By Jeffrey M. Kaplan and Rebecca Walker
For a variety of reasons, requiring training of agents and other third-party business representatives is among the most challenging aspects of having an anti-corruption compliance program. And, it is a challenge that apparently many companies have yet to address.
Based on the results to date of the survey we are conducting with the FCPA Blog, about 16% of companies apply a requirement of this kind to all of their third party representatives; about 22% do so for some third parties; and the majority – about 62% – do not do so at all.
While not requiring training of all third parties may be understandable (depending, of course, on a particular company’s risk profile and the role of its third parties), not doing so for any could be problematic. This is a function first of applicable legal standards, including the language of the Federal Sentencing Guidelines for Organizations providing that companies should train agents “as appropriate” and also several enforcement actions faulting companies for not requiring such training in the anti-corruption context (e.g., Securities and Exchange Commission, In re Westinghouse Air Brake Technologies Corporation, Accounting and Auditing, Enforcement Release No. 2785, Feb. 14, 2008).
Additionally, the UK anti-bribery adequate procedures guidance provides, in relevant part: “It may be appropriate to require associated persons [which can include agents] to undergo training. This will be particularly relevant for high risk associated persons. In any event, organisations may wish to encourage associated persons to adopt bribery prevention training.”
The need for such training is also a function of common-sense risk analysis, specifically, the fact that employees of a third party are often:
not as familiar with relevant compliance standards and laws as those of the principal organization;
unlikely to be influenced by the ethical culture of the principal;
less inhibited about creating risk to the principal than would the latter’s employees, since they would identify less with the company and its stakeholders; and
Finally, a practice pointer — based on the experience of a company we know with a truly superb anti-corruption compliance program: where possible, require new third parties to conduct training before being engaged by your company, as an after-the-fact requirement may be harder to enforce.
Have you taken the Anti-Corruption Compliance Program Benchmarking Survey yet? Participating companies contribute information anonymously and will receive a complimentary copy of the final report, with findings and analyses not only regarding monitoring but a host of other important compliance practices. Note that the survey will be closing in about two weeks.
Click here to learn more about the benchmarking survey and for a link to take the survey.
Jeffrey M. Kaplan and Rebecca Walker are partners at Kaplan & Walker LLP. They recently published a chapter in the BNA/ACC Compliance Manual on Compliance with the Foreign Corrupt Practices Act. Jeff, who is also co-editor of Compliance Programs and the Corporate Sentencing Guidelines (Thomson Reuters), can be reached at [email protected]. Rebecca, who is also author of Conflicts of Interest in Business and the Professions: Law and Compliance (Thomson Reuters), can be reached at [email protected].