery may not be uncommon in some parts of the world, it is universally recognized as wrong and criminalized across the globe, she says: “Why is it that no matter where it’s done in the world [bribery] is never done in the open? There’s something truly dirty about it.”
The key to an effective international compliance policy, experts agree, is ongoing training. To implement a policy in diverse business cultures, companies should provide training that addresses specific local practices and traditions, says Brad Richards, a partner at the law firm Haynes and Boone.
For example, the tradition of giving gifts to business partners varies considerably from country to country. While an international compliance policy should state the general framework for gifts, the policy would likely be applied differently in different regions of the globe.
“In China it’s very common to give gifts at the New Year. It’s common to give a gift of wine, and people may give that to the tax collector,” Richards says. “That’s not something we do in the United States. We don’t give wine to the IRS. The general policy is the same, but the application to the local condition may be a little different.”
Increasingly, companies are putting greater detail into their international compliance policies, Richards says, and consequently they are organizing more training programs. Apart from compliance with anticorruption laws, international companies often have to comply with export laws, anti-boycott laws and privacy laws, and sometimes the law conflict among countries.
“Companies are definitely encouraging policies that are specific to their business model and that give their employees sufficient notice about some of the more difficult areas for compliance in that context,” Richards says. “The real value is not in the policy itself but in having people learn that they need to think and have compliance in the back of their minds.”
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