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FCPA/OECD Risk Management |
What is at risk?
Every company with operations or sales overseas should carefully consider whether it has effective policies and procedures in place that adequately manage the company’s risks under the US Foreign Corrupt Practices Act (FCPA) 1977 and/or the OECD's Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (OECD) 1997.
While most business executives are aware of the regulation's basic objectives, they find it a daunting task to protect their companies and their employees from potentially disastrous consequences - stiff fines and prison sentences - that could result from a failure to comply.
The benefits of taking action
Companies should proactively protect themselves against FCPA/OECD violations. The “Federal Sentencing Guidelines for Organisations,” issued by the U.S. Sentencing Commission and applicable to criminal violations of all federal statutes such as the FCPA, require federal courts handing down criminal sanctions to take into account the existence or absence of effective corporate compliance programs.
The presence of an effective compliance program can significantly reduce a corporation’s sentence, in some cases by as much as 95%, while the absence of such a program can increase the sentence.
Eliminating FCPA/OECD risk
d2OPS international can assist you in implementing an FCPA/OECD Compliance System that will:
- Be Proactive, enabling the company’s board and management to track patterns and trends that pinpoint areas of abuse that they can quickly remedy.
- Provide Information in Real Time, so that the company can avoid FCPA/OECD abuses that could result in serious violations if there is no mechanism in place for reporting such violations to the board and management in real time, thus allowing them to continue unnoticed until it is too late.
- Digitise Business Rules and Processes, so that the board and management can monitor activities that could lead to FCPA/OECD violations.
- Establish Accountability and Create a Deterrent, digitising itself acts as a deterrent since employees will know that the system is monitoring their activities by flagging and reporting unusual activity that occurs outside of established parameters. This process would make the recurrence of the activity virtually impossible since the system would immediately reveal the wrongdoer to the company’s board and management, allowing them to take immediate remedial action.
- Enable Processes and Procedures to be Flexible and Easily Changed, providing the company’s board and management with the ability to update and improve the FCPA system as circumstances change.
- Enable the Board and Management to Update Business Rules, so that they can keep pace with the ever-changing regulatory environment in which they work by editing Business Rules immediately and easily, as and when changes occur in FCPA and OECD regulations.
- Provide a Clear and Thorough Audit, thus providing the board and management with a comprehensive overview of potentially harmful activities, as well as providing them with the ‘fingerprints’ of any wrongdoers.
- Provide reporting and analytics that continuously monitor and report upon the organisation's global exposure to risk.
- Enable Cross-Platform Compatibility & Communications, to enable the full integration of all information relevant to FCPA/OECD issues.
- Demonstrate FCPA/OECD Compliance to external agencies, through documented processes and escalation systems.
Software Tools
d2OPS international has access to, and experience of, a number of software tools that can be used to support the mitigation of FCPA/OECD risk. These tools allow for the implementation of business-rules based thresholds, the breaking of which will indicate anomolies to management 'dashboards' and other reporting systems. Example areas of vulnerability that these software tools could monitor are:
- Checking potential 3rd party business entities against lists of suspect persons, etc. from governmental agencies and against the company’s own list of previously disapproved entities.
- Creation of an exception report identifying any actual company vendors that don’t match the company’s authorised vendor list.
- Detecting unusual entertainment expenses.
- Detecting violations of maximum expenditure limits (e.g., 10% maximum commission)
- Detecting any unusually high expenditures or any unusual payment mechanisms (e.g., payment required in advance or paid to another party).
- Verifying that evidence has been obtained, and kept, regarding special uses for commission payments (e.g., that they will be used to build a warehouse).
Useful Links
US Department of Justice, Foreign Corrupt Practices Act
US Department of Justice, lay-person's Guide to the Foreign Corrupt Practices Act
US Bureau of Industry & Security, suggestions to avoid dealing with unauthorised persons
US Bureau of Industry & Security, red flag indicators
US Bureau of Industry & Security, denied persons list