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HR and Foreign Corrupt Practices Act (FCPA) Compliance

Consider the costs associated with lawsuits, fines, a tarnished reputation, public backlash and the collapse of a company due to ethical violations.

Posted by Joe Gerard on May 21st, 2010

On May 18th, I attended a webinar, “The Role of HR in FCPA Compliance,” hosted by Tom Fox, a lawyer based out of Houston, Texas. A specific section of the webinar that really stuck with me was a titled “Doing More With Less.” This has been a major topic of discussion recently, as organizations deal with the effects of the recession and the growing demands of ethics and compliance. Organizations are carefully considering where to spend their dollars. Ethics and compliance departments tend to have their budgets cut first, as some employers have a difficult time determining the return on investment of their ethics and compliance initiatives.

In the Ethisphere article “Take it from the Top: When Deloitte Execs Made Ethics a Priority, it Filtered on Down,”  Deloitte CEO Barry Salzberg, said:

“Fortune 1000 companies are on average spending 18%  less on their ethics and compliance budgets during the current recession. But it’s during times like these that it’s most important to invest in your employees so that they can make better, ethical decisions.”

Consider the costs associated with lawsuits, fines, a tarnished reputation, public backlash and the collapse of a company due to ethical violations. The money invested in preventing ethics and compliance investigations is well worth it. In today’s legal environment, organizations have been hit with some of the largest fines ever handed out for cases involving noncompliance, ethics violations and negligence. It’s much better to work towards preventing these issues from occurring than it is to have to respond to allegations exposing an organization’s wrongdoings.

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Human Resources

In the webinar, Tom Fox discussed the use of HR departments in conducting FCPA investigations. The case he made was that organization’s HR departments already handle employee training and background checks. Members of the HR department are frequently in direct contact with employees and can be used as a cost effective solution for carrying out investigations. In a blog post Fox wrote leading up to the webinar, “The Role of Human Resources in FCPA Compliance-Part I,” he mentioned:

“A key role for HR in any company is training. This has traditionally been in areas such as discrimination, harassment and safety, to name just a few. There’s a training requirement set forth in the US Sentencing Guidelines. Companies are mandated to ‘take reasonable steps to communicate periodically and in a practical manner its standards and procedures, and other aspects of the compliance and ethics program, to the individuals referred to in subdivision (B) by conducting effective training programs and otherwise disseminating information appropriate to such individuals’ respective roles and responsibilities.’ “

For the same reasons as mentioned above, many organizations already use their HR department for investigations. Fox also discussed how employee training enforces FCPA compliance. In one of our previous posts, “How to Maximize Your Compliance Training ROI,” we discuss the importance of setting the tone at the top, message consistency for communicating rules and regulations, including real-life examples and outcomes of previous workplace situations, using multiple training methods and frequency and timing of training.

Effective training leads to a better understanding and desire to commit to compliance. When employees comply with laws and corporate policies, the risk for violations is reduced. When employees act ethically and make decisions based on company policies, a return on investment is identified, as employees have retained the information and reduced the risk of allegations being made against the company.

Investigation Systems

The US Sentencing Commission has outlined mandatory guidelines for creating an effective ethics and compliance program. Under Chapter 8, section 2.1, the USSC states:

“The organization shall take reasonable steps to: (A) Ensure that the organization’s compliance and ethics program is followed, including monitoring and auditing to detect criminal conduct. (B) Evaluate periodically the effectiveness of the organization’s compliance and ethics program. (C) Have and publicize a system, which may include mechanisms that allow for anonymity or confidentiality, whereby the organization’s employees and agents may report or seek guidance regarding potential or actual criminal conduct without fear of retaliation.”

With i-Sight Investigation Software, we offer an easy to use, cost effective case management solution for HR teams. i-Sight is frequently integrated with existing HR databases and systems that store customer or employee information.  Integration ensures users won’t have to re-enter information that already exists in another application, as the information is extracted from existing systems and pulled into i-Sight cases. This feature helps reduce redundant actions and helps investigators save time. i-Sight is web-based, storing cases in a centralized locations, accessible anywhere there’s an Internet connection. i-Sight is custom configured to each organization’s unique policies and procedures to ensure consistency throughout the investigative process.

In the post “The Role of Human Resources in FCPA Compliance-Part I,” and in the webinar, Fox discussed the benefits HR brings to internal investigations:

“Regarding investigations, HR can bring broad benefits to any FCPA compliance and ethics program through an efficient investigation process. It’s recognized that a Legal or Compliance Department may wish to take over and complete an investigation process. However, HR can bring a consistency in both the process and any discipline which is imposed. Such consistency reinforces the senior management’s message of commitment by the company to FCPA compliance and ethics. Such a function by HR can lead to an understanding of emerging risks. Lastly, it may be that employees are more willing to speak up to HR and the building of trust can be utilized to assist in overall risk mitigation. “

To read an overview of the other topics discussed in the webinar, I recommend looking at these two articles written by Tom Fox on his FCPA Compliance and Ethics Blog:

The Role of Human Resources in FCPA Compliance-Part I

The Role of Human Resources in FCPA Compliance-Part II


Joe Gerard
Joe Gerard

CEO, i-Sight

Spend my days showing off the i-Sight investigative case management software and finding ways to help clients improve their investigations. Usually working with corporate security, HR & employee relations, compliance and legal teams.

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